Chp 14 Quiz

If the firm seeks to maximize profit, it should set a price equal to:

$8

As firms leave a monopolistically competitive industry that is sustaining economic losses:

the demand curves facing the remaining firms in the industry shift to the right.

If there were no barriers to entry:

Firms would compete away monopoly profits.

A market structure in which many firms sell differentiated products is called ____________________; there are few barriers to entry.

Monopolistic Competition

A(n) ____________________ is a market structure in which one firm makes up the entire market.

Monopoly

Why are patents important to those who hold them?

Patents act as a barrier to entry, allowing monopoly profits.

To ____________________ is to charge different prices to different individuals or groups of individuals.

Price Discriminate

Refer to the table shown, which shows the demand schedule for a product sold by a monopolist. Marginal revenue is positive:

When Price is above $10

A monopoly firm is different from a competitive firm in that

a monopolist can influence market price whereas a competitive firm cannot.

Refer to the graph shown of a monopolistically competitive firm. You can conclude that

the industry is in long-run equilibrium.

Under monopolistic competition, a firm's ability to influence the price of the product it sells arises because: 1-the product of each seller is differentiated from that of others. 2-sellers in the market have small market shares. 3-sellers in the market have large market shares. 4-each seller sells a standardized product.

1-the product of each seller is differentiated from that of others.

A monopolist: 1-earns a profit in the short run and the long run. 2-can earn profits or incur losses in the short run. 3-can never incur losses. 4-earns a profit in the short run but not in the long run.

2-can earn profits or incur losses in the short run

When a monopolistically competitive industry is in long-run equilibrium: 1-price equals marginal cost. 2-firms earn zero economic profits. 3-firms earn economic profits. 4-price equals minimum average total cost.

2-firms earn zero economic profits.

Marginal revenue is not equal to price for a monopolist because: 1-the monopolist's demand curve is below its marginal revenue curve. 2-the monopolist must lower the price of all units in order to sell more. 3-total revenue increases as output increases. 4-the monopolist sets price equal to marginal cost.

2-the monopolist must lower the price of all units in order to sell more.

Under monopolistic competition, a long-run equilibrium exists when price equals: 1-marginal cost. 2-minimum average total cost. 3-average total cost. 4-marginal revenue.

3-average total cost.

The demand curve for a monopolist differs from the demand curve faced by a competitive firm because the demand curve for: 1-a competitive firm is inelastic. 2-a monopolist lies below its marginal revenue curve. 3-a competitive firm lies above its marginal revenue curve. 4-a monopolist is the market demand curve.

4-a monopolist is the market demand curve.

A natural monopoly:

occurs when a single firm can supply the entire market demand for a product at a lower average total cost than would be possible if two or more firms supplied the market.

If a firm has a monopoly over the sale of photographic paper and seeks to maximize profits, it:

will set the price of the product so that its marginal revenue equals its marginal cost.