Micro Chapters 14 and 15

The long-run market supply curve...

a. is always more elastic than the short-run market supply curve.

A monopolist maximizes profit by producing the quantity at which...

a. marginal revenue equals marginal cost.

If all firms in a market have identical cost structures and if inputs used in the production of the good in that market are readily available, then the long-run market supply curve for that good should be...

a. perfectly elastic.

Public ownership of natural monopolies...

a. tends to be inefficient.

The profit-maximizing monopolist will choose the price and quantity represented by point...

a. A

For a competitive firm, marginal revenue is...

a. equal to the price of the good sold.

In the long run, some competitive firms will exit the market if the price is below...

b. P2

In the long run, the competitive equilibrium is...

b. P2, Q2

The profit earned by the profit-maximizing monopolist is represented by the area...

b. P4ACP1

If a competitive firm doubles its output ,its total revenue...

b. doubles

Compared to a perfectly competitive market, a monopoly market will usually generate...

b. higher prices and lower output.

The purpose of antitrust laws is to...

b. increase competition in an industry by preventing mergers and breaking up large firms.

A firm whose average total cost continually declines at least to the quantity that could supply the entire market is known as a...

b. natural monopoly.

In the long run, the competitive firm's supply curve is the...

b. portion of the marginal-cost curve that lies above the average-total-cost curve.

A monopoly is able to continue to generate economic profits in the long run because...

b. there is some barrier to entry to that market.

If regulators break up a natural monopoly into many smaller firms, the cost of production...

b. will rise.

The deadweight loss associated with monopoly pricing is represented by the area...

c. ABD

Which of the following statements about price and marginal cost in competitive and monopolized markets is true?

c. In competitive markets, price equals marginal cost; in monopolized markets, price exceeds marginal cost.

Which of the following statements about price discrimination is not true?

c. Perfect price discrimination generates a deadweight loss.

If the price is P4, a competitive firm will maximize profits if it produces...

c. Q3

In the short run, the competitive firm's supply curve is the...

c. portion of the marginal-cost curve that lies above the average-variable-cost curve.

Cengage Learning is a monopolist in the production of your textbook because...

c. the government has granted Cengage Learning exclusive rights to produce this textbook.

If an input necessary for production is in limited supply so that an expansion of the industry raises cists for all existing firms in the market, then the long-run market supply curve for a good could be...

c. upward sloping.

A grocery store should close at night if the...

c. variable costs of staying open are greater than the total revenue due to staying open.

In the long-run equilibrium in a competitive market, firms are operating at...

e. all of the above.

The monopolist's supply curve...

e. does not exist.

If a competitive firm is producing a level of output where marginal revenue exceeds marginal cost, the firm could increase profits if it...

a. increased production.

If marginal revenue exceeds marginal cost, a monopolist should...

a. increase output.

In the short run, competitive firms will temporarily shut down production if the price falls below...

a. P1

Which of the following markets would most closely satisfy the requirements for a competitive market?

a. gold bullion

If the long-run market supply curve for a good is perfectly elastic, an increase in the demand for that good will, in the long run, cause...

c. and increase in the number of firms in the market but no increase in the price of the good.

The competitive firm maximizes profit when it produces output up to the point where...

c. marginal cost equals marginal revenue

If the price is P4, the firm will earn profits equal to the area...

d. (P4 - P3) x Q3

Which of the following is not a barrier to entry in a monopolized market?

d. A single firm is very large.

The efficient price and quantity are represented by point...

d. D

Which of the following is not a characteristic of a competitive market?

d. Firms generate small but positive economic profits in the long run.

In the long run, some firms will exit the market if the price of the good offered for sale is less than...

d. average total cost.

When a monopolist produces an additional unit, the marginal revenue generated by that unit must be...

d. below the price because the price effect outweighs the output effect.

Using government regulations to force a natural monopoly to charge a price equal to its marginal cost will...

d. cause the monopolist to exit the market.

The inefficiency associated with monopoly is due to...

d. underproduction of the good.