12/4/21, 9:17 PM Chapter 15 Flashcards | Quizlet Chapter 15 Study sets, textbooks, questions 2 Study Chapter 15 Terms in this set (34) Monopoly a firm that is the only seller of a good or service that does not have a close substitute. If you own the only hardware Yes. You would have a monopoly if your profits are store in a smalltown, do you not competed away in the long run. have amonopoly? un cártel is un grupo of firms that collude by agreeing to restrict output to increase prices and profits In discussing theNCAA, the restricts the number of games that the member late Nobel laureate economist schools' teams can play Gary Beckerwrote, "It is impossible for an outsider to look at these[NCAA] rules without concluding that their main aim is to make the NCAA an effective cartel that severely constrains competencia among schools forplayers." . The NCAA acts like a cartel because it https://quizlet.com/405821273/chapter-15-flash-cards/ 1/6 12/4/21, 9:17 PM Chapter 15 Flashcards | Quizlet In discussing Chapter 15theNCAA, the athletic departamentos benefit because Study they have late Nobel laureate economist lowercosts, but athletes lose because they cannot Gary Beckerwrote, "It is be compensated for playing impossible for an outsider to look at these[NCAA] rules without concluding that their main aim is to make the NCAA an effective cártel that severely constrains competencia among schools forplayers." . As a result of the NCAA acting like acartel, In discussing theNCAA, the worse off because you would have fewer games to late Nobel laureate economist watch and have to pay more to watch them Gary Beckerwrote, "It is impossible for an outsider to look at these[NCAA] rules without concluding that their main aim is to make the NCAA an effective cartel that severely constrains competition among schools forplayers." If you are un estudiante who does not play intercollegiate sports but who is enrolled at a school, such as the University of Alabama or Ohio State University, with prominent sportsteams, the NCAA acting as a cartel makes you Economists could find that a it earns profits in the long run. firm is a monopoly if https://quizlet.com/405821273/chapter-15-flash-cards/ 2/6 12/4/21, 9:17 PM Chapter 15 Flashcards | Quizlet Substitutes 15 exist for just about Chapter be a monopoly if it can ignore the actions of other Study everyproduct, so can a firm firms. ever really be amonopoly? A firm can What are the four most the government blocksentry, control of a key important ways a firm becomes resource, networkexternalities, and economies of amonopoly? scale. The four main reasons a firm becomes a monopolyare: If patents reducecompetition, to encourage firms to spend money on research to why does the federal create new products. government grantthem? The federal government grants patents What is a publicfranchise? a firm designated by the government as the only A public franchise is legal provider of a good or service. All public franchises Are all public franchises natural monopolies? are not naturalmonopolies, and all natural monopolies are not public franchises. What is"natural" about a develops automatically due to economies of scale. naturalmonopoly? A natural monopoly https://quizlet.com/405821273/chapter-15-flash-cards/ 3/6 12/4/21, 9:17 PM Chapter 15 Flashcards | Quizlet Patents are15 granted for 20 Chapter Study A. Firms could earn higher profits for a longer years, but pharmaceutical period oftime, but consumers would lose because companiescan't use their prices of drugs would stay higher longer. patent-guaranteed monopoly B.Firms would be more likely to develop more new powers for anywhere near this products and consumers would gain from having a long because it takes several wider range of medicines. years to acquire FDA approval of drugs. Suppose it is proposed that the life of drug patents be extended to 20 years after FDA approval. What would be the costs and benefits of thisextension? If firms incurred no cost in there would be still be need for patents so that developing new technologies firms have can have some government protection and newproducts, all of the to charge high prices following will betrue, except: Why was De Beers worried that market competition wouldincrease, decreasing people might resell their old market prices diamonds? If people resell their olddiamonds, then How did De Beers attempt to De Beers developed the slogan"a diamond is convince consumers that used forever" to increase sentimental value. diamonds were not good substitutes for newdiamonds? How did DeBeers' strategy The demand for new diamonds has affect the demand curve for remained unchanged. newdiamonds? De Beers How were DeBeers' profits has remained affected? profitable. https://quizlet.com/405821273/chapter-15-flash-cards/ 4/6 12/4/21, 9:17 PM Oil refining 15 would be a natural Chapter Chapter 15 Flashcards | Quizlet Study having multiple firms would be highly inefficient. monopoly in a country if An industry is a natural one firm can satisfy the entire market at the lowest monopoly when cost. create barriers to entry because if a firm can attract enough customersinitially, it can attract additional Network externalities customers as itsproduct's value increases by more people usingit, which attracts even more customers. What is the relationship Amonopolist's demand curve is the same as the between amonopolist's market demand curve. demand curve and the market demandcurve? What is the relationship Amonopolist's marginal revenue curve has twice between amonopolist's the slope of its demandcurve, because to sell more demand curve and its marginal output, a monopoly must lower price. revenuecurve? A monopolist is a price maker when a monpolist raises itsprices, it loses some but because not all customers. A monopoly that maximizes is not also maximizing revenue because revenue is profit (revenue) highest when marginal revenue equals zero. A monopoly that maximizes is not also maximizing production because price profit (production) must be reduced to sell additional output. https://quizlet.com/405821273/chapter-15-flash-cards/ 5/6 12/4/21, 9:17 PM Chapter 15 Flashcards | Quizlet Suppose that Chapter 15 a perfectly As aresult, consumer surplus will decrease, Study competitive industryperfectly producer surplus will increase, and deadweight loss competitive industry becomes will increase a monopoly. Antitrust laws are intended to Who is in charge of enforcing them A horizontal merger is a merger Which type of merger is more make illegal any attempts to form a monopoly or to collude A.The Federal Trade Commission. B.The Antitrust Division of the U.S. Department of Justice. between firms in the sameindustry, while a vertical merger is a merger between firms at different stages of the production of a good Horizontal likely to increase the market power of a newly mergedfirm Why would it be economically Economic efficiency requires the last unit of a good efficient to require a natural produced to provide an additional benefit to monopoly to charge a price consumers equal to the additional cost of equal to marginalcost producing it. Why do most regulatory Regulating price instead to equal marginal cost agencies require natural would result in the firm suffering a loss. monopolies to charge a price equal to average costinstead he three main parts of the marketdefinition, measure ofconcentration, and merger guidelines involve merger standards https://quizlet.com/405821273/chapter-15-flash-cards/ 6/6
