In the infant industry argument, new firms can't compete with ________

more advanced producers in developed countries

would a new firm be stressed by a threat of a lawsuit?

yes?! how will they afford that??

Marginal revenue is...

change in cost from producing an additional unit of output

The HHI ranges from 10,000 (pure monopoly) to 0 (perfect competition)

over 2,500 is highly concentrated

What is an example of a company achieving monopolistic power through having control of a scare resource or input

ALCOA with aluminum in the United States

What is the main premise of game theory

thinking of your actions in response to others actions and what they may do

What price would a benevolent planner charge?

Where MC intersects the demand curve

Can a monopoly charge any price they want?

no, they face the market demand curve.

using money, power, and influence to earn wealth and economic profits

Why would "excessive advertising expenditures" be an issue in consumer goods?

it is hard to get ahead of an already advertized firm

What is an example of a company achieving monopolistic power through having control of a scare resource or input

Dabeers with literally all the diamonds in the world

what phenomenon makes monopolies so hard to break up

this is called the problem of rent seeking

What is an example of a legal barrier to entry

bank charters in the united states, you need permission to open a bank.

who creates legal restrictions for barriers to entry?

federal, state, or local governments

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Monopoly!

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Questions 94

Answers

1
The Clayton Act specified which actions were illegal, being more efficient than the Sherman Act.
True
False
2
a monopoly faces the ______ market demand curve
the entire
size of their share
3
OPEC is an example of a cartel
False
True
4
In the infant industry argument, new firms can't compete with ________
more advanced producers in developed countries
less advanced producers in their country
5
(if a monopolist can price discriminate) the demand curve will be _____ the marginal revenue curve
below
equal to
above
6
monopolies are price ______
takers
makers
7
How can a monopoly earn an economic profit?
if TR<TC
if TR>TC
if TR=TC
8
would a new firm be stressed by a threat of a lawsuit?
yes?! how will they afford that??
no, they have enough donations
9
Marginal revenue is...
the revenue gained + the revenue lost
change in cost from producing an additional unit of output
10
The HHI ranges from 10,000 (pure monopoly) to 0 (perfect competition)
over 2,500 is highly concentrated
over 2,500 is lower concentration
11
The HHI ranges from 10,000 (pure monopoly) to 0 (perfect competition)
over 1,500 is not competitive
under 1,500 is competitive
12
What is an example of a company achieving monopolistic power through having control of a scare resource or input
ALCOA with aluminum in the United States
People growing peaches
People chopping down trees for lumber
13
Will a monopoly ever "grow up"?
no, they will not.
yes, they will grow out of it!
14
Size gives firms market power
False
True
15
What is an example of a deliberately erected barrier?
cost of lawsuit fear
patents
anti-trust laws
16
What is the main premise of game theory
thinking of your actions in response to others actions and what they may do
thinking of what only you will do not caring about others
thinking of what others do and not your own actions
17
What price would a benevolent planner charge?
Price above MR
Where MC intersects the demand curve
Where Price = MR
Price above MC
18
(if the monopolist does not price discriminate) to sell more, a monopolist needs to _____ the price for every buyer
lower
raise
19
A monopoly can keep making economic profit as long as the _______ __ ______ are kept
free market capitalism
consumer surplus
barriers to entry
total surplus
20
Can a monopoly charge any price they want?
no, they face the market demand curve.
yeah, they control the market?
21
legal barriers to entry can be significant where?
in developing countries
in already developed countries
22
In the infant industry argument, new firms in specifically _____ ______ have trouble
developed countries
developing countries
23
Rent seeking is
using money, power, and influence to earn wealth and economic profits
going property searching for a place to start a business
24
Why would "excessive advertising expenditures" be an issue in consumer goods?
it is hard to get ahead of an already advertized firm
it is hard to hire creative people to make ads
it is not a problem
25
AT&T's Bell Labs was ___ profitable
very
not
26
What is characteristic of a monopoly?
close substitutes
ease of entry and exit
perfect information
only one seller
27
What is "measure of consumers willingness to pay for a good minus the amount they actually pay for it"?
Consumer surplus
Producer surplus
Total surplus
28
In a pure monopoly the seller is a price ______ ?
taker
maker
29
Describe 'Wall Street Cows' and their relation to game theory,,, (true)
True
False
30
Describe 1st and 2nd mover advantages in Game Theory (True)
True
False
31
A benevolent planner wants a
socially mid outcome
socially efficient outcome
socially inefficient outcome
32
What does perpetual economies of scale also mean
barriers to entry
monopolistic competition
a natural monopoly
33
the answer to the last question means the marginal revenue curve will lie _____ the demand curve
equal to
below
above
34
What is the problem with the "infant industry" argument?
firms do not grow up
firms grow up too fast!
35
Describe an oligopoly cartel... (true)
False
True
36
What is an example of a company achieving monopolistic power through having control of a scare resource or input
Build A Bear making teddy bears
Dabeers with literally all the diamonds in the world
HEB selling groceries
Spirit Halloween selling spooky decor and costumes
37
What is an example of a local utility monopoly in Austin?
Businesses on Guad
Austin Farmers Market
Austin Power
38
by granting the new company monopoly power in the "infant industry" argument, it gives the new company access to what?
every countries market
the domestic market
39
monopolies will _____ and use ______ to convince people monopolies are ______
anti-trust laws, money, bad
rent seek, propoganda, good
40
Who gets monopoly power in the "infant industry" proposed solution?
the new company
the more advanced company
41
what phenomenon makes monopolies so hard to break up
