Week 4 Practice Monopolistic Competition / Oligopoly Adaptive Assignement
A firm sustains a loss if ____________?
( TR < TC ) Total revenue is less than total cost
To Calculate profit, we need to identify 3 pieces of information.
1. Average total cost 2. Price 3. Quantity of output
a number of entry barriers are present in Oligopolistic markets, including
1. Economies of scale that may allow only a small number of firms to operate in a market. 2.Patents 3.Pricing strategies 4.Significant costs of capital 5.control of the resources needed to produce output
Indicate why the market for cucumbers is likely a perfectly competitive market?
1. Entry into the market is free and open 2. Producers do not have control over prices 3. To most consumers, all cucumbers are very similar
for a perfectly competitive firm, the market price is equal to__________?
1. Marginal Revenue 2. Demand 3. Average Revenue
Identify characteristics of a perfectly competitive Market
1. Standardized product 2.Easy entry and exit 3.large number of buyers and sellers 4.producers who are price takers
Which of the following is NOT a characteristic of Monopolistic Competition?
1. There is a Relatively large number of Buyers and Seller 2.Entry and Exit is Relatively easy 3.The Products are Standardized 4.Firms have some control over price.
Economic profit equals --------------
1. Total revenue minus explicit and implicit cost of production 2. Total revenue minus economic costs
in a perfect competitive market Homogeneity means that firms must charge the market price for the goods or the services they produce because ______________?
1. there are hundreds of perfectly good substitutes 2.The market is competitive
Monopolistic Characteristics
1.Product Differentiation - Features and Sales of their products. 2. Many Firms -20-60 firms 3.Freedom of Entry land Exit 4.Independent Decision Making 5.Some Degree of Market. Power 6.Buyers & Sellers do not have perfect information (Imperfect info.) 7.Small Market Share - smaller than monopolies 8.Some Barriers to entry - regarding Advertising Costs. 9.Large number of Sellers
a perfectly competitive model is the most effecient type of market and is characterized by both productive and ____________ effeciency
Allocative
Goods a society most desires
Allocative Efficiency
producing the goods and the services that are most wanted by consumers in such a way that their marginal benefit equals their marignal cost.
Allocative efficiency
Profit Maximization implies that monopolistically competitive firms should expand production up to the point where the marginal revenue equal marginal cost. True or False
Answer = True
Laws designed to prevent firms from engaging in behaviors that would lessen competition in a market are called?
Anti trust laws
Total profit equals (_______________revenue minus ______________total cost), multiplied by output.
Average, Average
Monopolistically Competitive Markets
Combine characteristics of competitive markets and pure monopolies.
A market structure characterized by a relatively large number of sellers producing a differentiated product, for which they have some control over the price they charge, with relatively easy market entry and exit is known as Monopolistic _______________.
Competition
As the market price decreases, all else held constant, a profit maximizing firm will its production.
Decrease
Normal profit is also known as zero ________________profit
Economic
In perfect Competition
Firms cannot influence the market price with production decisions
in the long run ________________
Firms earn a Normal profit
Of the same kind or alike . Consisting of parts all of the same kind.
Hemogeneous
Diverse in content substances in different phases.
Heterogeneous
In a monopolistically competitve market, the closer the substitutes are for a product, the more ______________its demand will be; the more rare or unusual a product is, the more _______________its demand will be.
Horizontal, Vertical
In a perfectly competitive market, we assume that products are___________in the minds of consumers.
Indentical
The extra or additional cost associated with the production of an additional unit of output is the _________________Cost.
Marginal
Extra or additional revenue associated with the production of an additional unit of output is the _________________.
Marginal revenue
In a perfectly competitive market, a single firm is a price taker, and therefore, can only charge the ___________price?
Market
In a _____________ Competitive Market, consumers can usually find exactly what they are looking for based on their preferences and budgets.
Monopolistic
For____________competitive firms, branding serves as a signal to consumers about the products they are going to purchase.
Monopolistically
producers operating in Oligopolistic markets generate
Normal profits and even losses in the short run.
Monopolistic Competition and a Monopoly are ...............?
Not the same Market Structure
In the long run, monopolistically competitive firm will charge a _________ equal to the average total cost per unit produced.
Price
Total revenue equals _________________?
Price times quantity
In a Oligopoly
Producers may or may not earn economic profits
The Strategy of distinguishing one firm's product from the competing products of other firms is called ________________Differentiation.
Product
Least costly production technique are used to produce wanted good or services.
Productively Effecient
For a firm, Profit equals total _______________Minus total ______________.
Revenue, Cost
Determine which markets can be described as Monopolistically Competitive.
Satellite Radio - Not Monopolistically Competitive AM/FM - Monopolistically Competitive Common Salt - Not Monopolistically Clothing - Monopolistically Competitive Shampoo - Monopolistically competitive
the characteristics of Oligopoly competitive market are_______________?
Standardized or differentiated products extensive entry barriers Producers who behave strategically when making decisions related to the features, pricing and advertising of their products. producers who are price makers few large producers
Oligopolistic firms can influence the prices they charge for their products, but their behavior needs to be, given they face other competitors in their industries.
Strategic
Product Differentiation
The strategy of distinguishing one firm's product from the competing products of other firms.
Profit equal ___________revenue minus ___________cost.
Total, Total
Productive efficiency is ______________.
Using the fewest resources possible to produce a good or a service.
The value of the economic surplus that is forgone when a market is not allowed to adjust to its competitive equilibrium.
deadweight loss
profit maximization implies that perfectly competitive firms should expand production up to the point where marginal revenue_____________ marginal cost.
equals
the underutilization of resources that occurs when the quantity of output a firm chooses to produce is less than the quantity that minimizes average total cost.
excess capacity
when a firm shuts down in the short run, it must still pay,________________costs.
fixed
The ________________Interdependence observed among Oligopolistic firms is often studied using the tools of game theory.
mutual
producing output at the lowest possible average total cost of production; using the fewest resources possible to produce a good or service
productive efficiency
All firms maximize profits by producing the quantity of output at which the marginal ____________is equal to the marginal___________.
revenue, cost
A perfectly competitive market involves firms that produce identical products, this guarantees
the consumers receive the lowest price