Econ 3
Allocative efficiency is achieved when the production of a good occurs where
p=mc
A purely competitive seller is
a price taker
Pure monopoly refers to
a single firm producing a product for which there are no are no close substitutes
Barriers to entering an industry
are the basis for monopoly.
If the entry or exit of firms does not affect the resource prices in an industry, we refer to it as a
constant cost industry
An increasing
cost industry is associated with- an upsloping long run supply curve
The process by which new firms and new products replace existing dominant firms and products is called
creative destruction
Competitive firms are price takers largely because of intensive advertising by their competitors.
false
Efficiency or deadweight losses occur in purely competitive markets when P = MC = lowest ATC.
false
In an unregulated monopoly at equilibrium, the output level is higher than the economically efficient level.
false
The basic difference between pure competition and monopolistic competition is in the number of firms in the industry
false
A constant-cost industry is one in which
100 units can be produced for 100$ then 150 can be produced 150$ 200 for 200 and so fourth
Economists use the term imperfect competition to describe
Those markets are not purely competitive
The marginal revenue curve for a monopolist
becomes negative when output increases beyond some particular level.
The pure monopolist's demand curve is relatively elastic
in the price range where marginal revenue is positive.
A natural monopoly occurs when
long-run average cost decline continuously through the range of demand.
The quantitative difference between areas Q1bcQ2 and P1P2ba in the diagram measures
marginal revenue
Large minimum efficient scale of plant combined with limited market demand may lead to
natural monopoly
Pure monopolists may obtain economic profits in the long run because
of barriers of entry
Local electric or gas utility companies mostly operate in which market structure
pure monopoly
A competitive firm faces fixed costs even if it produces zero output. If it starts producing and selling some output, which of the following would happen
the firms total cost would increase and its losses may become larger
The term productive efficiency refers to
the production of a good at the lowest average total cost.
The MR = MC rule applies
to firms in all types of industries
As long as its total revenues are greater than its total costs, a firm will earn positive economic profits
true
Marginal cost is a measure of the alternative goods that society forgoes in using resources to produce an additional unit of some specific product
true
Marginal revenue is the addition to total revenue resulting from the sale of one more unit of output
true
Price discrimination will result in consumers with more elastic demand purchasing more of the good than when a single price is charged to all consumers in the market.
true
The long-run supply curve for a decreasing-cost industry is downsloping.
true
In the short run, a purely competitive firm that seeks to maximize profit will produce
where total revenue exceeds total cost by maximum amount
The representative firm in a purely competitive industry
will earn zero economic profit in the long run