Monopoly / Natural Monopoly Quiz Prep

These flashcards cover key concepts from the lecture on monopolies and natural monopolies, including definitions and key characteristics.

Monopoly

A market structure characterized by a single seller or producer in control of the market.

Natural Monopoly

A type of monopoly that exists due to high startup costs and operational efficiencies that allow a single firm to serve the market at a lower cost than multiple firms.

Economic Profit

Profit over and above the normal expected return on investment, which may not be guaranteed in monopoly situations due to barriers to entry.

Price Discrimination

The practice of charging different prices to different customers for the same product based on their demand elasticity.

Deadweight Loss

The loss of economic efficiency when the equilibrium for a good or service is not achieved or is not achievable.

Price Ceiling

A government-imposed limit on how high a price can be charged for a product.

Marginal Revenue (MR)

The additional revenue that will be generated by increasing product sales by one unit.

Allocatively Efficient Quantity

The quantity of output where marginal cost equals marginal benefit (MC=MB), maximizing total welfare.

Rent-Seeking Behavior

The action of individuals or businesses to increase their own wealth without creating new wealth, often by manipulating the social or political environment.

Perfect Price Discrimination

Charging each consumer the maximum they are willing to pay, resulting in price equal to marginal revenue and eliminating consumer surplus.