ECON FINAL

when a perfectly competitive industry is taken over by a monopoly , some consumer surplus is transferred to the monopolist in the form of

economic profit

in monopolistic competition, profit is maximized by producing so that marginal revenue

equals marginal cost and whicha re less than price

MR=MC

everything good happens

for a natural monopoly, economies of scale

exist along the long-run average cost curve at least until it crosses the market demand curve

the major dilemma facing Boeing and airbus is the

fact that if each firm seperartely tries to maximize its profit, it might wind up with less profit that otherwise

a firm encountering economies of scale over some range or output will have

falling long-run average cost curve

True about monopolistic comp but false about perfect

firms compete on their product's price as well as its quality and marketing

more efficient technology was discovered by a firm, there would be

a downward shift in the MC curve

if a natural monopoly is regulated using

a marginal cost pricing rule, the firm incurs an economic loss

in the long run a firm in monopolistic competition maximizes

its profit at a point where price is equal to average total cost but the average total cost is not minimized

with an average cost pricing rule, the quantity produced by the natural monopoly is

less than the quantity produced with a marginal cost pricing rule

when oligopolies operate like firms in perfect competition , the firms produce at the point where the

marginal cost equals the price

if the short-run average variable costs of production for a firm are rising, then this indicates that

marginal costs are above average variable costs

firm's short-run marginal- cost curve is increasing when

marginal product is decreasing

when the total product curve is falling , the

marginal product of labor is NEGATIVE

A firm will find it profitable to hire workers up to the point at which their

marginal resource cost is equal to to their MRP

a price-discriminating monopoly

sells a larger quantity than it would if it were a single-price monopoly

a craft union attempts to increase wage rates by

shifting the labor supply curve to the left

in monopolistic competition, the products of different sellers are

similar but slightly different

the short run is a time period in which

some resources are fixed and others are variable

a natural barrier to entry is defined as a barrier that arises because of

technology that allows economies of scale over the entire relevant of output

why does the marginal cost pricing rule result in an economic loss for a natural monopoly

the ATC curve is downward sloping throughout the relevant range, therefore the MC is lower than the ATC

for a monopoly, marginal revenue is equal to

the change in total revenue brought about by a one-unit increase in quantity sold

the demand curve facing a single-price monopoly is

above the marginal revenue curve

marginal revenue product measures

amount by which the extra production of one more worker increases a firm's total revenue

capture theory

an economic theory of regulation

Herbs has a large share of its market and its tempted to collude with the few firms that are in its market. It operates in

an oligopoly

a natural monopoly

arises when one firm can meet the entire market demand at a lower average total cost than two or more firms

law of diminishing returns states

as a firm uses more of a variable resource, given the quantity of fixed resources, marginal product of the firm will eventually decrease

at a long-run equilibrium in monopolistic competition, price equals

average total cost

only monopoly and oligopoly have what?

barriers to entry

firms in an oligopoly

can each influence the market price

a single-price monopoly transfers

consumer surplus to producers

with price discrimination, a monopoly

converts consumer surplus into economic profit

variable costs

costs that change with the level of production

Monopolistic competition has this in common with monopoly

downward-sloping deamnd curve

Rate of return regulation is designed to allow a natural monopoly to

earn a normal profit

if a regulatory agency sets he price equal to marginal cost for a natural monopoly, the

government might have to provide a subsidy to the firm to keep it in business

for a single-monopoly, price is

greater than marginal revenue

What is the difference between perfect comp and monopolistic comp

in perfect comp, firms produce identical goods, while in monopolistic comp firms produce slightly different goods

output level exceeds marginal cost. in order to maximize his profit,

increase his output

the MRP curve for labor

is the firm's labor demand curve

for a firm selling its product in a purely competitive market, the marginal revenue product of labor can be found by

multiplying marginal product by product price

a monopoly

must determine the price it will charge

a single-price monopoly

must lower the price for all customers if it wants to increase its sales sets a single price for all consumers

charging a ticket price where its demand is inelastic, the marginal revenue is

negative

in a prisoners' dilemma game, in the Nash equilibrium

neither player gets his or her best outcome

the marginal product of labor curve shows the change in total product resulting from

one-unit increase in the quantity of a particular resource used, HOLDING CONSTANT OTHER RESOURCES

the major difference between monopolistic competition and monopoly is

only a monopoly can earn an economic profit in the long run

implicit costs

payments for self employed resources

the purely competitive employer of resource A will maximize the profits from A by equating

price A with the MRP of A

elatic

price higher than quantity

inelastic

price lower than quantity

a monopoly creates a dead weight loss because the monopoly

produces less than the efficient quantitiy

a profit-maximizing firm will

reduce employment if marginal revenue product is less than marginal resource cost

with a natural monopoly

regulation can take the form of average cost pricing to allow coverage of costs

derived demand

related to the demand for the product or service labor is producing

A cartel is a collusive agreement among a number of firms that is designed to

restrict output and raise prices

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if a firm sells its product at a price lower than the opportunity cost of the inputs used to produce it...

the firm may earn accounting profits, but will face economic loss

Marginal Resource cost is

the increase in total resource cost associated with the hire of one or more unit of the resource

these are the same for a monopoly

the market demand and the firm's demand are

What is an example of a perfectly competitive firm's short run decision?

the profit-maximizing level of output

The price charged by a perfectly competitive firm is

the same as the market price

when marginal product reaches its max, what can be said of total product?

total product is increasing if marginal product is still positive