Micro Unit 3 Chapters 8 & 9

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Individuals in a market who must take the market price as given are:

Price takers

a natural monopoly exists whenever a single firm:

confronts economies of scale over the entire range of production that is relevant to its market.

The profit-maximizing rule MR = MC is:

followed by any firm.

An assumption of the model of perfect competition is:

identical goods.

If a monopolist is producing a quantity that generates MC=MR, then profit:

is maximized

A monopolist is a:

price setter

The difference between total revenue and total cost is:

Economic profit

The United States bans most efforts to create a monopoly when:

Efforts to form a monopoly "unfairly" drive out competitors.

Marginal revenue is a firm's:

Increase in total revenue when it sells an additional unit of output.

Which of the following is (are) true?

MR = MC is a profit-maximizing rule for any firm.

Federal Trade Commission

Monitors markets and attempts to ensure markets remain competitive

Average Variable Cost

TC-FC

Average Total Cost (calculation)

Total cost/quantity

Profit (calculation)

Total revenue-total cost

A monopoly is a market characterized by:

a single seller

Conditions that prevent the entry of new firms in a monopoly market are:

barriers to entry

A monopoly:

determines its own price, given its demand curve

The demand curve facing a monopolist is:

downward sloping

The United States bans most efforts to create a monopoly when:

efforts to form a monopoly "unfairly" drive out competitors

A type of firm that usually has a natural monopoly in most of its markets is a(n):

electrical utility

Economic profits in a perfectly competitive industry induce _______ , and losses induce _______ .

entry; exit

Marginal revenue:

equals the market price in perfect competition.

A monopoly is likely to _______ and _______ than otherwise equivalent competitive firms.

produce less; charge more

If economic profits exist in perfect competition, in the long run firms will enter because of easy entry, the _______ curve will shift to the right, and _______ will _______ .

supply; output; increase

the demand curve for a monopoly is:

the industry demand curve

the demand curve facing a monopolist is always:

the same as the industry's demand curve

The demand curve facing a monopolist is always:

the same as the industry's demand curve.

Because monopoly firms are price setters:

they can only sell more by lower price.

If a perfectly competitive firm sells 30 units of output at a price of $10 per unit, its marginal revenue is:

$10

If a firm in perfect competition sells 10 units of output at a market price of $5 per unit, its marginal revenue is:

$5

The profit-maximizing level of output for a perfectly competitive firm occurs where:

marginal revenue equals marginal cost.

The two theoretical extremes of the market structure spectrum are occupied on one end by perfect competition and on the other end by:

monopoly

The power a firm has to set is own price is called:

monopoly power

The two theoretical extremes of the market structure spectrum are occupied on one end by perfect competition and on the other end by:

monopoly.

Most electric, gas, and water companies are examples of:

natural monopolies.


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