Intro to Micro

Suppose that a monopoly computer chip maker increases production from 10 microchips to 11 microchips. If the market price declines from $30 per unit to $29 per unit, marginal revenue for the eleventh unit is

19

A firm's long-run average total costs increase as it produces more output. This firm has:

Diseconomies of scale

In perfect competition, a change in fixed cost will

Encourage entry or exit in the long run such that price will change enough to leave firms earning zero profits

Which of these factors increases the likelihood of collusion among firms

Few firms in the industry

If you had an official license for the exclusive right to sell breakfast bagels in your community, your monopoly would result from

Government set barriers

In industries characterized by a few firms that dominate the market, product differentiation is MOST likely to occur when firms

Have tacit agreements to not engage in price war

Max profit

MR=MC

A customer with significant buying power in an industry would

Make a tacit price agreement more difficult to achieve

A monopolist's marginal cost curve shifts up, but the firm's demand curve remains the same and the firm does not shut down. Compared with the condition before the increase in marginal costs, the monopolist will _____ its price and _____ its level of production

Raise; decrease

Diminishing returns are a reason that:

The marginal cost curve is upward sloping

The MAIN reason a monopoly engages in price discrimination is

To increase profits

Perfectly competitive market

a market that meets the conditions of 1) many buyers and sellers, 2) all firms selling identical products, and 3) no barriers to new firms entering the market

The marginal cost curve intersects the average variable cost curve at

at its lowest point

You own a deli. Which input of production is most likely fixed at your deli?

dining room

A firm's ____ are costs that are incurred even if there is no output. In the short run, these costs ____ as production increases

fixed costs; do not change,

A firm that has lower costs per unit as it increases production in the long run has:

increasing returns to scale

An increase in the fixed costs of a monopoly firm would _____ price and _____ quantity in the short run.

not change; not change

A(n) ______ gives an inventor a temporary monopoly on the use or sale of an invention

patent