Microeconomics Exam 3
it call sell all it wants at the market price.
A competitive firm does not try to sell more by lowering its price because...
the industry S & D
A competitive firm's price is determined by
new firms will be attracted into the industry
A competitive market in the short run suggests that in the long run,
it can cover its variable costs and some of its fixed costs (MR>AVC but <ATC)
A firm should continue to operate even at a loss in the short run if:
small
A low concentration ratio means that each firm accounts for _______ market share of the industry
as long as marginal revenue is greater than marginal cost
A profit-maximizing firm in the short run will expand output: (how long?)
ATC, AVC, MC, and MR
A pure competition graph contains?
its average revenue equals its marginal revenue.
A purely competitive firm can be identified by the fact that...
its average marginal equals its marginal revenue.
A purely competitive firm can be identified by the fact that:
Marginal cost
A purely competitive firm's marginal revenue is equal to:
mutual interdependence
A unique feature of an oligopolistic industry is:
85
If an industry has 5 big firms holding market shares of 20, 25, 15, 10, and 25%, the four-firm concentration rate is ??%
Total revenue & total cost is the largest, with revenue > cost.
In a competitive market, a profit-maximizing firm will produce where the gap between...
other firms will enter the industry, supply will increase
In a competitive market, if the price > the minimum ATC of firms, then:
Average Variable Cost
In a short-run competitive market, a profit-maximizing firm will shut down when price is below
demand and supply curves intersect
In pure competition, price is determined where the industry:
MR (the whole thing)
In the monopolist's graph, the elastic portion of the demand curve ranges?
irrelevant in determining the optimal level of output
In the short run, fixed costs for a profitable firm are:
Pure Competition
In which market model are the conditions of entry into the market easiest?
Pure Monopoly
In which market model would there be a unique product for which there are no close substitutes?
$3.
Joe sells pork in a competitive market. The price is $3/lb. The marginal revenue of the 12th lb is:
Pure Monopoly
Local electric or gas utility companies mostly operate in which market structure?
MR=MC
Monopolists produce only where?
a firm's behavior is affected by other firms' actions
Mutual interdependence means that:
Oligopoly
Mutual interdependence would tend to limit control over price in which market model?
extensive economies of scale in production
Natural monopolies result from:
ATC=MR
Normal profits occur when:
the monopoly produces a product with no close substitutes
One defining characteristic of pure monopoly is that:
slopes downward
One feature of pure monopoly is that the demand curve:
a price MAKER
One feature of pure monopoly is that the firm is:
AVC
Shutdown price is when MR=?
a few large producers
The characteristic most closely associated with oligopoly is:
where TC>TR
The competitive firm in the short run will have losses in which production range?
the same as the industry's demand
The demand curve confronting a pure monopolist is:
Where AVC=MC (or AVC's minimum) because at that point the firm is not covering any costs
The firm should shut down if the quantity of output falls below:
less / more
The goal of product differentiation and advertising in monopolistic competition is to make price _____ of a factor & product differences _____ of a factor.
greater
The larger the Herfindahl index, the ____________ the degree of market power in an industry.
MR=MC, then trace up to the Demand
The monopolist firm will set its prices where?
segment of the MC curve lying above the AVC curve
The short-run supply curve for a competitive firm is the
Where D (or MR) > ATC
To maximize profits, a firm should produce what quantity?
in the elastic range of its demand curve
Under pure monopoly, a profit-maximizing firm will produce
Herfindahl Index
What is a measure of the degree of industry concentration?
price takers
Which characteristic would best be associated with pure competition?
Pure Competition
Which market structure has the largest number of firms in the industry?
price.
Xavier sells tomatoes in a competitive market so its marginal revenue always equals the...
ATC
Breakeven price is when MR=?
Pure Competition
Agricultural products (commodities) market (wheat or corn) is which type of market?
MR=MC
At the profit-maximizing level of output, the firm's total revenue equals: