As other firms enter a monopoly's market, the monopoly's market power
A) is unaffected.
B) declines.
C) increases.
D) increases according to the Lerner Index but decreases according to the price/marginal cost ratio.
B
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Sheila's Sports Shop is a very popular sporting goods store, which has a yearly revenue of $600,000. Sheila runs the business herself
Her alternative employment options are to be a college swimming coach for $50,000 per year or a construction worker for $40,000 per year. Sheila spends $230,000 purchasing goods for resale to her customers. She also has four employees, who each earn $25,000 per year. Sheila owns the building that her Sports Shop is housed in and she could have rented it out for $20,000 per year. Sheila's costs for the resources that she supplies to the business equal A) $70,000 per year. B) $90,000 per year. C) $0 per year. D) $330,000 per year.
An industry in which economies of scale allow one firm to supply the entire market at the lowest possible cost is called a
A) legal monopoly. B) natural monopoly. C) single-price monopoly. D) one-firm monopoly.