Production, Perfect Competition, Monopoly
Which of the following are characteristics of a contestable firm?
-No real barriers to entry -A single firm
In a perfectly competitive market, homogeneity means that firms must charge the market price for the goods or services they produce, because:
-There are hundreds of other perfectly good substitutes -The market is competitive
The practice of charging each and every consumer the price that she is willing and able to pay for a good or service is known as:
-first-degree price discrimination OR -perfect price discrimination -personal pricing
Which of the following is an example of second-degree price discrimination?
A customer decides to buy copy paper in bulk at a lower per-unit price.
What best describes the relationship between output and price?
A perfectly competitive firm's output moves in the same direction as the market price.
Which of the following is true if a firm is able to price discriminate?
The firm's economic profit is greater than without price discrimination.
What is true in the short run?
The supply curve for a perfectly competitive firm is a portion of its marginal cost curve.
How are monopolists similar to perfectly competitive firms?
They both produce where MR = MC.
Why are natural monopolies often regulated?
To ensure that consumers receive lower prices than they would occur without regulation.
Marginal revenue is the:
additional revenue associated with the sale of an additional unit.
Monopolies are likely to be less _____ than perfectly competitive firms.
allocatively efficient
A monopolist's marginal revenue curve lies _____ its demand curve.
below
Proprietorships, partnerships, and corporations are the primary forms of _____.
business organization
Negative _____ profits encourage firms to exit the market.
economic
Total revenue minus the explicit and implicit costs of production is _____ profit.
economic
Total revenue minus the total _____ costs of production is accounting profit.
explicit
In perfect competition,
firms cannot influence the market price with production decisions.
Decreasing _____ returns are a characteristic of production whereby the marginal product of the next unit of a variable resource utilized is less than that of the previous variable resource.
marginal
The level of profit that occurs when total revenue is equal to total cost is known as _____ profit.
normal
Costs that do not change with the amount of _____ produced are fixed costs.
output
The ability of a monopoly to influence prices by controlling the quantities that it produces in the market is called monopoly _____.
power
Total revenue equals:
price x quantity.
Profit equals total _________ minus total ________.
revenue; cost
Firms that take or accept the market price and have no ability to influence that price are known as price _____.
takers
For a monopoly, the marginal revenue is below the demand curve because:
the monopoly has to lower the price on all units to sell more.
A period of time in which at least one input of production is fixed is known as the _____.
the short run
Economic profit equals:
total revenue minus the explicit and implicit costs of production / total revenue minus economic costs.
Assuming the market price is $5 per unit of output, the firms marginal revenue curve:
would be a horizontal line at $5.
A company can break even and meet operating costs without a loss when it earns ___ economic profit.
zero
