Microeconomics Exam 3
What does monopolistic competition have in common with perfect competition?
A large number of firms and freedom for entry and exit
A firm that is a price taker faces
A perfectly elastic demand curve.
In contrast to competitive firms, single-price monopolies
Can make an economic profit for an indefinite period of time.
Perfect competition is characterized by all of the following EXCEPT
Considerable advertising by individual firms.
The square of the percentage market share of each firm summed over the firms in a market is the
Herfindahl-Hirschman Index.
A perfectly competitive firm's short-run supply curve is
Its marginal cost curve above the AVC curve.
The marginal revenue curve facing a monopolistically competitive firm
Lies below its demand curve
Which of the following firms is most likely to be a monopoly?
Local distributor of natural gas
In the long run in monopolistic competition, firms
Make zero economic profit
A firm in perfect competition is a price taker because
Many other firms produce the same product
A firm maximizes its profit by producing the amount of output such that
Marginal revenue equals marginal cost.
An industry with a large number of firms, differentiated products, and free entry and exit is called
Monopolistic competition
Which antitrust law has two main provisions, one against conspiring with others to restrict competition and the other making it felony to monopolize or attempt to monopolize?
Sherman Act
When new firms enter the perfectly competitive Miami bagel market, the market
Supply curve shifts rightward
Marginal revenue is
The change in total revenue from one-unit increase in the quantity sold.
To maximize its profit, in the short-run a perfectly competitive firm decides
What quantity of output to produce.
In the long run, a perfectly competitive firm makes
Zero economic profit
Kevin owns a personal training gymnasium in Orlando. The above figure shows the demand and cost curves for his firm, which competes in a monopolistically competitive market. Kevin will train how many clients per day?
4
What does monopolistic competition have in common with monopoly?
A downward-sloping demand curve
A firm faces a smaller number of competitors. This firm is competing in
An oligopoly
One requirement for an industry to be perfectly competitive is that in the industry there
Are many different firms for whom the efficient scale of production is small.
To be able to price discriminate, a firm must
Be able to prevent resales of its goods
In the prisoners' dilemma, each player is ____________ regardless of the other player's actions.
Better off confessing
The demand curve for a monopoly is
Downward sloping.
A natural monopoly is one that arises from
Economies of scale.
To maximize its profit, a single-price monopoly produces the amount of output, so that its marginal revenue
Equals its marginal cost.
Which of the following is the best example of a perfectly competitive market?
Farming
Long-run economic profits are most likely to be earned in
Monopoly and oligopoly
Game theory is used to analyze the interactions among firms in
Oligopoly
A monopoly is a market with
One supplier.
The four market types are
Perfect competition, monopoly, monopolistic competition, and oligopoly.
A perfectly competitive firm can
Sell all of its output at the prevailing market price.
If a monopoly wants to sell a larger quantity, it must
Set a lower price
A single-price monopoly
Sets a single price for all consumers.
Normal profit is
The return of entrepreneurship.
The price charged by a perfectly competitive firm is
The same as the market price.
One requirement for an industry to be perfectly competitive is that
There are no restrictions on entry into or exit from the market.
One of the requirements for a monopoly is that
There is a product with no close substitutes.
If a few oil-producing countries in the Middle East decide to jointly limit the production of oil,
They are forming a cartel.