Microeconomics Test 3
Total profit is equal to
(Price - ATC) x (Q)
profit maximization
A method of setting prices that occurs when marginal revenue equals marginal cost.
Which of the following is a common barrier to entry in a monopoly market?
A patent on a new product.
Monopolists set prices
At the output where marginal revenue equals marginal cost.
If a perfectly competitive firm is producing a rate of output at which MC exceeds price, then the firm
Can increase its profit by decreasing output.
The demand curve confronting a competitive firm
Equals the marginal revenue curve.
Both a competitive industry and a monopoly
Face downward-sloping market demand curves.
True or False: A monopolist's ability to act as a price setter guarantees economic profits in the short run.
False
The demand curve for each perfectly competitive firm is
Horizontal
A perfectly competitive firm will maximize profits by choosing an output level where
Price equals marginal cost.
A catfish farmer will shut down production when
Price falls below AVC.
For a monopolist, marginal revenue equals
The change in total revenue divided by the change in quantity.
Which of the following is true about the output level where marginal revenue equals marginal cost?
The firm is maximizing profit.
A firm maximizes profit when
Total revenue exceeds total cost by the greatest amount
