econ 201 midterm 2

a benefit to consumers of monopolistically competitive market is that

consumers have a variety of products from which to choose

which of the following is true in the long run for both monopoly and perfectly competitive industries?

firms will go out of business if they cannot charge a price that is at least equal to the average total cost

___ is a cost that independent of the quantity produced by the firm and is incurred by the firm in the short run

fixed cost

as compared to a perfectly competitive firm, a monopolistically competitive firm will

have more control over price

a low price guarantee on car stereos leads to

higher prices for consumers

when a second firm enters a monopolists market the initial demands curve facing the monopolist will

shift to the left

limit pricing occurs when a firm sets price

so low that other firms are prevented from entering the market

In the short run ___ factors of production are fixed, while in the long run ___ of them are

some;none

the herfindahl hirschman index measures

the degree of concentration in a market

for a monopolistically competitive firm- at the profit maximizing output level-

the firm is making a positive economic profit

for a monopolistically competitive firm- if the firms demand curve shifts to the left as more firms enter the market-

the firms profit will be smaller at the new profit maximizing output level

a firms marginal cost curve above the minimum of the average variable cost curve is also

the firms short-run supply curve

What costs do accountants include that do not reflect a monetary payment but are treated as an expense or reduction in net value of the company?

all are examples

for a monopolistically competitive firm- in the long run we expect-

all of the above

the merits of a patent system are

all of the above

which of the following is a characteristic of a perfectly competitive market?

all of the above

when the government eliminates artificial barriers to entry

all of the above will occur

suppose that there are 6 firms in a market, with 5 each controlling 15% of the market and the remaining firms controlling 25% of the market. the hhi would equal

1750

which of the following is not a characteristic of a monopoly

a monopolist is a price-taker

if a firm can maximize its profit by producing the output where price is equal to marginal cost, the firm is operating in:

a perfectly competitive market

brodie sells fish in a perfectly competitive market. suppose the current market price of fish is 4.50 per pound

brodie can sell as many fish as he can catch at 4.50 per pound

for a monopolistically competitive firm, the firms demand curve is

downward sloping

the government allows firms to engage in price discrimination unless the practice:

drives rival firms out of business

if a firm in a perfectly competitive market is currently producing the output where marginal revenue=marginal cost=average total cost, the firm is:

earning a zero economic profit

which of the following is not a characteristic of a monopolistically competitive market?

firms hold patents on their products

diminishing marginal returns implies that:

marginal costs are increasing

which of the following is not a characteristic of a perfectly competitive market?

modest barriers to entry

a market served by only one firm is called a

monopoly

if a firm suffers an economic loss its

price is less than its average total cost

which of the following is an example of limit pricing?

prices are set low enough to prevent other firms from entering the market

the demand curve that a monopolist faces is

the market demand curve

sheila sells corn in a perfectly competitive market. this month sheila receives a lower price for a bushel of corn than she did last month. this might happen because

the market demanded decreased for corn

which of the following is an example of a monopolistically competitive firm?

timos italian eatery a local restaurant

marginal product is defined as the change in ___ resulting from a one unit increase in ___

total product;input

which of the following is a long run adjustment?

two firms exit the asbestos removal industry