Chapter 15-16 Quiz
Which of the following statements is correct? Monopolies are socially inefficient because they
(i) and (ii) only 1charge a price above marginal cost. 2produce too little output.
When a monopolist increases the amount of output that it produces and sells, the price of its output
increases.
Monopolistic competition is an
inefficient market structure because there is deadweight loss.
Firms can freely enter a market
only when the market is a monopoly.
Which of the following is a characteristic of a monopoly?
a product without close substitutes
What is the shape of the monopolist's marginal revenue curve?
a downward-sloping line that lies below the demand curve
The figure is drawn for a monopolistically-competitive firm.
at 100 units.
A monopolistically competitive market is like both a competitive market and a monopoly in that firms in all three market structures
can earn economic profits in the short run.
As new firms enter a monopolistically competitive market, profits of existing firms
decline, and product diversity in the market increases.
The market demand curve for a monopolist is typically
downward sloping.
A firm in a monopolistically competitive market faces a
downward-sloping demand curve because the firm's product is different from those offered by other firms.
Refer to Figure 16-9. Given this firm's cost curves, if the firm were perfectly competitive rather than monopolistically competitive, then in a long-run equilibrium it would produce
less than 100 units of output.
Consider monopoly, monopolistic competition, and perfect competition. In which of these three market structures does a profit-maximizing firm charge a price that exceeds marginal cost?
monopoly and monopolistic competition only
Which of the following formulas would correctly calculate a monopolist's profit?
profit = (price - average total cost) × quantity
A concentration ratio
reflects the level of competition in an industry.
A natural monopoly arises when
there are economies of scale over the relevant range of output.