Econ Quizlet

suppose that joe sells pork in a purely competitive market. the market prove of pork is 3 dollars per pound, joe's marginal revenue from selling the twelfth pound would be

3 dollars

refer to the above table. with diminishing marginal returns, if the firm hires seven units which of the following numbers would most provably be the total product

40

allocative inefficiency happens in a monopoly because at the profit-maximizing output level

P > MC

T/F: As a monopolist lowers the price of its product from a high level, it finds that its total revenue may at first increase and then, below a certain price, its total revenue begins to decrease.

T

T/F: As long as an additional unit of output yields a marginal revenue larger than its marginal cost it will be adding to total profits of the firm

T

T/F: monopolistically competitive firms have some control over the price of their products

T

if the long run average total cost curve for a firm is horizontal in the relevant range of production, then it indicates that there

are constant returns to scale

a profit-maximizing firm in the short run will expand output

as long as marginal revenue is greater than marginal cost

monopolistic competitive firms are productively inefficient because production occurs where

average total cost is not at its lowest

mutual interdependence means that each firm in an oligopoly

considers the reactions of its rivals when it determines its pricing policy

productive efficiency refers to

cost maximization, where P=minimum ATC

if a firm increases its output quantity when marginal revenue is less than marginal cost then its profits will

decrease

natural monopolies result from

extensive economies of scale in production

in an oligopolistic market there are

few sellers

which of the following statements about a competitive firm is correct?

in long-run equilibrium a competitive firm will produce at the point of minimum average costs

compared to the purely competitive industry, a pure monopoly

is able to use barriers to entry and maintain positive economic profits in the long run

pure competition produces a socially optimal allocation of resources in the long run because

marginal cost equals price

in which two market models would advertising be used most often

monopolistic competition and oligopoly

which of the following is true under conditions of pure competition

no single firm can influence the market price by changing its output

diseconomies of scale occur mainly because

of the inherent difficulties involved in managing and coordination a large business enterprise

if a firm is a price taker, then the demand curve for the firm's product is

perfectly elastic

which characteristic would best be associated with pure competition

price takers

the representative firm in a purely competitive industry

will earn zero economic profit in the long run

In the standard model of pure competition, a profit maximizing firm will produce the output quantity in the short run where the gap between

total revenue and total cost is the largest, with revenue higher than cost

in the standard model of pure competition, a profit-maximizing firm will shut down in the short run if

total revenue is less than total variable cost

a monopoly results in productive inefficiency because at the profit-maximizing output level

ATC is not at its minimum level

if you know that total fixed cost is $200, total variable cost is $600, and a total product is 4 units, then average total cost must be

$200

T/F: "price maker" means that a monopoly can decide whatever price it wants to, in order to sell a specific given quantity of its product

F (price is determined by demand curve)

T/F: a firm sells 99 units of output when price equals $10, and 100 units of output when price equals $9. Its marginal revenue for the 100th unit of output is negative

T

a natural monopoly is characterized by

a decreasing average-cost curve extending beyond the market's size

marginal cost can be defined as the

change in total cost resulting from one more unit of production

a firm sells a product in a purely competitive market, the marginal cost of the product at the current output of 500 units is $1.50, the minimum possible AVC is $1.00, the market price of the product is $1.25, to maximize profits or minimize losses, the firm should:

continue production, but produce less than 500 units

in the long run, the representative firm in monopolistic competition tends to have

excess capacity

the firm's short-run marginal-cost curve is increasing when

marginal product is decreasing

in which market model is there mutual interdependence?

oligopoly

the soft-drink and automobile industries would be examples of which market model?

oligopoly

in which set of market models are there the most significant barriers to entry?

oligopoly and pure monopoly

in which market model are the conditions of entry in the market easiest

pure competition

the market for agricultural products such as wheat or corn would best be described by which market model

pure competition

which market model assumes the least number of firms in an industry

pure monopoly

T-shirt Enterprises is selling in a purely competitive market, it is producing 3000 units, selling them for $2.00 each. At this level of output, the ATC is 2.50 and the AVC is $2.20. Based on these date, the firm should

shut down in the short run