econ-micro exam 3
new firms would enter this market until price equaled
11 dollars (where MC=ATC)
which quantity of output would be the allocative efficient level of output
12 (MC on the D curve)
which price would the profit maximizing monopolist charge
27 dollars ((MC=MR directly above on MR curve)
a profit maximizing fir would produce ----- of output and charge a price of ----
6 thousand at 25 dollars (where MC=MR and directly vertical upwards)
which quantity of output would the profit maximizing monopolist produce
8 (MC=MR)
long run competition equilibrium is achieved by the firm when output is
90- When ATC=MR
a rpofit maximizing firm would produce ---- of output and charge a price of---
92 thousands units at 14 dollars. (price where MR is)
the firms short-run supply curve is given as
MC above 5 dollars (where AVC is minimum) at quantity 80
a monopolist receiving economy profits in the long run when
MC=MR, P>ATC
a firm in perfect competition incurring economic losses in the short run when
MR<ATC
long run equilibrium in perfect competition occurs when
MR=MC and MR=ATC
profit maximizing firm is receiving economic profits when
MR>ATC or P>C
one of the major consumer benefits of competitive markets is that goods are produced with the most efficient scale of plant and at the lowest ATC which equals market price.
TRUE
when compared with the purely competitive industry with identical costs of production, a monopolist will charge
a higher price and produce less output
which of the following is most likely an example of monopolistic competition
a market for running shoes
under perfectly competition if some firms are receiving economic profits in the short run, then
a market price will eventually decrease to equal ATC
which of the following is a source of product differentiation
advertising, marketing, and promotions
which industry comes closest to being purely competitive
agriculture
a profit maximizing monopolist will usually set a price
along its demand curve, vertically above where MC intersects MR
which of the following is not a characteristic of perfect competition?
barriers to entry** similar or identical products, price takers, perfect information, none of the above
if firms enter a monopolistically competitive industry, we would expect the typical firms demand curve to
decrease and the firms price to decrease
at present output and monopolist determines that its MC is 18 dollars and its MR is 21 dollars. the monopolist will maximize profits or minimize losses by
decreasing price and increasing output
which of the following is characteristic of monopolistic competition
differentiated products
monopolistically competitive firms face a demand curve that is usually
elastic
a monopolist will charge the highest price it can get
false
since a monopolist is the only seller of a good with no close substitutes and barriers to entry keep potential competitors out, the demand for the monopolist's product is more inelasti than the market demand curve.
false
the demand curves for an individual firm in a purely competitive industry are perfectly inelastic
false
there are significant obstacles to entry in a purely competitive industry
false
in the short run, a perfectly competitive firm will earn as economic profit when marginal revenue is
greater than ATC
under which of the following situations would a monopolist increase profits by increasing price and decreasing output
if it were producing where MC>MR
which of the following is true concerning perfectly competitive industries
in long run equilibrium firms earn a normal profit
suppose a firm is a perfectly competitive market discovers that the price of its product is equal to marginal cost (MC) where MC is Less than ATC but above AVC. This firm is
incurring economic losses (above ATC= econ gain. below ATC= econ loss)
what do we know about the elasticity of demand for the monopolist at a price of 33 and quantity demanded of 6,000
it is elastic (left of curve is elastic, right of curve is inelastic)
the Zebra inc is selling in a purely competitive mart. its output is 250 units and sells at 2 bucks each. at this level of output, marginal cost is 2 dollars and AVC is 2.25. the firm should
produce 0 units of output. MC<AVC= shut down
which of the following is natural monopoly
railroading int the 19th century USA
which of the following is Least likely to represent a perfectly competitive market
the market for motorcycles
a perfectly competitive firms short- run supply curve is
the same as its marginal cost curve above the minimum point of average variable cost (AVC) (ATC=MC and above that given price)
a monopolist will avoid setting a price int he inelastic segment of the demand curve and prefer to set the price i the elastic segment
true
a purely competitive firm will produce in the short run and output at which marginal cost and marginal revenue are equal provided that the price of the product is greater than its average variable cost of production
true
a purely competitive firm wishes to produce ad not close down will maximize profits or minimize losses at that output at which marginal costs and marginal revenue are equal
true
in a purely competitive industry individual firms foo not have control over price of their product
true
the primary economic criticism of monopoly is that monopolists restricts output that actively efficient level.
true
a monopolist ca increase the sales of its product if it charges a lower price
true (demand curve)
the analysis of monopoly indicates that the monopolist
will seek to maximize total profits
