econ 3

Total cost divided by quantity equals

Average cost

In monopolized markets, price

Exceeds marginal cost

Monopolists always produce at the efficient scale T/F

F

In comprettive markets, price equals

Marginal cost

The derivative of total cost equals

Marginal cost

Natural monopoly

Monopoly that arises because a single firm can supply a good or service to an entire market at a smaller cost than other firms

If a market has a negative externality of consumption and a positive externality of production, then what is always true?

P(social) < P*

Profit equals

Revenue - cost

Large fixed costs tend to lead to monopolies T/F

T

Monopolist DWL > Duopoly DWL > Triopoly DWL T/F

T

A markup of price over marginal cost is inconsistent with free entry and zero profit T/F

false

When a firm in a monopolistically competitive market earns zero economic profit, its price must equal marginal cost T/F

false

When a firm operates with excess capacity in the long run, it must be in a monopolistically competitive market T/F

false

Which is a public good: knowledge, fish in a lake, uncongested toll roads, or all

knowledge

What is true of club goods: they are often natural monopolies, they have low marginal costs, the market provides too high a quantity for them

they are often natural monopolies + they have low marginal costs

A profit-maximizing firm in a monopolistically competitive market always prices its product at some markup over marginal cost T/F

true

Excess capacity (producing a lower quantity than that which equates marginal cost and ATC) characterizes firms in a monopolistically competitive markets in situations of long-run equilibrium T/F

true

For a profit maximizing firm in a monopolistically competitive market, it is true that at the quantity at which price is equal to average total cost, price must lie above marginal cost T/F

true

When a profit-maxinimizing firm in a monopolistically competitive market is in long-run equilibrium, marginal cost at the profit maximizing quantity must lie below average total cost at that quantity T/F

true