econ quiz - 04/23

when a firm exercises its monopoly power, the cost to society is ___________________.

deadweight loss

​________ is a market structure in which many rival firms produce differentiated products.

monopolistic competition

a monopolistically competitive firm shuts down in the short run if​ ________.

total revenues do not cover variable costs

if the marginal revenue of a producer exceeds his marginal cost, ___________________________.

additional production enhances profits

all firms in a monopolistically competitive industry face a​ ________ demand​ curve, so they have​ ________.

downward sloping, market power

an example of a monopolistically competitive firm is ________________.

fast-food industry

what feature do monopolistically competitive markets and monopolies​ share?

firms face downward sloping demand curves

when compared to competition, monopoly prices are ___________ and quantity produced is __________. the purpose of an antitrust policy is to ________ this situation.

higher, lower, reverse

when a firm exercises its monopoly power, social surplus is _________________ when compared to a perfectly competitive market.

lower

compared to a perfectly competitive market, consumer surplus is ___________, producer surplus is ______________, and deadweight loss is _________________.

lower, higher, higher

a firm's objective behind changing different prices to different consumers for the same good is to enhance __________.

profits

what equation calculates economic profits for a monopoly?

profits = (P-ATC) x Q

if a monopoly engages in first-degree price discrimination, ________________________.

social surplus is maximized

the residual demand curve facing a firm in a monopolistically competitive industry is​ ________.

the demand that is not satisfied by other producers

why do monopolies weaken the function of the invisible hand?

the quantity produced by a monopoly is too low

how is a monopolistically competitive market similar to a perfectly competitive​ market?

there are no restrictions on entry of new firms

monopolists do not use a supply curve because ___________________.

they do not vary based on market price

what is the purpose of an antitrust company?

to regulate and prevent anti competitive pricing, to prevent the use of questionable methods and unfair practices resulting in a monopoly

for a market to be characterized as monopolistically competitive, there must be _________________.

zero economic profits in the long run, differentiated products, and many sellers