Ch.7+notes&hw

7.1 Turned in paper

7.2 Notes Monopoly is a market dominated by a single seller. Quantity of goods sold is lower than in a market with more than one seller. Natural Monopoly is a market that runs most efficiently when one large firm supplies all of the output. Government monopoly is a monopoly created by the government. Patent is a license that gives the inventor of a new product the exclusive right to sell it for a certain period of time. Franchise is the right to sell a good or service within an exclusive market. License is a government issued right to operate a business. Price discrimination is a division of customs into groups based on how much they will pay for a good. Market power is the ability of a company to change prices and output like a monopolist. Economies of scale factors that cause a producers average cost per unit to fall as output rises. As output increases from zero the average cost of each good drops, and the curve initially slopes downward. The average cost of producing each good increase as output increases, and the curve slopes upward to match the rising cost per unit. The monopolist faces either output or price, but not both. Limits of price discrimination can be some market power, distinct customer groups, and difficult resale.

Questions #1-4


 * 1) A firm with market power can allow a company to change prices and output like a monopolist.
 * 2) The government usually approves of natural monopolies because; it is a market that runs most efficiently when one large firm supplies all of the output.
 * 3) Three different types of price discrimination include senior citizens, children, and students.
 * 4) The term economies scale in my opinion would be, when a company produces so much they have to lower their price in order to get rid of their excess units.

7.3 Notes

Questions #1-4, 6