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  1. A price discriminating firm facing separate market demand curves in different markets should fosse its price and output levels so that Marginal revenue in each market is equal to its marginal cost of production.
  2. Desciribe the prevention of resale in terms of price discrimination.
  3. The first from to locate in a town will have a _______ over an potential new entrants. THis will tend to keep newcomers out of the market.
  4. When do governments grant franchises?
  5. What are some examples of a natural monopoly?
  6. Once we have a monopoly's marginal revenue curve, the profit-maximizing output level can be found by applying our new rule which tells us how any firm can find its profit-maximizing output level:
  7. In the case of a natural monopoly, because there are sizable _________ and the market is small, the first firm to enter the market will lily be the last.
  8. Look at page 283 for explanation of graph on page
  9. Recall that economies of scale cause...
  10. What are some examples of price discrimination?
  11. Perfectly competitive firms _________ a profit in the long run equilibrium.
  12. Give an example of a network externality in reverse.
  13. A monopoly suffers a loss whenever ___________. Its total loss at the best output level equals the area of a rectangle with height equal to the distance between ATC and P and width equal to the level of output.
  14. In the case of a monopoly suffering a loss the ________ curve lies everywhere above the ________ curve. As a result...
  15. Patty's pool example. Page 289 and 290.
  16. When network externalities are present, jointing a large network is more beneficial than joining a small network, even if the product in the larger network is somewhat inferior to the product in the smaller one.
  17. It appears that while consumers do get some benefit from the technological change, they don't get all the benefit.
  18. Price discrimination can raise th price for some costumers above the price they would pay under a single price policy.
  19. What are network externalities?
  20. What is it called when some firms (including monopolies) charge different prices to different consumers, based on differences in the process that they are willing to pay?
  21. Only _______________ firms, which face a horizontal demand curves, have no market power.
  22. When any firm, including a monopoly faces a downward-sloping demand curve, marginal revenue is larger than the marginal price of the output. Therefore, the marginal revenue will ______ the demand curve.
  23. The monopoly, compared to a competitive market, charges _______ and produces _________.
  24. But what if a monopoly suffers a loss in the short run?
  25. Why do monopolies exist?
  26. What is a copyright?
  27. A monopoly is an example of a firm with _________ power.
  28. What is the market for a specific intellectual property a monopoly?
  29. Under ___________ a firm charges each customer the most the customer would be willing to pay for each unit he or she buys.
  30. Comparing monopoly and perfect competition, we see that price is higher and output is lower under a ____________.
  31. Why must marginal revenue be less than price?
  32. For a single price monopoly: Once the firm determines its output levee, it has also determined its _______. Similarly once it determines its _______ it also determines its output level.
  33. A privately owned, unregulated monopoly suffering an economic loss in the long run will exit the industry, just as would any other business firm.
  34. Being a monopolist is no guarantee of _______. If costs are too high, or demand is insufficient, a monopolist may break even or suffer a loss.
  35. In dealing with intellectual property, government ideally strikes a compromise: It allows the creators of intellectual property to enjoy a monopoly and earn economic profit, but only ___________.
  36. In what two ways does government involvement reduce monopoly profit?
  37. What is a firm that does not employ price discrimination? In other words, they must charge the same price for every unit they sell, regardless of any differences in willingness to pay among their consumers.
  38. Like other firms, monopolies face _________.
  39. A monopoly earns a profit whenever P>ATC. Its total profit at the best output level equals...
  40. Prices tend to be _________ under monopoly than under perfect competition.
  41. What are groupons?
  42. Monopolies are not price takers but it does face a given demand curve for its product.
  43. What are two important types of legal protection of intellectual property rights?
  44. What is a monopoly that arises because of economies of scale?
  45. Give an example of identifying willingness to pay.
  46. The statement TR<TVC is equivalent to the statement...
  47. WHen the firm's demand curve slopes downward, marginal revenue is _____ than the price for all increases in output (except the increase from zero to one unit)
  48. Rent seeking includes the time and money spend lobbying legislators and the public for favorable policies.
  49. What are some barriers to entry?
  50. Any firm facing a downward sloping demanward sloping demand rice has market power:
  51. Describe gogovernmetn regulation in terms of reducing monopoly profit?
  52. The market supply curve tells us...
  53. Monopolies are ______ to shifts in demand.
  54. What is a price setter?
  55. What must the seller submit to in a government franchise?
  56. If a monoply operates under a government fanshise or regulation and produces a vital service uch as transportation, the government may not allow it to shut town.
