Micro Econ Exam #3 Review
a profit-maximizing monopolist produces the rate of output where
MR=MC and determines price based on the demand curve
a firm should shutdown production when
P < minimum AVC
in which of the following cases would entry and exit cease
P = long run ATC
price leadership is a method by which oligopolies can...
increases price without explicit price-fixing
the marginal cost curve
is the short-run supply curve for a competitive firm at prices above the AVC curve
what is a characteristic of monopolistic competition?
many firms produce a particular type of product, but each maintains some independent control over its own price
which of the following market structures will have higher prices in the long-run than perfect competition, ceteris paribus?
monopolistic competition, monopoly and oligopoly
economists assume the principal motivation of producers is...
profit
the entry of firms into a market...
reduces the profits of existing firms in the market
economic losses are a signal to producers
that they are not using resources in the best way
if someone invents a better way to produce frozen pizzas, then...
the market supply curve for frozen pizzas will shift to the right
monopolistic competition results in...
the wrong mix of output
a monopoly is characterized by
producing less output than a competitive industry
when a business advertises that its product has unique features that make it superior to other similar products, it is engaging in...
product differentiation
the demand curve for a perfectly competitive firm is...
horizontal
what is a characteristic of a perfectly competitive market?
a large number of firms
what is a barrier to entry in a monopoly market?
a patent on a new product
what is a production decision?
a rate of output and is a short-run decision
if economic profits are earned in a competitive market, then over time
additional firms will enter the market
a monopolistically competitive firm can raise its price somewhat without fear of great change in unit sales because of
brand loyalty
a monopoly...
chargers higher prices than competitive firms, ceteris paribus
the marginal revenue of a monopolist falls below price because the firm
confronts a downward-sloping demand curve
higher profits in a particular industry indicate that
consumers want more of that industry's good
in a competitive market, if the market price is equal to the minimum point of the firm's ATC curve, the firm may seek to earn economic profits by
decreasing production through tech improvements
when tech improves, the firm's marginal cost curve shifts...
downward, and supply increases
the demand curve confronting a competitive firm...
equals the marginal revenue curve
if a firm can change market prices by altering its output, then it...
has market power
what market structure is characterized by a few interdependent firms?
oligopoly
the concentration ratio for an oligopoly is
over 60%
a catfish farmer will shut down production when
price falls below AVC
