State True or False and justify your answer: A monopoly with a more elastic demand curve will...
Question:
State True or False and justify your answer:
A monopoly with a more elastic demand curve will have more market power.
Monopoly:
A monopoly refers to a market structure that consists of a single seller or producer of a particular commodity, which is hard to get a substitute. Pure monopoly markets are hard and rare to get. In the monopoly market, the monopoly seller or producer is the price maker. Other firms find it hard to get into a monopoly because of the high entry barriers.
Answer and Explanation: 1
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View this answerMarket power relates to the ability of a firm to manipulate the market price by impacting its demand, supply, or both. The demand curve is a graphical...
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What is a Monopoly in Economics? - Definition & Impact on Consumers
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Chapter 7 / Lesson 2
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Understand the meaning of a monopoly in economics and what it does. Also, know the characteristics of a monopoly and the different types of monopolies.
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- State true or false and justify your answer: A monopoly should produce and sell on the elastic portion of demand.
- A decrease in the price elasticity of demand would follow an increase in monopoly power. True or false?
- True or false? A decrease in the price elasticity of demand would follow an increase in monopoly power.
- Is the following statement true or false? Explain your answer. a) A duopoly market always yields the same price and quantity as a monopoly market. b) If demand is elastic, a monopoly's total revenue
- True/False: Under monopoly, relative markups are higher when demand elasticity is lower.
- True or false? A monopoly is a market structure in which the firms face a perfectly elastic demand curve.
- True or false? A monopolistic firm's demand curve is less elastic than a purely competitive firm's demand curve.
- State True or False and justify your answer: In the case of a natural monopoly (i.e. a firm whose average cost decreases as output increases due to large fixed and low marginal costs), the government should generally regulate the monopolist to charge a pr
- A monopoly's marginal cost curve is the monopoly's supply curve. True or false? Explain your answer.
- Answer true or false: The monopolistic competitive firm faces a perfectly elastic demand curve.
- State true or false and justify your answer: Inelastic demand is usually associated with demand for luxuries.
- State true or false and justify your answer: A large negative cross-price elasticity of demand means two goods are easily substitutable, and market power is likely to be weak.
- True or false? A monopolistic firm's demand curve is always inelastic.
- Consider the following statement: "A monopolist always sets price equal to the unitary elastic point on its demand curve." Is the statement true or false?
- State true or false and justify your answer: If the demand for a certain good is highly elastic, and the supply of the good is relatively inelastic, then the burden of a tax on this good will fall almost entirely on the buyers in the market.
- A monopolist always sets price equal to the unitary elastic point on its demand curve.? a. True b. False, Use a graph.
- State True or False and justify your answer: If a rational monopolist is confronted with a dramatic increase in its fixed costs, then this monopolist, ceteris paribus, would have a strong incentive to pass at least some of this fixed cost along to consume
- Determine whether the following statement is true or false: In a perfectly competitive market, firms take the market price as a given, which implies that the market demand is infinitely elastic.
- Determine whether the following statement is true or false: A monopolist will always want to produce in the more elastic segment of its demand curve.
- A monopolist will always want to produce in the more elastic segment of its demand curve. a. True. b. False.
- True or false? A monopoly firm will maximize profit by producing where demand is inelastic.
- State true or false. Since a monopolist is a price taker, it cannot have a supply curve.
- State True or False and justify your answer: A given increase in the money supply is more effective at shifting the aggregate demand curve the more interest rate responsive (elastic) is the money demand curve.
- True or false? Monopoly power in a market is likely to increase consumer surplus.
- A monopolist never produces on the elastic portion of his demand curve. a. True b. False
- The ratio of price to marginal cost for a monopolist increases as the demand curve becomes more elastic. True or False? Explain
- The demand curve in a perfectly competitive market is perfectly elastic. TRUE or FALSE.
- State true or false and justify your answer: A firm would increase profits from dumping if it charges a lower price at home, where demand is inelastic, and a higher price abroad where demand is elastic.
- True or False: The demand curve facing a monopolistically competitive firm is elastic. The goal of the firm's owner is to make it nearly inelastic. Explain.
