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12 Cards in this Set

  • Front
  • Back
5 main characteristics of a Pure Monopoly
1) Blocked entry (No Immediate Competitors)
2) Nonprice Competition (Advertising Competition Instead)
3) Price Maker
4) Single Seller
5) No close substitutes
What is a patent?
Exclusive right of an inventor to use, or allow another to use, her or his invention
What leads to most patents?
R&D (Research and Development)
A natural monopoly is caused by?
ATC is minimized ONLY when 1 firm produces a particular product.
A monopolist will definitely discontinue production in the short run if:
MR is less than AVC
X-Inefficiency
Occurs when a firm's actual cost of producing any output is greater than the lowest POSSIBLE cost of producing it
What is the meaning of the phrase "Dilemma of Regulation"?
·Socially Optimal Price achieves Allocative Efficienct but may suffer economic losses
·Fair Return Price gives a normal profit but fails to achieve allocative efficiency
Socially Optimal Price?
P = MC
Fair Return Price?
P = ATC
What is the meaning of the phrase "Dilemma of Regulation"?
·Socially Optimal Price achieves Allocative Efficienct but may suffer economic losses
·Fair Return Price gives a normal profit but fails to achieve allocative efficiency
Socially Optimal Price?
P = MC
Fair Return Price?
P = ATC