Microeconomics 2011 Chapter 13 微观经济 教学课件.ppt

True and False Monopoly can arise when there are close substitutes for a product. If one firm can supply the market at a lower cost than multiple firms can, then there are natural barriers to entry. The supply curve of a monopoly firm is its marginal cost curve. Once a single-price monopoly chooses its output, average revenue always equals price. True and False Monopoly can arise when there are close substitutes for a product. (F) If one firm can supply the market at a lower cost than multiple firms can, then there are natural barriers to entry. (T) The supply curve of a monopoly firm is its marginal cost curve. (F, has no supply curve) Once a single-price monopoly chooses its output, average revenue always equals price. (T) True and False A monopoly will always make economic profit. When rent seeking is taken into account, economic profits from monopoly are guaranteed in the long run. Price discrimination only works for goods that can be readily resold. If a regulator applies an average total cost pricing rule, a natural monopoly will earn normal profits only. True and False A monopoly will always make economic profit. (F) When rent seeking is taken into account, economic profits from monopoly are guaranteed in the long run. (F) Price discrimination only works for goods that can be readily resold. (F) If a regulator applies an average total cost pricing rule, a natural monopoly will earn normal profits only. (T) * * * * * * * * D * C * C * * * * * * * * * * Monopoly is inefficient. The inefficiency of monopoly is one of the key propositions in this chapter. Because P MR, and because MR = MC, P MC—single-price monopoly under-produces and creates deadweight loss. Rent seeking uses further resources so potentially the social cost of monopoly is the sum of the deadweight loss and the economic profit that a monopoly might earn. Adam Smith described the situation thus: “People in the same trade seldom meet together, even for merriment and diversion, but the conversat