- The demand curve facing a monopolistically competitive firm is elastic. The goal of the firm's owner is to make it nearly inelastic. Is this True or False. Explain
- With a completely elastic supply curve, we cannot be sure whether consumer surplus generate in market rises or falls when demand in that market increases. True False
- With a completely elastic supply curve, we cannot be sure whether consumer surplus generate in market rises or falls when demand in that market increases. True or false?
- True or false? Monopolies charge a mark-up over marginal cost because they face a perfectly elastic supply curve.
- True or false? A price-discriminating pure monopoly will follow a system where buyers with relatively more inelastic demands are charged higher prices than buyers with relatively more elastic demands.
- State True or False and justify your answer: A monopoly currently is selling at a price of $10, where ATC = $7, MC = $6, and MR=$3. To maximize profit or minimize loss, this firm should lower the prices and increase the output.
- True or false? A pure monopolistic demand curve is the industry demand curve.
- In a perfectly competitive market, firms take the market price as a given, which implies that the market demand is infinitely elastic. True or False?
- State true or false and justify your answer: An increase in demand will not cause the price to rise if the industry is a constant cost industry.
- State true or false and justify your answer: If the demand for a good shifts out (increases), then the labor demand of a monopolist in that industry will increase.
- A monopoly will always produce less than a purely competitive industry, ceteris paribus. a. true b. false
- State true or false and justify your answer: One of the most important factors in determining whether or not the demand for a product is elastic or inelastic is whether or not substitutes for it exist.
- State true or false and justify your answer: If the price elasticity of demand for a good is 3, then total revenue will increase.
- State true or false and justify your answer: When demand is unit elastic, an increase in price will lead to increased total revenue for the product.
- A monopolist will always pick a price in the elastic region of the demand curve. a. True b. False
- State true or false and justify your answer: An increase in demand with no change in supply will increase equilibrium price and reduce equilibrium quantity.
- State true or false and justify your answer: When demand is inelastic, an increase in price will lead to an increase in total revenue for the product.
- Similar to monopoly, Monopolistically Competitive firms face down-sloping demand curve. a. True b. False
- State true or false and justify your answer: If market demand increases and market supply decreases, then the change in equilibrium price is unpredictable without first knowing the exact magnitudes of the demand and supply changes.
- In monopoly, firms equate price and marginal cost. Is this statement true or false? Explain.
- Following a rightward shift a demand curve, demand will be less elastic at any given price. True False Explain.
- True or false? If the price elasticity of demand is equal to 0, then demand is unit elastic.
- The ratio of a monopolist's optimal price to its marginal cost is larger when the market elasticity of demand is greater in absolute value (i.e., more elastic). a. True. b. False.
- State true or false and justify your answer: The elasticity of demand deals with the relationship between price and quantity demanded.
- True or false? A price-discriminating pure monopoly will follow a system where all buyers are charged the same price regardless of their elasticity of demand.
- A monopolist will never produce where the demand function is inelastic. Explain your answer. (i) True (ii) False
- State true or false and justify your answer: If the price is greater than the marginal cost, a firm should produce less.
- State True or False and justify your answer: In the long-run, both allocative inefficiency and X-inefficiency might be found in monopoly but not under conditions of pure competition.
- Answer true or false and explain: If the price elasticity of demand is higher in one market than in the other, the optimal pricing strategy is to charge a higher price in the market with a higher elasticity of demand than in the market with the lower elas
- State true or false and justify your answer: If demand is inelastic and price decreases, total revenue will also decrease.
- State true or false and justify your answer: The monopolist can choose the price or the quantity, but not both simultaneously.
- State True or False and justify your answer: A monopoly is most likely to emerge and be sustained when firms have U-shaped long-run average total cost curves.
- Answer true or false: A monopolist's marginal revenue is 0 whenever the price elasticity of demand is -1.
