Mirco Final
Refer to Figure 15-18. If the monopoly firm is not allowed to price discriminate, then the deadweight loss amounts to
ch 15. check phone or end of video
Refer to Figure 16-4. What price will the monopolistically competitive firm charge in this
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Refer to Figure 16-3. At the profit-maximizing level of output, what is the firm's total cost of
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7. If the marginal cost of production is constant at $18 per unit, this profitmaximizing monopolist will choose to produce
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Price discrimination adds to social welfare in the form of
(i) Increased total surplus
As competitors enter a monopolistically competitive industry, the incumbent firms demand curves shift
. To the left and becomes more elastic
When an industry is a natural monopoly
A larger number of firms will lead to higher average cost
When consumers are exposed to additional choices that result from the introduction of a new product,
A product-variety externality is said to occur
Competitive firms that earn a loss in the short run should
A. Shut down if P IS LESS THAN AVC
Refer to Figure 14-1. The firm will earn a positive economic profit in the short run if the market price is
Above $6.30 CH 14
. Monopolies are socially inefficient because the price they charge is
Above marginal cost
Compared to other firms, firms that sell highly differentiated products likely incur significant costs associated with
Advertising
For a competitive firm
Average revenue equals marginal revenue
firm produces 400 units of output at a total cost of $1,200. If fixed costs are $200,
Average variable cost is $2.5
Doreen's Dairy produces and sells Swiss cheese. Last year, it produced 7,000 pounds and sold each pound for $6. In producing the 7,000 pounds, the dairy incurred variable costs of $28,000 and a total cost of $40,000. In producing the 7,000 pounds of cheese, the firm's average fixed cost wa
B. $1.71 PIC ON PHONE
suppose a firm in a competitive market produces and sells 150 units of output and earns $1800 in total revenue from the sales. If the firm increases its output to 200 units, total revenue will be
B. $2400 in notes
The fundamental source of monopoly power is
Barriers to entry
Tom produces commemorative T-shirts in a competitive market. If Tom decides to decrease his output, this will
Decrease his revenue, since his output has decreased and the price remains the same
In the long run a company that produces and sells covers for cell phones incurs total costs of $2,500 when output is 1,250 covers and $4,000 when output is 1,500 covers. For this range of output, the cell phone cover company exhibits
Diseconomies of scale
The supply curve for the monopolist
Does not exist
Product differentiation causes the seller of a good to face what type of demand curve?
Downward sloping
In a perfectly competitive market, the process of entry and exit will end when
Economic profits are zero
In a competitive market, the actions of any single buyer or seller will
Have a negligible impact on the market price
A monopolist's profits with price discrimination will be
Higher than if the firm charged just one price because the firm will capture more consumer surplus.
In a competitive market the current price is $5. The typical firm in the market has ATC = $5.50 and AVC = $5.15.
In the short run firms will shut down, and in the long run firms will leave the market
Monopolistically competitive firms have excess capacity. To maximize profits, firms will
Maintain the excess capacity
1. A monopolistically competitive industry is characterized by
Many firms, differentiated products and free entry
When all firms and potential firms in a market have the same cost curves, the long-run equilibrium of a competitive market with free entry and exit will be characterized by firm
Operating at the efficient scale
Raiman's Shoe Repair produces custom-made shoes. When Mr. Raiman produces 12 pairs per week, the marginal cost of the 12th pair is $84, and the marginal revenue of the 12th pair is $70. What would you advise Mr. Raiman to do?
Produce fewer custom-made shoes
the amount that producers receive for a good minus their costs of producing it equals
Producer surplus
At all levels of production higher than the point where the marginal cost curve crosses the average variable cost curve, average variable cost
Rise
5. Refer to Table 14-8. In order to maximize profits, the firm will produce
TR NEEDS TO B HIGHER THAN TC
Suppose that a competitive market is initially in equilibrium, then demand increases. If some resources used in the production are not available in sufficient quantities for entering firms.
The long-run market supply curve will be upward sloping
Scenario 15-6 The concert promoters of a heavy-metal band, WeR2Loud, know that there are two types of concert-goers: die-hard fans and casual fans. For a particular WeR2Loud concert, there are 1,000 die-hard fans who will pay $150 for a ticket and 500 casual fans who will pay $50 for a ticket. There are 1,500 seats available at the concert venue. Suppose the cost of putting on the concert is $50,000, which includes the cost of the band, lighting, security, etc. Refer to Scenario 15-6. How much additional profit can the concert promoters earn by charging each customer their willingness to pay relative to charging a flat price of $50 per ticket?
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Consider the following demand and cost information for a monopoly. Quantity Price Total Cost 0 $32 $6 1 $28 $20 2 $24 $34 3 $20 $48 4 $16 $62 5 $12 $76 Refer to Table 15-9. At the profit-maximizing price, how much profit will the monopoly earn?
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A competitive firm
is a price taker, whereas a monopolist is a price maker.
