ECON FINAL
when a perfectly competitive industry is taken over by a monopoly , some consumer surplus is transferred to the monopolist in the form of
economic profit
in monopolistic competition, profit is maximized by producing so that marginal revenue
equals marginal cost and whicha re less than price
MR=MC
everything good happens
for a natural monopoly, economies of scale
exist along the long-run average cost curve at least until it crosses the market demand curve
the major dilemma facing Boeing and airbus is the
fact that if each firm seperartely tries to maximize its profit, it might wind up with less profit that otherwise
a firm encountering economies of scale over some range or output will have
falling long-run average cost curve
True about monopolistic comp but false about perfect
firms compete on their product's price as well as its quality and marketing
more efficient technology was discovered by a firm, there would be
a downward shift in the MC curve
if a natural monopoly is regulated using
a marginal cost pricing rule, the firm incurs an economic loss
in the long run a firm in monopolistic competition maximizes
its profit at a point where price is equal to average total cost but the average total cost is not minimized
with an average cost pricing rule, the quantity produced by the natural monopoly is
less than the quantity produced with a marginal cost pricing rule
when oligopolies operate like firms in perfect competition , the firms produce at the point where the
marginal cost equals the price
if the short-run average variable costs of production for a firm are rising, then this indicates that
marginal costs are above average variable costs
firm's short-run marginal- cost curve is increasing when
marginal product is decreasing
when the total product curve is falling , the
marginal product of labor is NEGATIVE
A firm will find it profitable to hire workers up to the point at which their
marginal resource cost is equal to to their MRP
a price-discriminating monopoly
sells a larger quantity than it would if it were a single-price monopoly
a craft union attempts to increase wage rates by
shifting the labor supply curve to the left
in monopolistic competition, the products of different sellers are
similar but slightly different
the short run is a time period in which
some resources are fixed and others are variable
a natural barrier to entry is defined as a barrier that arises because of
technology that allows economies of scale over the entire relevant of output
why does the marginal cost pricing rule result in an economic loss for a natural monopoly
the ATC curve is downward sloping throughout the relevant range, therefore the MC is lower than the ATC
for a monopoly, marginal revenue is equal to
the change in total revenue brought about by a one-unit increase in quantity sold
the demand curve facing a single-price monopoly is
above the marginal revenue curve
marginal revenue product measures
amount by which the extra production of one more worker increases a firm's total revenue
capture theory
an economic theory of regulation
Herbs has a large share of its market and its tempted to collude with the few firms that are in its market. It operates in
an oligopoly
a natural monopoly
arises when one firm can meet the entire market demand at a lower average total cost than two or more firms
law of diminishing returns states
as a firm uses more of a variable resource, given the quantity of fixed resources, marginal product of the firm will eventually decrease
at a long-run equilibrium in monopolistic competition, price equals
average total cost
only monopoly and oligopoly have what?
barriers to entry
firms in an oligopoly
can each influence the market price
a single-price monopoly transfers
consumer surplus to producers
with price discrimination, a monopoly
converts consumer surplus into economic profit
variable costs
costs that change with the level of production
Monopolistic competition has this in common with monopoly
downward-sloping deamnd curve
Rate of return regulation is designed to allow a natural monopoly to
earn a normal profit
if a regulatory agency sets he price equal to marginal cost for a natural monopoly, the
government might have to provide a subsidy to the firm to keep it in business
for a single-monopoly, price is
greater than marginal revenue
What is the difference between perfect comp and monopolistic comp
in perfect comp, firms produce identical goods, while in monopolistic comp firms produce slightly different goods
output level exceeds marginal cost. in order to maximize his profit,
increase his output
the MRP curve for labor
is the firm's labor demand curve
for a firm selling its product in a purely competitive market, the marginal revenue product of labor can be found by
multiplying marginal product by product price
a monopoly
must determine the price it will charge
a single-price monopoly
must lower the price for all customers if it wants to increase its sales sets a single price for all consumers
charging a ticket price where its demand is inelastic, the marginal revenue is
negative
in a prisoners' dilemma game, in the Nash equilibrium
neither player gets his or her best outcome
the marginal product of labor curve shows the change in total product resulting from
one-unit increase in the quantity of a particular resource used, HOLDING CONSTANT OTHER RESOURCES
the major difference between monopolistic competition and monopoly is
only a monopoly can earn an economic profit in the long run
implicit costs
payments for self employed resources
the purely competitive employer of resource A will maximize the profits from A by equating
price A with the MRP of A
elatic
price higher than quantity
inelastic
price lower than quantity
a monopoly creates a dead weight loss because the monopoly
produces less than the efficient quantitiy
a profit-maximizing firm will
reduce employment if marginal revenue product is less than marginal resource cost
with a natural monopoly
regulation can take the form of average cost pricing to allow coverage of costs
derived demand
related to the demand for the product or service labor is producing
A cartel is a collusive agreement among a number of firms that is designed to
restrict output and raise prices
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if a firm sells its product at a price lower than the opportunity cost of the inputs used to produce it...
the firm may earn accounting profits, but will face economic loss
Marginal Resource cost is
the increase in total resource cost associated with the hire of one or more unit of the resource
these are the same for a monopoly
the market demand and the firm's demand are
What is an example of a perfectly competitive firm's short run decision?
the profit-maximizing level of output
The price charged by a perfectly competitive firm is
the same as the market price
when marginal product reaches its max, what can be said of total product?
total product is increasing if marginal product is still positive