3.3.2 Monopoly

• In a monopoly, only one firm provides the product or service.


  True
• Monopoly products have no close substitutes available to consumers.


  True
• Firms with superior technology or intellectual property hold a technological monopoly.
• Natural monopolies arise due to high fixed costs and economies of scale.
• High fixed costs and economies of scale are the source of power for natural monopolies.
• High barriers to entry prevent new competitors from entering a monopoly market.


  True
• A monopoly firm has a high degree of control over setting prices due to a lack of competition.


  True
• The monopoly product or service has no comparable alternatives for consumers.


  True
• The monopoly firm has a high degree of control over setting prices
• What is the role of barriers to entry in a monopoly market?

  Prevent competition
• Monopolies can exert significant control over market decisions


  True
• In a monopoly market, the firm's demand curve is the same as the market demand curve

  True
• A competitive firm's demand curve is horizontal because it is a price taker
• What condition must a monopoly firm satisfy to maximize profits?

  MR = MC
• A monopoly firm produces output where marginal revenue equals marginal cost


  True
• How does a monopoly firm determine its pricing strategy?

  Maximizes profits
• The demand curve for a monopoly firm is horizontal.

  False
• A competitive firm is a price taker
• A monopoly firm controls the entire supply of a product or service.


  True
• Match the characteristic of a monopoly with its description:

  Single Seller ↔️ Only one firm offers the product

  Price Maker ↔️ Can set prices due to lack of competition

  High Barriers to Entry ↔️ Obstacles prevent new firms

  No Close Substitutes ↔️ Limited alternatives for consumers
• High barriers to entry prevent new firms from competing with a monopoly.


  True
• What are the main sources of monopoly power?

  Legal, natural, technological
• Natural monopolies arise from extremely high fixed costs and economies of scale.


  True
• Match the type of monopoly with its source of power:

  Legal Monopoly ↔️ Exclusive rights granted by the government

  Natural Monopoly ↔️ High fixed costs and economies of scale

  Technological Monopoly ↔️ Superior technology or know-how
• A monopoly firm must lower its price to sell more due to the downward-sloping demand curve.


  True
• A monopoly firm maximizes profits where marginal revenue equals marginal cost.
• What are the three types of profits a monopoly can earn?

  Normal, supernormal, losses
• A monopoly incurs losses if total revenue is less than total costs.

  True
• A monopoly is a market structure where a single firm controls the entire supply
• High barriers to entry prevent new competitors from entering the market.
• Match the source of monopoly power with its description:

  Legal Monopoly ↔️ Exclusive rights by the government

  Natural Monopoly ↔️ High fixed costs and economies of scale

  Technological Advantage ↔️ Superior technology or intellectual property

  Mergers and Acquisitions ↔️ Elimination of competition
• Legal monopolies are granted exclusive rights by the government.


  True
• Government-granted exclusive rights are a source of power for legal monopolies.


  True
• Order the characteristics of a monopoly:

  1️⃣ Single Seller

  2️⃣ Price Control

  3️⃣ Barriers to Entry

  4️⃣ No Close Substitutes
• In a monopoly, only one firm controls the entire supply of a product or service.
• High barriers, such as patents, large capital requirements, or licenses, prevent new firms from competing.
• What is the defining characteristic of a single seller in a monopoly market?

  Controls entire supply
• Barriers to entry prevent new firms from competing with the monopoly

  True
• A monopoly product or service has no close substitutes
• Natural monopolies often result from economies of scale