Econ 202, CSU, Exam 2 study guide
Using the profit maximization rule, a monopolist will produce
4 units, based on the table
What was the change in demand or supply that impacted the marijuana market in Maastricht
A restrictive ID law causing the decrease in market demand
What keeps firms from entering the market to steal a monopolists profits
Barriers to entry
The demand curve for each perfectly competitive firm is
Downward sloping
Accounting costs and economic costs differ because
Economic costs include implicit costs and accounting costs do not
In a monopolistic competition, if economic profits are being earned, which of the following will not happen
Entry will cause the market supply curve to shift to the right
A profit-maximizing monopolist produces the rate of output where
MARGINAL REVENUE = MARGINAL COST
The soft drink market is dominated by Coke, Pepsi, and very few other firms. The firms often start price wars. This market can best be described as
Oligopoly
A perfectly competitive firm should expand output when
PRICE < MARGINAL COST
In a competitive market where firms are earing economic losses, which of the following should be expected as the industry moves to long-run equilibrium
a lower price and more firms
Monopolists set prices
at the price given by the demand curve, at the level of output where marginal revenue equals marginal cost
Which of the following most characterizes monopolistic competition
economies of scale
Which of the following is a characteristic of a perfectly competitive market
exit of small firms when profits are high for large firms
The goal of a company in an oligopolistic industry is to
increase market share and profits
A perfectly competitive firm
is a price taker
The demand cure will be kinked if rival oligopolists
match price reductions but not price increases
The most desirable rate of output for a firm is the output that
maximizes total profit
Diminishing returns occur because in the short run because
of inefficiency in production process
The concentration ratio measures the
proportion of total profits made by a firm in a specific market
Price leadership
results in predatory pricing
Price discrimination is best defined as
selling an identical good at different prices to consumers by a single seller
If new firms enter a monopolistically competitive market, the demand curve for the existing firms will
shift to the left
The period in which at least one input is fixed in quantity is the
short run
The marginal physical product of labor in Figure 21.1 is negative for
sixth worker
Short-run profits are maximized at the rate of output where
total revenue is maximized
