1. Whereas perfectly competitive firms are price takers, monopoly firms are price ___________.

makers

creators

discriminators

2. Which of the following are NATURAL barriers to entry?

Economies of Scale

Patents

Licensing

Control of resources

Problems raising financial capital

3. A monopolist will always make a profit, as long as there is no government interference.

True

False

4. A natural monopoly means that the firm's _____ curve is always decreasing.

AVC

ATC

MC

5. In the case of a natural monopoly, forcing the firm to set price equals to marginal cost will lead to

a DWL that is larger than the usual DWL associated with a monopoly.

maximum profits for the monopoly firm.

a loss, and the monopoly will exit the market.

6. Regulating a monopoly by setting up Average-total-cost pricing enables the firm to stay in business, but forces it to earn 0 profit.

True or False