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