  57. Unlike perfectly competitive firms, ___________ may earn economic profit in the long run.
  58. Price discrimination can lower the price for some consumers below the price they would pay under a single-price policy.
  59. What is market power?
  60. What are some constraints faced by monopolies?
  61. A monopoly does not have _______ power.
  62. What does it mean when there is an in-between monopoly?
  63. Profit per unit =
  64. What is a patent?
  65. Describe rent seeking activity as a way to reduce monopoly economic profit?
  66. Give some examples of monopolies.
  67. Notice the phrase "no close substitutes." THis phrase suggests...
  68. A monopolist will gernarally react to an increase in demand by producing _______ output, charging a _______ price, and earning a _______ profit. It will react to a decrease in demand by reducing output, lowering price, and suffering a reduction in profit.
  69. But monopoly also differs from perfect competition in another way:
  70. To price discriminate, a firm must have ______ power.
  71. For a perfect price discriminator, ____________ is equal to the price of the additional unit sold. Thus the firm's _______ curve is the same as its demand curve.
  72. Describe rebates:
  73. Some firms have their monopoly status through __________, a grant of exclusive rights over a product.
  74. What is economic rent?
  75. In the short run, a monopoly may earn an economic profit or suffer an economic loss.
  76. Profit per unit is the _____ between the firm's demand curve ant its ATC curve.
  77. Adam Smith's invisible hand, which channels the behavior of perfectly competitive firms into a socially beneficial outcome-- doenst poke, prod, or even lay a finger on a monopoly firm.
  78. Graphs on page
  79. What is a government granted rights to be the sole seller of a product or service?
  80. What is a monopoly?
  81. Examples of government franchises?
  82. A monopoly's economic profit is another example of ______.
  83. In figure 9: By pushing her output all the way to 40 rolls per day, its Larissa violating the MC=MR rule and decreasing her profit?
  84. A monolpoly market is in equilibrium when the pony firm in the market, the monopoly firm, is....
  85. The ______________ increases profit at the expense of consumers, charging each customer the most he or she would willingly pay for the product.
  86. What is price discrimination?
  87. What three conditions must be satisfied in order to price discriminate?
  88. See graph on page 291 a
  89. What are the two most important legal barriers that give rise to monopolies?
  90. When a firm has market power it is a _______-- it makes a choice about what price to charge.
  1. a Living social, Groupon that offer conditional discounts.
  2. b Government ownership or control or government regulation over its prices and profits.
  3. c Facebook surpassing Myspace. The network becomes less valuable to those who remain. Others do not work out, for example, Google+. It is superior to Facebook, but it did not convince users to switch.
  4. d Look on both pages for graphs and explanations.
  5. e In the long run, therefore we should not find such monopolies suffering economic losses.
  6. f Wow, good point. (So a person who has a good idea about a new computer or software program would be laughed at, because windows is already dominant, and because of this dominance, it is preferred)
  7. g Not immune
  8. h more, higher, larger
  9. i Government Franchise
  10. j P<ATC
  11. k Monopolies
  12. l Perfectly competitive firms (for a competitive firm, raising the price reducers quantity demanded)
  13. m that deciding whether a market or firm is a monopoly depends on how easily it is for consumers to substitute the products of other sellers. This can be a matter of judgement.
  14. n Refers to a market in which only one firm sells a product with no close substitutes or the single firm that sells in that market. THe only seller in a market, or a market with just one seller.
  15. o Airlines and how they target businessmen.
  16. p Perfect price discrimination
  17. q The ability to raise price without causing quantity demanded to go to zero.
  18. r and maybe an explanation on 292
  19. s A grant of exclusive rights to sell a literary, musical, or artistic work.
  20. t A firm should shut down if TR<TVC at the output level where marginal revenue and marginal cost are equal.
  21. u Firms keep a chuck go the benefits for itself.
  22. v Market
  23. w All else equal, a monopoly market will have a higher price and lower output than a perfectly competitive market.
  24. x 1. Identifying willingness to pay
    2. Market Power
    3. Prevention of resale
  25. y As it raises its price, quantity demanded falls, but some customers who value the firm's product will continue to buy it at the higher price.
  26. z Lie below the demand curve
  27. aa Unlimited, monopolies are remarkably predictable
  28. ab Because when firm facing a downward sloping demand curve, it must lower the price in order to sell a greater quantity.
  29. ac MRa=MRb=MRc=MRd
  30. ad Postal service, local utility companies that provide electricity, gas, and water, as well as garbage collection services.
