Production, Perfect Competition, Monopoly

Which of the following are characteristics of a contestable firm?

-No real barriers to entry -A single firm

In a perfectly competitive market, homogeneity means that firms must charge the market price for the goods or services they produce, because:

-There are hundreds of other perfectly good substitutes -The market is competitive

The practice of charging each and every consumer the price that she is willing and able to pay for a good or service is known as:

-first-degree price discrimination OR -perfect price discrimination -personal pricing

Which of the following is an example of second-degree price discrimination?

A customer decides to buy copy paper in bulk at a lower per-unit price.

What best describes the relationship between output and price?

A perfectly competitive firm's output moves in the same direction as the market price.

Which of the following is true if a firm is able to price discriminate?

The firm's economic profit is greater than without price discrimination.

What is true in the short run?

The supply curve for a perfectly competitive firm is a portion of its marginal cost curve.

How are monopolists similar to perfectly competitive firms?

They both produce where MR = MC.

Why are natural monopolies often regulated?

To ensure that consumers receive lower prices than they would occur without regulation.

Marginal revenue is the:

additional revenue associated with the sale of an additional unit.

Monopolies are likely to be less _____ than perfectly competitive firms.

allocatively efficient

A monopolist's marginal revenue curve lies _____ its demand curve.

below

Proprietorships, partnerships, and corporations are the primary forms of _____.

business organization

Negative _____ profits encourage firms to exit the market.

economic

Total revenue minus the explicit and implicit costs of production is _____ profit.

economic

Total revenue minus the total _____ costs of production is accounting profit.

explicit

In perfect competition,

firms cannot influence the market price with production decisions.

Decreasing _____ returns are a characteristic of production whereby the marginal product of the next unit of a variable resource utilized is less than that of the previous variable resource.

marginal

The level of profit that occurs when total revenue is equal to total cost is known as _____ profit.

normal

Costs that do not change with the amount of _____ produced are fixed costs.

output

The ability of a monopoly to influence prices by controlling the quantities that it produces in the market is called monopoly _____.

power

Total revenue equals:

price x quantity.

Profit equals total _________ minus total ________.

revenue; cost

Firms that take or accept the market price and have no ability to influence that price are known as price _____.

takers

For a monopoly, the marginal revenue is below the demand curve because:

the monopoly has to lower the price on all units to sell more.

A period of time in which at least one input of production is fixed is known as the _____.

the short run

Economic profit equals:

total revenue minus the explicit and implicit costs of production / total revenue minus economic costs.

Assuming the market price is $5 per unit of output, the firms marginal revenue curve:

would be a horizontal line at $5.

A company can break even and meet operating costs without a loss when it earns ___ economic profit.

zero