Micro Unit 3 Chapters 8 & 9
Individuals in a market who must take the market price as given are:
Price takers
a natural monopoly exists whenever a single firm:
confronts economies of scale over the entire range of production that is relevant to its market.
The profit-maximizing rule MR = MC is:
followed by any firm.
An assumption of the model of perfect competition is:
identical goods.
If a monopolist is producing a quantity that generates MC=MR, then profit:
is maximized
A monopolist is a:
price setter
The difference between total revenue and total cost is:
Economic profit
The United States bans most efforts to create a monopoly when:
Efforts to form a monopoly "unfairly" drive out competitors.
Marginal revenue is a firm's:
Increase in total revenue when it sells an additional unit of output.
Which of the following is (are) true?
MR = MC is a profit-maximizing rule for any firm.
Federal Trade Commission
Monitors markets and attempts to ensure markets remain competitive
Average Variable Cost
TC-FC
Average Total Cost (calculation)
Total cost/quantity
Profit (calculation)
Total revenue-total cost
A monopoly is a market characterized by:
a single seller
Conditions that prevent the entry of new firms in a monopoly market are:
barriers to entry
A monopoly:
determines its own price, given its demand curve
The demand curve facing a monopolist is:
downward sloping
The United States bans most efforts to create a monopoly when:
efforts to form a monopoly "unfairly" drive out competitors
A type of firm that usually has a natural monopoly in most of its markets is a(n):
electrical utility
Economic profits in a perfectly competitive industry induce _______ , and losses induce _______ .
entry; exit
Marginal revenue:
equals the market price in perfect competition.
A monopoly is likely to _______ and _______ than otherwise equivalent competitive firms.
produce less; charge more
If economic profits exist in perfect competition, in the long run firms will enter because of easy entry, the _______ curve will shift to the right, and _______ will _______ .
supply; output; increase
the demand curve for a monopoly is:
the industry demand curve
the demand curve facing a monopolist is always:
the same as the industry's demand curve
The demand curve facing a monopolist is always:
the same as the industry's demand curve.
Because monopoly firms are price setters:
they can only sell more by lower price.
If a perfectly competitive firm sells 30 units of output at a price of $10 per unit, its marginal revenue is:
$10
If a firm in perfect competition sells 10 units of output at a market price of $5 per unit, its marginal revenue is:
$5
The profit-maximizing level of output for a perfectly competitive firm occurs where:
marginal revenue equals marginal cost.
The two theoretical extremes of the market structure spectrum are occupied on one end by perfect competition and on the other end by:
monopoly
The power a firm has to set is own price is called:
monopoly power
The two theoretical extremes of the market structure spectrum are occupied on one end by perfect competition and on the other end by:
monopoly.
Most electric, gas, and water companies are examples of:
natural monopolies.