  31. ae Marginal revenue, MR
  32. af A temporary grant of monopoly rights over a new product or scientific discovery.
  33. ag Government franchise
  34. ah When they think the market is a natural monopoly. In this case, a single large firm enjoying economies of scale would have a lower cost per unit than multiple smaller firms. The government tries to serve the public interest by ensuring that there are no empetitors that would cause cost per unit to rise.
  35. ai Firm with market power that selects its price rather than accepting the market price as given.
  36. aj The additional profit for the firm comes at the expense of the consumers who pay more.
  37. ak How much it will cost the monopoly to produce another unit of output at each of its plants.
  38. al Lumpy inputs
  39. am perfect price discriminator
  40. an 292 and 293
  41. ao Patents and copyright
  42. ap One firm or individual owns the property and is the sole seller of the righters to use it.
  43. aq Economies of scale, legal barriers, and Network externalities
  44. ar Services provided vs goods. Resale of goods is much harder to prevent.
  45. as Higher
  46. at Vertilal distance.
  47. au A rebate is a way that you can get your money back partially for a product that you bought. By addition time, trouble, and delay for the discount, the store can separate those who are very price sensitive (they will go through the trouble) from those who are not (they will forget about the rebate).
  48. av Rebates, coupons, "groupons," sales, college tuition
  49. aw Maximizing its profit
  50. ax Only for a limited period of time. Once the time is up, other sellers are permitted to enter into the market.
  51. ay Monopoly is all else is equal.
  52. az Price, price, U the maximum price it can charge and still dell that output level.
  53. ba The added benefits for all users of a good or service that arise because other people are using it too.
  54. bb :)
  55. bc P-ATC
  56. bd Not really. THe MR curve in the figure was drawn under the assumption that Larisa would have to lower her price on all dolls in order to sell more of them. But this is no longer the case. With price discrimination, the MR curve no longer tells us what will happen to Larisa's revenue when she increases her output.
  57. be Local monopolies (one gas station, one food market, one doctor, and so on)
  58. bf Cost advantage
  59. bg Constraints in cost and price it can charge
  60. bh Natural monopoly
  61. bi To maxmize profit, a monopoly firm-- should produce the quantity where MC=MR and the MC curve crosses the MR curve from below.
  62. bj Some sort of barrier is in the way of new firms entering into the market.
  63. bk The monopoly will often take action to preserve legal barriers to entry. Any costly action a firm undertakes to establish or main tai its monopoly stays is called rent seeking monopoly.
  64. bl There government will often want to keep prices high enough to keep the monopoly in business, but no higher. Keep the monopoly's economic profit at zero. If the public commission succeeds, the monopoly's accounting profit will be just enough to match what the owners could earn by investing their funds elsewhere-- that is the monopoly will earn zero economic profit.
  65. bm 284
  66. bn Price discrimination
  67. bo Those consumers benefit, while the firm earns higher profit.
  68. bp More, less
  69. bq Government regulation and rent-seeking activity.
  70. br Protection of intellectual property and government franchise
  71. bs Charging different customers for reasons other than differences in cost.
  72. bt Market power
  73. bu Price setter
  74. bv Left unchecked, it will not create the best of all possible worlds for consumers.
  75. bw THe available substitutes are not very close. Ex. Cable television. Substitutes include iTunes or Netflix but are not exactly the same product. Economists typically think of cable tv as a monopoly.
  76. bx Single price firms
  77. by Will not
  78. bz Profit
  79. ca Any earnings beyond the minimum needed in order for a good or service to be produced.
  80. cb Constraints
  81. cc Rent
  82. cd (It may, of course, break even as well.)
  83. ce the firm's long run average cost curve to slope downward-- that is, the more output it produces, the lower will be its cost per unit. If economies of scale persists through a large enough range of output, then a single firm can produce for the entire market at lower cost than could two or more firms.
  84. cf ATC, demand

    The firm will suffer a loss at any level of output. As the best output level (where MC=MR), the loss will be smallest.
  85. cg P<AVC
  86. ch Government will use tax revenue to cover the loss.
  87. ci US postal service, cable television (provided by neighborhoods), doctors (given small town), Movie theater (given small town)
  88. cj the area of a rectangle with heigh equal to the distance between P and AC and width equal to the level of output.
  89. ck Less
  90. cl The monopoly faces a tradeoff. The higher price it charges, the fewer units it will be able to sell.