Econ Final Review
Which of the following is a characteristic of perfect competition?
Easy entry and exit
How do economies of scale contribute to the development of an oligopoly?
Economies of scale make small-scale producers inefficient, so only the largest firms have low costs that allow them to compete
If a single-price monopolist can sell 5 units at price of $200 per unit and 6 units at a price of $180 per unit, its marginal revenue at an output of 6 is
$80
Which of the following conditions hold true for both the perfectly competitive firm and the monopoly at the profit-maximizing output level?
MR = MC
What is considered a profit maximizing point for business?
MR=MC
What does marginal revenue equal in perfect competition?
Market price
The demand curve for the product of a monopolistically competitive firm
is downward sloping and relatively elastic
The perfectly competitive firm cannot influence the market price because
its production is too small to affect the market
Advertising by monopolistically competitive firms can do all of the following EXCEPT
lower the price of the good
Which of the following is NOT a characteristic of monopolistic competition?
Barriers to entry
In a long-run monopolistically competitive equilibrium,
P = ATC, and ATC is not at its minimum value.
For a perfectly competitive firm, the short-run break-even point occurs at the level of output where
P = MC = ATC
In oligopoly, any action by one firm to change the price, output, or quality will cause
a reaction by other firms
In the long run equilibrium, a monopolistic competitor will produce to the point at which
actual average total costs are higher than the minimum of possible ATC
When considering strategic dependence, managers in oligopoly firms must
anticipate the reaction of rival firms
A cartel is a form of
collusion
When considering perfect competition the absence of entry barriers implies that
firms can enter and leave the industry without serious impediments
One problem associated with a monopoly firm is that it
restricts output and charges a relatively higher price than a purely competitive industry
Restaurants are generally considered to belong in the market structure of monopolistic competition, so under normal market conditions, Axel can expect
short run positive economic profits and long run zero economic profits
Consumer surplus is
the difference between the total amount that consumers would have been willing to pay for an item and the total amount that they actually pay
A horizontal merger involves
the joining of two firms selling similar products
When comparing perfect competition and monopoly, a major assumption made is that
the marginal costs of production are the same under monopoly as under perfect competition.
Economists generally assume that firms attempt to maximize
total economic profits
