Eco chapter 12&13 quiz

When natural monopoly is present in an industry, the per-unit costs of production will be

lowest when a single firm generates the entire output of the industry

In the long run, a pure monopolist will maximize profits by producing that output at which marginal cost is equal to

marginal revenue.

Monopolistically competitive firms

may realize either profits or losses in the short run but realize normal profits in the long run.

Assuming no change in product demand, a pure monopolist

must lower price to increase sales.

Large minimum efficient scale of plant combined with limited market demand may lead to

natural monopoly.

Pure monopolists may obtain economic profits in the long run because

of barriers to entry

With respect to the pure monopolist's demand curve, it can be said that

price exceeds marginal revenue at all outputs greater than 1.

A monopolist will maximize profits by

producing the output where marginal revenue equals marginal cost and charging the price on the demand curve at that quantity.

A monopolistically competitive industry combines elements of both competition and monopoly. The monopoly element results from

product differentiation.

If firms in a monopolistically competitive market are currently earning economic losses, then in the long run,

some existing firms will exit the market, and the remaining firms will experience an increase in demand for their products until zero economic profit is again restored.

A monopolistic firm has a sales schedule such that it can sell 10 prefabricated garages per week at $10,000 each, but if it restricts its output to 9 per week it can sell these at $11,000 each. The marginal revenue of the 10th unit of sales per week is

1,000

A profit-maximizing monopolistically competitive firm will expand output to the point where

MR = MC

Assuming that firms maximize profits, how will the price and output policy of an unregulated monopolist compare with purely competitive market efficiency?

The output of the monopolist will be too small and its price too high

Which of the following is the most accurate description of a monopolist?

a firm that is the sole producer of a product for which there are no good substitutes in a market with high barriers to entry

Non-price competition refers to

advertising, product promotion, and changes in the real or perceived characteristics of a product.

In the long run, neither perfectly competitive or monopolistically competitive firms will be able to earn economic profits because

competition will force prices down to the level of per-unit production costs.

A significant difference between a monopolistically competitive firm and a purely competitive firm is that the

former sells similar, although not identical, products.

In a monopolistically competitive market, the firms will

have to accept the market price for their product, and the entry barriers into the market will be low.

A monopolistically competitive firm's marginal revenue curve

is downsloping and lies below the demand curve.

Monopolistic competition is characterized by a

large number of firms and low entry barriers.