Monopoly definitions
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Intros
Lessons
- Monopoly Definitions Overview:
- Definition of Monopoly
- Single seller with no competition
- Two key features to Monopoly
- No Close Substitutes
- Barrier to Entry
- Barriers to Entry
- Natural Barrier to Entry
- Ownership Barrier to Entry
- Legal Barrier to Entry
- Methods to Setting Prices in Monopoly
- Monopoly Sets its Own Price
- Single-Price Monopoly
- Price Discrimination
Examples
Lessons
- Understanding Monopoly Definitions
State whether the firm is a monopoly by reading the following statements:- The firm is protected by barrier to entry, but the good itself has a few substitutes from other firms.
- A firm has economies of scale even when it produces the quantity that reaches market demand.
- Adidas cuts its price of shoes below Nike.
- The firm can sell any quantity at a set price from the market.
- Suppose Natural, Ownership, and Legal barrier to entry holds in a monopoly market. Which of the following is false?
- The firm can supply the entire market at the lowest possible cost.
- There is no restriction to competition and entry to the market.
- A firm owns a huge portion of the resource to produce the good
- A government license must be obtained in order to create the product.
- Which of the following is not a legal barrier to entry?
- Public franchise
- Patent
- Copyright
- Government license
- None of the above
- Suppose a company has the monopoly for a product. Determine whether the following statement represents a single-price monopoly or price discrimination.
- Customer haggles with the store employee to lower the price of the product.
- Coupons are used to lower the price of the product.
- The price of the product decreases next year due to low demand.
- Suppose a company has the monopoly for a product. Determine whether the following statement represents a single-price monopoly or price discrimination.
- Men have higher car insurance rates than women based on their likelihood of being in an accident.
- Store employees do not get a discount on their store products.
- "Regular" and "Premium" versions of the product are introduced.
- Name two substitutes for a television cable company to not be a monopoly in the market.