Econ 202, CSU, Exam 2 study guide

Using the profit maximization rule, a monopolist will produce

4 units, based on the table

What was the change in demand or supply that impacted the marijuana market in Maastricht

A restrictive ID law causing the decrease in market demand

What keeps firms from entering the market to steal a monopolists profits

Barriers to entry

The demand curve for each perfectly competitive firm is

Downward sloping

Accounting costs and economic costs differ because

Economic costs include implicit costs and accounting costs do not

In a monopolistic competition, if economic profits are being earned, which of the following will not happen

Entry will cause the market supply curve to shift to the right

A profit-maximizing monopolist produces the rate of output where

MARGINAL REVENUE = MARGINAL COST

The soft drink market is dominated by Coke, Pepsi, and very few other firms. The firms often start price wars. This market can best be described as

Oligopoly

A perfectly competitive firm should expand output when

PRICE < MARGINAL COST

In a competitive market where firms are earing economic losses, which of the following should be expected as the industry moves to long-run equilibrium

a lower price and more firms

Monopolists set prices

at the price given by the demand curve, at the level of output where marginal revenue equals marginal cost

Which of the following most characterizes monopolistic competition

economies of scale

Which of the following is a characteristic of a perfectly competitive market

exit of small firms when profits are high for large firms

The goal of a company in an oligopolistic industry is to

increase market share and profits

A perfectly competitive firm

is a price taker

The demand cure will be kinked if rival oligopolists

match price reductions but not price increases

The most desirable rate of output for a firm is the output that

maximizes total profit

Diminishing returns occur because in the short run because

of inefficiency in production process

The concentration ratio measures the

proportion of total profits made by a firm in a specific market

Price leadership

results in predatory pricing

Price discrimination is best defined as

selling an identical good at different prices to consumers by a single seller

If new firms enter a monopolistically competitive market, the demand curve for the existing firms will

shift to the left

The period in which at least one input is fixed in quantity is the

short run

The marginal physical product of labor in Figure 21.1 is negative for

sixth worker

Short-run profits are maximized at the rate of output where

total revenue is maximized