Perfect Monopoly

Question 1

What is a perfect monopoly market or industry?

Answer 1

• Single Seller
• Good or service for which there is no close substitutes
• market entry is restricted

Single firm = The firm

Question 2

What are the reasons monopolies exist?

Answer 2

Economies of scale: Can produce at a lower cost
*Public utilities

Legal authority or control- Single producer has sole legal authority or sole control of resources
*Patent

Question 3

in a monopoly, the demand curve is?

Answer 3

Downward sloping

Question 4

In a monopoly, the marginal revenue curve is?

Answer 4

Downward sloping- They are not the same slope. Marginal revenue at a steeper slope than demand.

Question 5

Where will a perfect monopoly produce?

Answer 5

When MR = MC: IF they produced at a lower cost

Question 6

How do perfect monopolies determine price?

Answer 6

Where Quantity intersects the demand curve based off the same line of MR=MC.