exam 3 and 4

Monopolies are inefficient because they

restrict output below the socially efficient level of production.

Comparing marginal revenue to marginal cost

reveals the contribution of the last unit of production to total profit. is helpful in making profit-maximizing production decisions.

In a market with 1,000 identical firms, the short-run market supply is the

sum of the quantities supplied by each of the 1,000 individual firms at each price.

The analysis of competitive firms sheds light on the decisions that lie behind the

supply curve.

Total revenue equals

price x quantity.

Which of these assumptions is often realistic for a firm in the short run?

The firm can vary the number of workers it employs but not the size of its factory.

Which of the following are necessary characteristics of a monopoly?

The firm is the sole seller of its product. The firm's product does not have close substitutes.

Patent and copyright laws encourage

creative activity. research and development.

Explicit costs

enter into the accountant's measurement of a firm's profit. enter into the economist's measurement of a firm's profit.

A firm's opportunity costs of production are equal to its

explicit costs + implicit costs.

A competitive firm

is a price taker, whereas a monopolist is a price maker.

If a competitive firm is selling 900 units of its product at a price of $10 per unit and earning a positive profit, then

its average total cost is less than $10.

In the short-run, a firm's supply curve is equal to the

marginal cost curve above its average variable cost curve.

If firms are competitive and profit maximizing, the price of a good equals the

marginal cost of production.

At the profit-maximizing level of output

marginal revenue equals marginal cost.

If a profit-maximizing monopolist faces a downward-sloping market demand curve, its

marginal revenue is less than the price of the product.

Economists normally assume that the goal of a firm is to

maximize profit.

Economists assume that the typical person who starts her own business does so with the intention of

maximizing profits.

Which of the following is not a characteristic of a monopoly?

one buyer

For a monopoly firm,

price always exceeds marginal revenue.

The market demand curve for a monopolist is typically

vertical