MICRO FINAL
Which of the following statements applies to a purely competitive producer?
A) It will not advertise its product
Which of the following industries most closely approximates pure competition?
A) agricultural
In pure competition, the marginal revenue of a firm always
D) marginal cost
Whenever a monopolist demand curve is down sloping:
D) marginal revenue is less than price
An industry comprised of a very large number of sellers producing a standardized product is known as:
D) pure competition
The demand curve in a purely competitive industry/market is ______, while the demand curve to a single firm in that industry is ____________
B) downsloping, perfectly elastic
A monopolistic structure has elements of a monopoly because:
C) product differentiation allows for some individual seller power
Which of the following approximates a pure monopoly?
C) the diamond market
Firms seek to maximize:
C) total profit
Which of the following is not a basic characteristic of pure competition?
A) considerable non-price competition
The MR=MC rule:
A) demand and marginal revenue curves
The quantity from the minimum ATC and the monopolistically competitive profit maximizing quantity is called:
A) excess capacity
If a pure monopolist is producing at that output where P=ATC, then:
A) its economic profits will be zero
An industry comprised of a large number of sellers with no barriers to entry, where each firm has a small market share and sell differentiated products is an example:
A) monopolistic competition
A pure monopolist:
A) will realize an economic profit if price exceeds ATC at the profit-maximizing/loss-minimizing level of output
A perfectly elastic demand curve implies that the firm:
B) can sell as much output as it chooses at the existing price
A purely competitive firm does not try to sell more of its product by lowering its price below the market price because:
B) it can sell all it wants to at the market price
The demand schedule or curve confronted by the individual purely competitive firm is:
B) perfectly elastic
What characteristic would best be associated with pure competition?
B) price taker
In the short run a purely competitive firm which seeks to maximize profit will produce:
B) where total revenue exceeds total cost by the maximum amount
If a firm in a purely competitive industry is confronted with an equilibrium price of $5, its marginal revenue
B) will also be $5
Which of the following is correct?
C) A purely competitive firm is a "price taker," while a monopolist is a "price maker."
Price is constant or given to the individual firm selling in a purely competitive market because:
C) each seller supplies a negligible fraction of total supply
Which set best describes the basic features of monopolistic competition?
C) easy enter, many firms, and differentiated products
The demand curve for a monopolistic firm is:
C) is more elastic than a monopoly demand curve
To maximize profit a pure monopolist must:
C) maximize the difference between total revenue and total cost
Monopolistically competitive firms:
C) may realize either profits or losses in the short run, but realize normal profits in the long run
A monopolistically competitive industry combines elements of both competition and monopoly. The monopoly element results from:
C) product differentiation
A pure monopolist is:
D) a one-firm industry
When a purely competitive firm is in long-run equilibrium:
E) all of the above (marginal revenue equals marginal cost, price equals marginal cost, total revenue equals total cost, minimum average total cost equals price)
