Because There Are Very Significant Economies of Scale Involved in Making

question 57

Multiple Choice

Because there are very significant economies of scale involved in making flat screen television sets in a competitive market, the price of flat screen TVs will:

• A) fall as output expands because long-run average total costs are lower for higher quantities.
• B) rise because the long run average total cost curve is upward-sloping over the entire range of output.
• C) rise because of the combination of stronger demand and higher production costs.
• D) stay exactly the same regardless of any shifts in the demand curve.

Describe the characteristics that make a monopolist a price maker.

Identify major barriers to entry in monopolistic markets.

Understand the implications of natural monopoly and the concept of fair-return and socially optimal prices.

Discuss the dynamics of price discrimination, including its conditions, strategies, and effects on businesses and consumers.

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Definitions:

Consignment

An arrangement where goods are left in the possession of another party to sell, but the consignor retains ownership until the goods are sold.

On Approval

A conditional agreement for the sale of goods where the buyer is not obligated to complete the purchase unless they approve of the goods.

Risk of Loss

The responsibility for damage or loss of goods during a transaction or while in transit.

Inspected

Examination or review of a condition or situation, often for compliance or quality control.