econ quiz - 04/23
when a firm exercises its monopoly power, the cost to society is ___________________.
deadweight loss
________ is a market structure in which many rival firms produce differentiated products.
monopolistic competition
a monopolistically competitive firm shuts down in the short run if ________.
total revenues do not cover variable costs
if the marginal revenue of a producer exceeds his marginal cost, ___________________________.
additional production enhances profits
all firms in a monopolistically competitive industry face a ________ demand curve, so they have ________.
downward sloping, market power
an example of a monopolistically competitive firm is ________________.
fast-food industry
what feature do monopolistically competitive markets and monopolies share?
firms face downward sloping demand curves
when compared to competition, monopoly prices are ___________ and quantity produced is __________. the purpose of an antitrust policy is to ________ this situation.
higher, lower, reverse
when a firm exercises its monopoly power, social surplus is _________________ when compared to a perfectly competitive market.
lower
compared to a perfectly competitive market, consumer surplus is ___________, producer surplus is ______________, and deadweight loss is _________________.
lower, higher, higher
a firm's objective behind changing different prices to different consumers for the same good is to enhance __________.
profits
what equation calculates economic profits for a monopoly?
profits = (P-ATC) x Q
if a monopoly engages in first-degree price discrimination, ________________________.
social surplus is maximized
the residual demand curve facing a firm in a monopolistically competitive industry is ________.
the demand that is not satisfied by other producers
why do monopolies weaken the function of the invisible hand?
the quantity produced by a monopoly is too low
how is a monopolistically competitive market similar to a perfectly competitive market?
there are no restrictions on entry of new firms
monopolists do not use a supply curve because ___________________.
they do not vary based on market price
what is the purpose of an antitrust company?
to regulate and prevent anti competitive pricing, to prevent the use of questionable methods and unfair practices resulting in a monopoly
for a market to be characterized as monopolistically competitive, there must be _________________.
zero economic profits in the long run, differentiated products, and many sellers