Week 8: Monopoly (True/False)

Since a monopoly firm controls the market, it can charge any price it wants and consumers will have to pay that price.

The demand for a monopolist's product is typically not perfectly inelastic. The monopolist is constrained by the consumer's willingness and ability to purchase the product.

Monopolists maximize profits at the output level where price equals marginal cost.

Monopolists maximize profits at the output level where marginal cost equals marginal revenue.

For a monopolist, the demand curve facing the firm is the same as the market demand curve and is downward sloping.

The marginal revenue curve for a monopolist is less than the price because the monopolist faces a downward sloping demand curve for its product.

Since a monopolist is a price setter, it will earn unlimited profits.

Even though a monopolist is a price setter, there is no guarantee that it will even earn a profit. Its profits are limited by cost and demand conditions.

Patents, legal harassment, and product bundling are all examples of barriers to entry in monopoly markets.

In a contestable market, monopoly behavior may be limited because of potential competition.

At the profit maximizing rate of output, for both perfectly competitive and monopoly firms, price exceeds marginal cost.

For perfectly competitive firms price equals marginal cost, but for a monopolist price exceeds marginal cost.

A market that includes many firms with distinct brand images is referred to as "an oligopoly."

A market that includes many firms with distinct brand images is referred to as "monopolistic competition." A market that has only a few firms is referred to as an oligopoly.

Monopolists have little motivation to develop and use new technologies and innovative ideas since they are able to keep competitors out of the market and enjoy monopoly profits without any changes.