unit 4 econ

Which of the following statements relating to a firm in an imperfectly competitive market and a firm in a perfectly competitive market is true?

An imperfectly competitive firm must lower its price to increase sales, while a perfectly competitive firm can increase sales by increasing output at the current price

Which of the following can give a firm market power?

Having economies of scale in production over the range of market output

Which of the following is necessarily true at a monopolist's profit-maximizing level of output?

Marginal revenue is equal to marginal cost, but less than price.

As the quantity of a good increases, which of the following is true in the elastic region of a monopolist's demand curve?

Marginal revenue is positive, and total revenue is increasing.

Which of the following is true of both monopolistically competitive and perfectly competitive firms in long-run equilibrium?

Price equals average total cost.

If Zeta, a single producer, had exclusive control of a key resource needed to produce good Z , a likely result would be which of the following?

There would be a barrier to entry, and Zeta would have a monopoly on good Z

If a firm engages in perfect price discrimination, it charges

each customer the highest price the customer is willing to pay

An industry consists of 100 small firms, and the largest firm accounts for only 2 percent of sales. Brand names are considered a signal of quality. The industry described is best classified as

monopolistically competitive

Game theory is most commonly used for analyzing the pricing behavior of firms in which market structure?

oligopoly

Most economists argue that a monopoly is inefficient because it

produces too little output and sets a price above marginal cost

The firm shown in the diagram above qualifies as a natural monopoly because

the ATC curve is decreasing in relevant range of market demand

Which of the following is more likely to occur when there are high barriers to entry in an industry?

there will be economic profit in the long run

The price of an airline ticket is typically lower if a traveler buys the ticket several weeks before the flight's departure date rather than on the day of departure. This pricing strategy is based on the assumption that

travelers' demand becomes less elastic as the departure date approaches

Which of the following is true for a monopolist that engages in perfect price discrimination?

The monopolist sells the allocatively efficient quantity of output.

Which of the following is a source of monopoly power?

barriers to enter