Unit B exam
In Figure 24.2, the profit-maximizing level of output is
4 units.
In Figure 24.1, the profit-maximizing monopolist will charge a price of
A
Monopolistically competitive firms are productively inefficient because long-run equilibrium occurs at an output rate where
ATC is greater than minimum ATC.
The shutdown point occurs where price equals the minimum of
AVC
If price is greater than marginal cost, a perfectly competitive firm should increase output because
Additional units of output will add to the firm's profits (or reduce losses).
Markets that exhibit economies of scale over the entire range of market output
Are natural monopolies.
The price charged by a profit-maximizing monopolist occurs
At a price on the demand curve above the intersection where MR = MC.
In Figure 24.2, total profit at the profit-maximizing rate of output is
CDHG.
Refer to Figure 22.2 for a perfectly competitive firm. The profit-maximizing quantity of output is
D
Refer to Figure 25.1 for an oligopoly firm. The existing price and quantity are $10 and 2,000 units. If we assume that rival firms match price decreases but not price increases, the firm's demand curve will most likely be (from left to right)
D2ED1.
Refer to Figure 22.3 for a perfectly competitive firm. If the market price is $15,
Economic profits will be zero.
Reductions in minimum average costs that come about through increases in the size of plants and equipment are called
Economies of scale.
Which of the following is an investment decision in a competitive market?
Entry or exit.
The demand curve confronting a competitive firm
Equals the marginal revenue curve.
Which of the following contributes to a firm maintaining a monopoly?
Exclusive franchises.
Product differentiation refers to
Features that make one product appear different from competing products in the same market.
If a firm can change market prices by altering its output, then it
Has market power.
Monopolistically competitive industries are characterized by all of the following except
Homogenous products.
Which of the following is true about advertising?
It is a major component of competition in perfectly competitive markets.
According to the text, one argument in favor of concentration of market power is that
Large firms can sometimes produce more efficiently than small firms because of economies of scale in production.
Brand loyalty usually makes the demand curve for a product
Less price-elastic.
Economic profit its
Less than accounting profit by the amount of implicit cost.
A profit-maximizing producer seeks to
Maximize total profit.
If there are many firms in an industry producing goods that are similar but slightly different, this is an example of
Monopolistic competition.
Which of the following may not characterize an oligopoly?
No market power.
Market structure is determined by the
Number and relative size of the firms in an industry.
Which of the following is not a characteristic of a perfectly competitive market?
Perfect information.
Economists assume the principal motivation of producers is
Profit
A concentration ratio measures the
Proportion of industry output produced by the largest firms.
Refer to Figure 26.1 for a monopolistically competitive firm. The profit-maximizing output and price combination for this firm in the short run is
Q2, P4.
The entry of firms into a market
Reduces the profits of existing firms in the market.
A monopoly realizes larger profits than a comparable competitive market by
Reducing production below the competitive level and pushing prices up above the competitive level..
Which of the following was the first to prohibit "conspiracies in restraint of trade"?
The Sherman Act.
Refer to Figure 22.3 for a perfectly competitive firm. If the market price is $23,
The firm will have above-normal profits.
A perfectly competitive firm is a price taker because
The price of the product is determined by many buyers and sellers.
When firms are interdependent,
The profit of one firm depends on how its rivals respond to its strategic decisions.
Which of the following is true about a monopolistically competitive industry?
There is excess capacity.
The Herfindahl-Hirshman Index is
Used to identify cases worthy of antitrust concern.
Which of the following is not a barrier to entry?
Well-established brand loyalty.
Which of the following is characteristic of a perfectly competitive market?
Zero economic profit in the long run.
Refer to Figure 22.3 for a perfectly competitive firm. If the market price is $10,
An economic loss will occur.
If the entire output of a market is produced by a single seller, the firm
Is a monopoly.
If a firm can raise market price by reducing its output, then
It faces a downward-sloping demand curve.
Refer to Figure 22.2 At quantity level B
Marginal revenue is greater than marginal cost, so the firm should expand production.
The correct ranking of degree of market power (from highest to lowest) is
Monopoly, oligopoly, monopolistic competition, perfect competition.
The only market structure in which there is significant interdependence among firms with regard to their pricing and output decisions is
Oligopoly.
Which market structure is characterized by a few interdependent firms?
Oligopoly.
In which of the following cases would a firm enter a market?
P > long-run ATC.
Price discrimination is best defined as
The selling of an identical good at different prices to different consumers by a single seller.
If a monopolistic competitor is maximizing profit, it is producing at a point where marginal cost
equals marginal revenue, which is less than price in monopolistic competition.