Micro Final exam
if 100 units can be produced for $100, then 150 can be produced for $150, 200 for $200, and so forth.
A constant cost industry means that
With a loss
A monopolistically competitive firm is producing at an output level in the short run where average total cost is $4.50, price is $4.00, marginal revenue is $2.50, and marginal cost is $2.50. This firm is operating
Long run average costs decline continuously through the range of demand
A natural monopoly occurs when
It will not advertise its product
A purely competitive producer will not....
neither productive efficiency nor allocative efficiency
At its profit-maximizing output, a pure nondiscriminating monopolist achieves
Each seller supplies a negligible fraction of total market
Price is constant to the individual firm selling in a purely competitive market because
S will decrease; p will increase
Refer to the accompany graphs for a competitive market in the short run. What will happen in the long run to industry supply and the equilibrium price, p, of the product
The greater the degree of product variation, the greater is the excess capacity problem.
The greater the degree of product variation then,
10000
The herfindahl index for a pure monopolist is
Produce 8 units at a profit of $16
The accompanying table gives cost data for a firm that is selling in a purely competitive market. If the market price for the firm's product is $32, the competitive firm will produce
X-efficiency
What is not a barrier of entry?
Latteras demand curve is perfectly elastic
A significant difference between a monopolistic competitive competitive firm and a purely competitive firm is that the
former sells similar, although not identical, products.
A significant difference between a monopolistically competitive firm and a purely competitive firm is that the
P=MC
Allocative efficiency is achieved when the production of a good occurs where
Oligopoly
An industry comprising four firms, each with about 25 percent of the total market for a product, is an example of
Realizing a loss of $5000
Assume ALX Corp is producing 100 units of output. It is selling this output in a purely competitive market at $400 per unit. It's total fixed costs is 6000. Average total cost is 450 and marginal cost is 400 at 100 units of output.
Realizing an economic profit of $40.
Assume the XYZ Corporation is producing 20 units of output. It is selling this output in a purely competitive market at $10 per unit. Its total fixed costs are $100 and its average variable cost is $3 at 20 units of output. This corporation
P1 to children and P2 to adults
Assume the figure applies to a pure monopolist and that MC is the same for both graphs. If this firm is able to price discriminate between children and adults, it should charge prices of
the marginal revenue curve lies below the demand curve because any reduction in price applies to all units sold
For an imperfectly competitive firm,
Will also be $5
If a firm in a purely competitive industry is confronted with an equilibrium price of $5, its marginal revenue
Resources are being undercoated to Y
If the price of product Y is $25 and its marginal cost is $18
Productive efficiency
In the long run equilibrium of a pure competition market, p = min ATC = MC. The equality of P and minimum ATC means the firm is achieving
Entry and exit of firms can occur
In the long run in a purely competitive industry
Exceed MC but equal ATC
In the long run the price charged by a monopolistic competitive firm seeking maximize profit will
May be positive or negative depending on the demand and cost conditions
In the short run, a monopolist's economic profits
Above MC
In the short run, a profit-maximizing monopolistically competitive firm sets it price
P>ATC
In the short run, a purely competitive firm will always make an economic profit if
Marginal revenue lying above the average variable cost curve.
In the short run, the individual competitive firm's supply curve is that segment of the
may be either equal to ATC, less than ATC, or more than ATC.
In the short run, the price charged by a monopolistically competitive firm attempting to maximize profits
Greater power in Y than X
Industries X and Y both have four-firm concentration ratios of 32 percent, but the Herfindahl index for X is 256, while that for Y is 264. These data suggest
May be operating in either long run or short run
Kreations sells handbags in a purely competitive market. Kreations is currently breaking even. Based on this information, we can conclude that Kreations
Remain constant as industry output expands.
Line (2) in the diagram reflects a situation where resources prices
Large number of firms and low entry barrier
Monopolistic competition is characterized by a
advertising, product promotion, and changes in the real or perceived characteristics of a product.
Nonprice competition refers to...
incurring X-inefficiency but is producing that output at which all existing economies of scale might be realized.
Refer to the long-run cost diagram for a firm. If the firm produces output Q2 at an average cost of ATC2, then the firm is
Any level of output between 100 and 400 produces economic profit.
Refer to the short-run data in the accompanying graph. Which of the following is correct?
