Direct from text 14-16
A firm in a competitive market receives $500 in total revenue and has marginal revenue of $10. The firm's average revenue is________, and__________ were sold.
$10 50 units
Which of the following conditions does NOT describe a firm in a monopolistically competitive market?
It takes its price as given by market conditions.
In the long-run equilibrium of a competitive market with identical firms, what is the relationship between price , marginal cost , and average total cost ?
P=MC and P=ATC
For a profit-maximizing monopoly that charges the same price to all consumers, what is the relationship between price , marginal revenue , and marginal cost ?
P>MR and MR=MC
What is true of a monopolistically competitive market in long-run equilibrium?
Price is greater than marginal cost.
more likely to engage in adversting A family-owned farm or a family-owned restaurant A manufacturer of forklifts or a manufacturer of cars A company that invented a very comfortable razor or a company that invented a less comfortable razor
a family owned restaurant a manufacturer of cars a company that invented a very comft razor
Compared to the social optimum, a monopoly firm chooses
a quantity that is too low and a price that is too high.
When a monopolist switches from charging a single price to perfect price discrimination, it reduces
consumer surplus.
If advertising makes consumers more loyal to particular brands, it could ________ the elasticity of demand and ________ the markup of price over marginal cost.
decrease, increase
A firm is a natural monopoly if it exhibits the following as its output increases:
decreasing average total cost.
If demand is inelastic and a monopolist raises its price, total revenue would_________ and total cost would_________ , causing profit to_________ . Therefore, a monopolist will_________produce a quantity at which the demand curve is inelastic.
increase decrease increase never
If a profit-maximizing, competitive firm is producing a quantity at which marginal cost is between average variable cost and average total cost, it will
keep producing in the short run but exit the market in the long run.
14. Problems and Applications Q9 The market for fertilizer is perfectly competitive. Firms in the market are producing output but are currently making economic losses. The price of fertilizer must be_________average total cost, ____________average variable cost, and ___________marginal cost.
less than greater than equal to
A competitive firm maximizes profit by choosing the quantity at which
marginal cost equals the price.
A monopolistically competitive firm will increase its production if
marginal revenue is greater than marginal cost.
A competitive firm's short-run supply curve is its ________ cost curve above its ________ cost curve.
marginal, average variable
Pretzel stands in New York City are a perfectly competitive industry in long-run equilibrium. One day, the city starts imposing a $100 per month tax on each stand. How does this policy affect the number of pretzels consumed in the short run and the long run?
no change in the short run, down in the long run
New firms will enter a monopolistically competitive market if
price is greater than average total cost.
Bob's lawn-mowing service is a profit-maximizing, competitive firm. Bob mows lawns for $27 each. His total cost each day is $280, of which $30 is a fixed cost. He mows 10 lawns a day. In the short run, Bob ____________ shut down. In the long run, Bob _________exit the industry.
should not should
Which of the following goods best fits the definition of monopolistic competition?
soft drinks
The deadweight loss from monopoly arises because
some potential consumers who forgo buying the good value it more than its marginal cost.
If a monopoly's fixed costs increase, its price will _____, and its profit will _____.
stay the same, decrease
A perfectly competitive firm
takes its price as given by market conditions.