this is called the problem of competitive markets
this is called the problem of rent seeking
this is called the problem of the friedman doctrine
42
Develop a HHI example problem (True)
False
True
43
Today corporate leaders focus on
short term without stock price
long term and stock price
short term and stock price
long term no stock price
44
_______ warned monopolies would gobble up smaller firms over 100 years ago
Friedman
Marx
Shompeter
Sherman
45
What is characteristic of a monopoly
barriers to entry
multiple sellers
perfect information
elastic demand
46
The Sherman Act "prohibits all contracts combinations and conspiracies in restraint of trade (section 1)"
False
True
47
What is an example of a legal barrier to entry
a farmer entering a farmers market
bank charters in the united states, you need permission to open a bank.
48
who creates legal restrictions for barriers to entry?
firm owners do this with no help from legislators
federal, state, or local governments
49
Why do pure monopolies almost never happen?
Theyre too good for society.
They are HORRIBLE for society.
50
if linear the demand curve will have __x the slope of the marginal revenue curve
5
4
6
2
51
Are pure monopolies common?
no, they are very rare.
yes!
52
Would a monopolist use money from economic profits to keep barriers of entry?
no, why would they do that???
yes, they will do that.
53
Are monopolies innovative? History says ....
sometimes
never
all the time!
54
Do monopolies often result in inefficiencies and stifles in innovation?
True
False
55
Small firms can also be competitive and beat monopolies IF given a chance BUT
ease of entry isnt ever a problem wym?
ease of entry will be a problem
56
Telephone service was once provided by a ...
monopoly
competitive market
57
What kind of business would a "cost of lawsuit" fear stress the most?
new startups
firms that have been open for more than five years
existing firms
58
Monopoly power is undesirable because high prices reduce buyers well being
False
True
59
Why does the NFL have no competitors?
they arent in a good enough market
MASSIVE start up costs
60
In the infant industry argument, the new firm is allowed to have monopoly power until their firm ____ __
gets incredibly rich
grows up
61
Is the "infant industry" argument foolproof?
idk what that is
yes, there are no problems with it.
no!!!
62
In a pure monopoly the seller has the market _______
to themselves
share with other sellers
63
What policies in the United States seek to prevent monopoly power from developing/breaking them up if they occur
barriers to entry connoisseur
pro monopoly policies
anti-trust
64
In order to use HHI you have to define the relevant market to determine the market share
False
True
65
Where are deliberately erected barriers high?
clothing industry
food industry
tech industry
66
What is characteristic of a monopoly?
no close substitutes
multiple sellers
firms are price takers
ease of entry
67
In perpetual economies of scale (or a natural monopoly), the more you produce, the...
higher your CPU
lower your CPU
68
Do many societies have laws to prevent monopolies from happening?
Yes, these laws are called anti-trust laws.
No, why would a society not want monopolies?
69
What can these legal barriers to entry be in the United States?
patents
anti-trust laws
70
Graphically, a monopoly will produce _____ and charge _____ than a perfectly competitive firm with the same cost curves
less;less
more;less
more; more
less;more
71
The Sherman Act worked perfectly!
True
False
72
The Sherman Act, prohibits monopolization in interstate and foreign trade"
False
True
73
What act came first, Sherman Anti-Trust Act or Clayton Anti-Trust Act?
Sherman (1890)
Clayton (1914)
74
What is true about the long-run equilibrium for firms in a monopolistically competitive industry?
P = ATC, P > MC
P > ATC, P = MC
P = MR = MC = min(ATC)
MR < MC, P < min(ATC)
75
Do sellers want to be a monopoly?
no, who would want to be a monopoly?
yes, they will fight to achieve this.
76
Why would companies fight to control economies and countries?
so they can have monopoly power
so they can establish perfect competition of course
77
In the long run, both a competitive market and a monopolistic competition market will have 0 economic profit.
no
yes
78
How could a bigger business give "threats of a lawsuit" to a startup
"If a new firm tries to compete with us, they must have stolen our tech!"
"this new business is not as good as us"
79
The Clayton act
prohibited price discrimination and more anti-competitive behaviors
did not prohibit anything
80
Is having control of a scarce resource or input an example of monopolistic barriers to entry?
Yes! How will those in need of it get it then?
No?
81
What is a benevolent planners problem?
maximizing only consumer surplus
maximizing total surplus
maximizing only producer surplus
82
What is "measure of economic well being of buyers and sellers in a market, sum of consumer surplus and producer surplus"
total surplus
producer surplus
consumer surplus
83
Make example Graph Problems ! (True)
False
True
84
Describe the prisoners dilemma... (true)
False
True
85
Bell Labs survived because it was _____ by AT&T
not funded
funded
86
Monopolists will use part of their profits to lobby for elected officials that will let them keep their monopoly power
False
True
87
Monopolies are a net ____ for society
negative
positive
88
What is another example?
local utilities
differentiation requirements
89
What is another example of local utilities monopoly in Austin?
Student orgs selling food on speedway
Food Truck Vendors on 26th
Cap Metro
90
In perpetual economies of scale (or a natural monopoly), the largest producer will have the _____ costs?
highest
lowest
91
what does the term "unique technological superiority" mean?
developing a so-so product that is good enough for the market
developing a product so good everyone wants to buy it
developing a product that is good enough to get people to buy it
92
Where would a benevolent planner want producers to produce
the quantity where marginal revenue intersects the demand curve
the quantity where marginal revenue is above the demand curve
the quantity where marginal revenue is below the demand curve
93
In the infant industry argument, once you take away monopoly power, you will have a ____ market?
oligopoly
competitive
monopoly
94
What is "measure of the amount a producer receives for a good minus their cost for producing it"?
Total surplus
Producer Surplus
Consumer surplus

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