ECON 2113 exam 4
a one-unit increase in output will increase the firm's profit.
If a competitive firm is currently producing a level of output at which marginal revenue exceeds marginal cost, then...
exactly triple
If a firm in a perfectly competitive market triples the number of units of output sold, then total revenue will...
may still be earning profit
If marginal cost exceeds marginal revenue, the firm...
have a negligible impact on the market price.
In a competitive market, the actions of any single buyer or seller will
profit is zero.
In a market that allows free entry and exit, the process of entry and exit ends when, for the typical firm in the market,
economic profits are zero.
In a perfectly competitive market, the process of entry and exit will end when, for firms in the market,
price < average total cost
In the long run all of a firm's costs are variable. In this case the exit criterion for a profit-maximizing firm is...
a competitive market
When a firm has little ability to influence market prices it is said to be in what kind of a market?
price is below the minimum of average variable cost.
When a perfectly competitive firm makes a decision to shut down, it is most likely that...
price takers
When buyers in a competitive market take the selling price as given, they are said to be...
may be minimizing its losses, rather than maximizing its profit.
When marginal revenue equals marginal cost, the firm...
drive down profits of existing firms in the market.
When new firms have an incentive to enter a competitive market, their entry will...
upward sloping
When some resources used in production are only available in limited quantities, it is likely that the long-run supply curve in a competitive market is...
shut down
When total revenue is less than variable costs, a firm in a competitive market will...
does not change
Whenever a perfectly competitive firm chooses to change its level of output, holding the price of the product constant, its marginal revenue...
Firms have difficulty entering the market.
Which of the following is NOT a characteristic of a perfectly competitive market?
(i) A key resource is owned by a single firm. (ii) The costs of production make a single producer more efficient than a large number of producers. (iii) The government has given the existing monopoly the exclusive right to produce the good. all of the above
Which of the following is an example of a barrier to entry?
The costs of production make a single firm more efficient than a large number of firms.
Which of the following items is a primary source of barriers to entry?
Bill owns the only grocery store in a small community that lies 200 miles from the nearest city
Which of the following scenarios best represents a monopoly situation?
A monopoly has the ability to set the price of its product at whatever level it desires.
Which of the following statements is (are) true of a monopoly?
The decision to shut down is a short-run decision, whereas the decision to exit is a long-run decision.
Which of the following statements is correct regarding a firm's decisionmaking?
A competitive firm is a price taker and a monopoly is a price maker
Which of the following statements is correct?
a. its total revenue is less than its total cost. b. its profit is negative. c. the price of its product is less than its average total cost. all of the above
A firm will exit a market if, for all positive levels of output,
the government gives a firm the exclusive right to sell some good or service.
A government-created monopoly arises when...
Firms can enter and exit a market more easily in the long run than in the short run.
A long-run supply curve that is flatter than a short-run supply curve results from which of the following?
each buyer is small compared to the market and each seller is small compared to the market.
A market is competitive if
be less than the price per unit of its product.
A monopoly's marginal cost will...
there are economies of scale over the relevant range of output.
A natural monopoly occurs when...
(i) a product that is priced higher than it would be without the exclusive rights. (ii) desirable behavior in the sense that inventors are encouraged to invent. (iii) higher profits for the inventor. all of the above
Allowing an inventor to have the exclusive rights to market her new invention will lead to
fixed costs
Firms that shut down in the short run still have to pay their...
average revenue, marginal revenue, and the price of the good are all equal to one another.
For a competitive firm,
total revenue - total cost
For a competitive firm, profit =
are generally not worried about competition eroding their monopoly position in the market.
Natural monopolies differ from other forms of monopoly because they...
government-created monopolies.
Patent and copyright laws are major sources of...
price exceeds average total cost.
Profit-maximizing firms enter a competitive market when, for existing firms in that market,
a. marginal revenue b. average revenue c. price per unit of output ALL OF THEM
The additional revenue a firm in a competitive market receives if it increases its production by one unit equals its
the short run, but not the long run.
The assumption of a fixed number of firms is appropriate for analysis of...
marginal cost curve that lies above average variable cost.
The complete description of a competitive firm's supply curve is as follows: The competitive firm's short-run supply curve is that portion of the...
economies of scale over the relevant range of output.
The defining characteristic of a natural monopoly is...
increase market supply and decrease market prices.
The entry of new firms into a competitive market will...
the price of its output
The key difference between a competitive firm and a monopoly firm is the ability to select...
its marginal cost curve (above average variable cost).
The short-run supply curve for a firm in a perfectly competitive market is...
(i) The firm is the sole seller of its product. (ii) The firm's product does not have close substitutes.
To define a monopoly, we cite the following characteristics: