Suppose that the average cost to one firm to supply an entire market is less than the average cost at which two or more firms could supply the same market, what is this industry called? a natural monopoly a resource industry a government monopoly an exclusive industry.

Suppose that the average cost to one firm to supply an entire market is less than the average cost at which two or more firms could supply the same market, what is this industry called? a natural monopoly a resource industry a government monopoly an exclusive industry.

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter9: Monopoly

Section: Chapter Questions

Problem 12SQP

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Question

Suppose that the average cost to one firm to supply an entire market is less than the average cost at which two or more firms could supply the same market, what is this industry called?

a natural monopoly

a resource industry

a government monopoly

an exclusive industry.

Definition Definition Market structure in which a single company dominates the entire industry. In a monopoly market, there are no close substitutes for the goods and services offered by the monopoly.

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If a monopoly firm is earning profits, how much would you expect these profits to be diminished by entry in the long run?
Imagine that you ale managing a small firm and thinking about entering the market of a monopolist. The monopolist is currently charging a high price, and you have calculated that you can make a nice profit charging 10 less than the monopolist. Before you go ahead and challenge the monopolist, what possibility should you consider for how the monopolist might react?
Why does a monopoly arise? O because of diseconomies of scale because entry to an industry is blocked because of elastic demand because firms want to maximize profits
When regulating a natural monopoly, the government always sets a price ceiling where marginal cost intersects the demand curve. O True O False
One way a monopoly can convert additional consumer surplus into economic profit is to O price discriminate raise prices O lower prices
Which of the following is true of a natural monopoly? * It experiences diseconomies of scale. ATC is lower if there is a single firm in the market. It occurs in a market that relies on natural resources for its production. There are decreasing returns to scale in the industry. O The government must provide the good or service to achieve efficiency.
Which of the following government actions is the most common for a natural monopoly in the United States? * O prevent its formation O break it up using antitrust laws use price regulation take public ownership eliminate the market
One of these four answers best represents the condition that generates a natural monopoly. Which one? OA single firm controls an industry because there are very few customers in the industry. The government prohibits entry into an industry. O The firm takes anti-competitive actions to keep other firms out. O Economies of scale are large relative to quantity demanded in a market
PLEASE ANSWER ASAP When can a market exercise a strong monopoly? And what could be the best possible examples of firms that can run under a monopoly market?
Which of these is the BEST example of a natural monopoly? O A. a coffee shop O B. a tobacco products company OC. an airline O D. an electric utility company
What is the critics of a monopoly market. Explain in detail.
Over a recent family dinner, your Aunt Trudy expresses her disdain for price discriminating monopoly businesses, to which you, having taken some economics reply, "A perfect price discriminating monopoly may convert all of the consumer surplus to monopoly profit, but at least it produces O A. more output than a competitive industry would produce. OB. the same output that a competitive industry would produce. C. at the minimum of its average total cost (ATC) curve. D. where its marginal cost (MC) curve is still declining.