CH 6 CONCEPT QUIZ

For a perfectly competitive firm, marginal revenue is

equal to price

Compared to perfect competition, monopoly results in

fewer units produced and sold

The table provided below shows how to calculate a monopoly's total revenue and marginal revenue. As price falls, total revenue initially __________ and then __________.

increases; decreases

A monopolist is __________ likely to advertise than a monopolistically competitive firm.

less

Which of the following is NOT considered a natural barrier

licensing

A good example of a monopolistically competitive market is

local restaurants.

A natural monopoly exists when a single seller experiences __________ average total costs than any potential competitor.

lower

Under monopolistic competition, a market has

many firms

Monopolies choose their profit-maximizing

output level and price.

Monopoly power measures the ability to set the __________ for a good.

price

Under monopolistic competition, firms produce

products that are somewhat differentiated.

in a perfectly competitive market, the price of product is

set by market supply and demand.

The price of a competitive firm's product is $50 per unit. The firm currently has marginal cost equal to $40. To maximize profits, this firm

should increase its output.

Assume that a monopolist faces the demand schedule given in the following table and a constant marginal cost of $2 for each unit of output. To maximize profits, this monopolist would produce __________ units of output and charge a price of __________ per unit.

two units; $5

On the following figure, where does a monopoly operate to maximize profits?

where MR = MC

Assume that a monopolist faces the demand schedule given in the table below and a constant marginal cost of $50 for each unit of output. To maximize profits, the monopolist would produce __________ units of output at a price of __________ per unit.

3,000; $70

Monopolies lead to

Both rent seeking and deadweight loss are true.

Which of the following sets of firms is best described as an oligopoly?

GM, Ford, Chrysler, Honda, and Toyota

To maximize profits, firms expand output until

MR = MC

Which of the following conditions must be met for a single seller to become a monopolist?

The firm must have something unique to sell and a way to prevent potential competitors from entering the market.

Compared to perfect competition, monopolies charge

a higher price

Oligopoly occurs in markets with

a small number of large firms.

Over time, a monopolist

can continue to make economic profits if it can maintain a monopoly and keep competitors from entering the market.

Suppose that at the current level of production, the price of a monopolist's product is equal to $15 per unit. Marginal revenue is equal to $10 per unit, and marginal cost is equal to $15 per unit. This monopoly

can increase its profit by producing and selling fewer units of its product.