Purely competitive; imperfectly competitive
Refer to the two diagrams for individual firms. Figure 1 pertains to __________, while Figure 2 refers to ________.
should continue producing in the short run but leave the industry in the long run if the situation persists.
Suppose a firm in a purely competitive market discovers that the price of its product is above its minimum AVC point but everywhere below ATC.
And industry output will be less than the initial price and output
Suppose a purely competitive, increasing-cost industry is in long-run equilibrium. Now assume that a decrease in consumer demand occurs. After all resulting adjustments have been completed, the new equilibrium price
Increasing cost industry
Suppose losses cause industry X to contract and, as a result, the prices of relevant inputs decline. Industry X is
Downward sloping
Suppose that as the output of mobile phones increases, the cost of touch screens and other component part decreases. If the mobile phone industry features pure competition, we would expect the long-run supply curve for mobile phones to be:
This industry in monopolistically competitive
Suppose that total sales in an industry in a particular year are $800 million and sales by the top four sellers are $50 million, $40 million, $30 million, and $30 million, respectively. We can conclude that
Produce 0 at a loss of $100
The accompanying table gives cost data for a firm that is selling in a purely competitive market. If the market price for the firm's product is $12, the competitive firm should produce
More elastic is the monopolistic competitive firms demand curve
The larger the number of firms and the smaller the degree of product differentiation,the
directly with the number of competitors but inversely with the degree of product differentiation.
The price elasticity of a monopolistically competitive firm's demand curve varies
Economic profits bring firms to enter an industry. Losses cause them to leave.
What causes firms to enter an industry?
Considerable non price competition
What is not a basic characteristic of pure competition?
The commodity involved must be a durable good.
What is not part of price discrimination?
The LCD television industry is a decreasing cost industry
When LCD televisions first came on the market, they sold for at least $1,000, and some for much more. Now many units can be purchased for under $400. These facts imply that
Faces a downsloping demand curve
A purely monopolistic firm
Incurring x-inefficiency but is failing to realize all existing economies of scale
Refer to the long run cost curve for a firm. If the firm produces output at Q1 at an average total cost of ATC1 then the firm is
0P3/ 0AHE, $=MR=MC
Refer to the accompanying diagram. At the profit-maximizing output, total revenue will be
Rise; Rise
Refer to the data. If Firm B merged with Firm C, the industry's four-firm concentration ratio would ____ and its Herfindahl index would ____.
excess capacity DE; If this firm were to realize productive efficiency, it would incur a loss.
Refer to the diagram for a monopolistically competitive producer. This firm is experiencing
P2 where MC=D
Refer to the diagram for a pure monopolist. If a regulatory commission seeks to achieve the socially optimal allocation of resources to this line of production, it will set a price of
Between P2 and P3
Refer to the diagram for a purely competitive producer. The firm will produce at a loss at all prices
BCD segment above the MC curve
Refer to the diagram for a purely competitive producer. The firm's short-run supply curve is
Producing at QM, (Q2)
Refer to the diagram. If this somehow was a costless product (that is, the total cost of any level of output was zero), the firm would maximize profits by
above ATC; it is realizing an economic profit; new firms will enter the industry.
Refer to the diagram. In short-run equilibrium, the monopolistically competitive firm shown will set its price
Is realizing economic profit
Refer to the diagram. The monopolistic competitive firm shown
MC=MR
Refer to the diagram. To maximize profits or minimize losses, this firm should produce
The diagrams portray short-run equilibrium. In the long run we should expect firms to leave the industry, market supply to fall, and product price to rise.
Refer to the diagrams, which pertain to a purely competitive firm producing output q and the industry in which it operates. Which of the following is correct? In the long run we should expect
A. The long-run supply curve for a purely competitive increasing-cost industry will be upsloping.
Which of the following statements is correct? a. The long-run supply curve for a purely competitive increasing-cost industry will be upsloping. b. The long-run supply curve for a purely competitive increasing-cost industry will be perfectly elastic. c. The long-run supply curve for a purely competitive industry will be less elastic than the industry's short-run supply curve. d. The long-run supply curve for a purely competitive decreasing-cost industry will be upsloping.
P=AFC
Which of the following will not hold true for a competitive firm in long-run equilibrium?
A purely competitive firm is a price taker, while a monopolist is a price maker
Who is the price taker vs price maker