- Evaluate the following statements and discuss whether they are true, false or uncertain. Justify your answer. A monopolist who encounters a linear demand curve should always produce at the point where the demand is unit elastic in order to maximize profit
- True or False: A monopolist sells to two markets: Market 1: there is a constant elasticity of demand e1<-1 Market 2: there is a constant elasticity of demand e2>-1. The monopolist charges a higher pr
- State true or false and justify your answer: If the quantity demanded for good A increases from 40 to 60 when the price decreases from $9 to $7, the absolute value of the price elasticity of demand in this price range is 1.6.
- True or false? A monopolist is constrained by demand in setting its price.
- Price-discriminating, profit-maximizing monopolists charge higher prices to buyers who have more elastic demand curves. a. True b. False
- True or false? A monopolist produces on the inelastic portion of its demand curve.
- a) The Market Demand Curve is the same an Individual Demand Curve? True or False. Discuss b) Does the market demand curve always slope downward to the right? If your answer is yes, discuss. If your an
- State true or false and justify your answer: In an oligopoly, the firm that has the largest market share will also be the price leader.
- True or false? Ceteris paribus, the more elastic the supply curve, the larger the total subsidy.
- True or false? If a monopoly is maximizing profits, the price will always be greater than the marginal cost.
- State true or false and justify your answer: If demand is inelastic, then an increase in the price of a good will lead to a decrease in total revenue for producers of the good.
- If the market demand curve for a good is a downward-sloping line, its price elasticity is constant. a. True. b. False.
- In the monopolistic competition model, the firm's demand curve is a horizontal line. True or false?
- True or false? In a perfectly competitive market, each firm faces a perfectly elastic demand curve.
- The demand curve is inelastic for inferior goods and elastic for normal goods. a. True. b. False.
- The price elasticity of demand for the industry is always smaller (in absolute terms) than the price elasticity of demand of firms within that industry. True or False. Explain.
- An increase in demand would enable a monopolist to raise its price while reducing its output. A) True B) False
- True or false? Along a single demand curve, demand elasticity decreases as you move down the curve (to lower prices).
- If demand is infinitely elastic, a unit tax of $2 will cause the market price to rise by $2. Explain your answer (i) true (ii) false
- True or false? A tax on a market with elastic demand and elastic supply will shrink the market more than a tax on a market with inelastic demand and inelastic supply will shrink the market.
- State whether the following is true or false and explain why. The kinked demand model of oligopoly allows for the possibility that cost functions, including marginal cost, can shift without changing the quantity and price of profit maximizing output.
- State true or false and justify your answer: The price elasticity of demand measures consumer responsiveness to a change in the price of the product.
- True or false? In general, long-run price elasticity of demand is more elastic than short-run price elasticity of demand.
- Determine whether the following statement is true or false: The ratio of a monopolist's optimal price to its marginal cost is larger when the market elasticity of demand is greater in absolute value (i.e., more elastic).
- True or false? The demand for labor will be more elastic if the demand for the product is relatively inelastic.
- Determine if the following statement is true or false: A monopolist sells to two markets: In Market 1, there is a constant elasticity of demand e1 is less than -1. In Market 2, there is a constant el
- State true or false and justify your answer: Not only do changes in demand induce relatively wide fluctuations in price when supply is inelastic, but changes in supply induce relatively wide fluctuations in price when demand is inelastic.
- Excess demand in a market economy would force prices down. True False
- State True or False and justify your answer: A monopolist can earn positive profits in the long run because it has market power, allowing it to charge a price that is higher than the marginal cost.
- The value of the price elasticity of demand is equal to the slope of the demand curve. True or false?
- True or false? In a market in which there is a perfectly price discriminating monopolist, there is no consumer surplus.
- The flatter the demand curve passing through a given point, the less elastic the demand curve at that point. a. True b. False
- An increase in demand in a perfectly competitive market will cause all firms to earn positive economic profits in the long-run equilibrium. (a) True (b) False.
- Is the following scenario true or false? Explain the reason for your answer. As a price-taker, assuming there are no externalities, the market equilibrium is also the efficient outcome.
- When the demand curve shifts, the change in equilibrium price will be smaller the closer the price elasticity of supply is to 0. True False
- A monopolist's marginal revenue curve is flatter than its demand curve. a. True b. False
- State true or false and justify your answer: The more interest elastic the investment demand function, the more effective monetary policy will be.
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