ECON 202 exam 3

How do you find the Average Revenue (AR) in a perfectly competitive market?

the total revenue divides by the quantity of the product sold (TR/q=(P*q)/q=P )

Few firms are price takers because?

their individual output is relative to the market

consumers are usually price takers when they buy most goods and services because?

their individual purchases are small relative to the market

productively efficient output?

this occurs at the minimum point of the ATC, the intersection of the ATC and MC, ATC=MC

how do you find profit in a perfectly competitive market?

total revenue minus total cost (TR-TC)

mergers between firms in the same supply cain are called

vertical mergers (automobile with a tire manufacturer)

what is the allocative efficient output rule ?

when the demand cure and magical cost intersect (MB=MC, MV=MC, Price-MC)

in a perfectly competitive market, how is the demand (for wheat) determined?

the intersection of market supply and market demand determines the equilibrium price (of what) which creates the horizontal demand line

a patent gives its holder the exclusive right to a product for a period of ___ years from the date the patent is filed with the government

20

in the long run a firms exit point is the minimum point on the

ATC cure

short run shut down pint is the minimum point on the

AVC cure

(for all markets) profit maximizing level of output occurs when

Marginal revenue equals marginal cost (MR=MC)

total profit equals

P-ATC*q

how do you find the Total Revenue (TR) in a perfectly competitive market?

Price times the firms output (P*q)

a price taker is

a buyer or seller that is unable to affect the market price

wat is the relationship between a perfectly competitive firms marginal cost cure and it's supply curve?

a firms marginal cost cure is equal to its supply curve for prices above the average variable cost

laws aimed at promoting competition among firms are known as

antitrust laws

in a perfectly competitive firm why is it impossible to maximize the total revenue?

because a firm can always sell one more unit at market price, without having to lower the price

in a perfectly competitive firm how do you find the marginal revenue (MR)?

change in total revenue from selling one more unit of product (∆TR/∆q)

mergers between two completely unrelated firms are called

conglomerate

a merger between firms in the same industry is called

horizontal merger

how is the market supply curve derived from the supply curves of individual firms?

horizontally adding the individual firms supply curves

a firm is likely to be a price taker when

it sells a product that is exactly the same as every other firm

for a market to be perfectly competitive, there must be

many buyers and sellers, with all firms selling identical products, and no barriers to new firms entering the market

In a perfectly competitive market, for any level of output, a firms average revenue is always equal to?

market price (P)

Short Run shutdown output?

occurs at the minimum point of the AVC. MC=AVC, where the MC and AVC intersect

economic breakeven output rule?

occurs when the demand and ATC (average total cost) intersect, (P=ATC)

a monopoly market is characterized by

one seller of a good or service that has no substitutes

in a perfectly competitive market, firms can sell all the ____ they deserve at the market price

output

what are the four market structures?

perfect competition, monopoly, monopolistic, and oligopoly

price discrimination is the

practice of dividing consumers into two or more groups and charging different prices to each group

Natural monopoly happens when

the average total cost curve is decreasing

in the long run, the monopolist can earn..

zero or positive economic profit