question
If the marginal revenue received from selling a good is less than the marginal cost of production, then:
answer
the firm's profit can be improved if production decreases
question
The long-run average total cost of producing 100 units of output is $4, while the long-run average total cost of producing 110 units of output is $5. These numbers suggest that the firm producing this output is experiencing:
answer
diseconomies of scale
question
The U-shape of the long-run average total cost curve is the result of:
answer
economies and diseconomies of scale
question
Which of the following is true concerning monopoly?
answer
Barriers to entry prevent other firms from entering the industry
question
Most electric, gas, and water companies are examples of:
answer
natural monopolies
question
The following are four statements about monopoly and perfect competition. Which of these is correct?
answer
A monopolist has market power while a perfect competitor does not
question
A monopoly is likely to ________ units of output and ________ price than a perfectly competitive firm.
answer
produce fewer; charge a higher
question
Because monopoly firms are the only firm in the market:
answer
they can only sell more by lowering price
question
After the first unit is sold, the marginal revenue a monopolist receives from selling one more unit of a good is less than the price at which that unit is sold because of:
answer
a downward-sloping demand curve
question
Suppose that a monopolist increases production from 10 units to 11 units. If the market price declines from $30 per unit to $29 per unit, marginal revenue for the eleventh unit is:
answer
$1
question
The XYZ Company is a profit-maximizing firm with a monopoly in the production of pennants. The firm sells its pennants for $10 each and economics profit is positive. We can conclude that the XYZ Company is producing a level of output at which:
answer
marginal cost equals marginal revenue at a value less than $10
question
A natural monopoly exists whenever a single firm:
answer
is owned and operated by the federal or local government
question
Suppose Prof. Dumbler's magic hat monopoly is broken up and the magic hat industry becomes perfectly competitive. We would expect the __________ to increase from the breakup and __________ to decrease from the breakup.
answer
consumer surplus and total surplus; producer surplus
question
If the regulation of a monopoly results in a price equal to marginal cost but the price is below average total cost:
answer
the firm will require subsidization or it will go out of business.
question
Price discrimination is the practice of:
answer
charging different prices to buyers of the same good.
question
For the monopolistically competitive seafood market, the demand curve for any individual firm is __________, and there __________ producers of seafood.
answer
downward-sloping; are many
question
Suppose the dry-cleaning market is monopolistically competitive and economically profitable this year. In the long run, the demand for any one firm's dry-cleaning services will ________ as more firms enter the industry, causing profits to ________.
answer
decrease; fall to zero
question
The largest HHI possible is in the case of __________ and the index in this case is equal to __________.
answer
monopoly; 10,000
question
A monopolistically competitive firm is operating in the short run at the optimal level of output and is earning positive economic profits. Which of the following describes how this firm will adjust in the long run?
answer
Entry if new firm shifts the firm's demand and marginal revenue curves leftward, decreasing the firm's level of output, and decreasing the price the firm can charge until price equals average total cost.
question
Which of the following scenarios best describes an oligopolistic industry?
answer
Coca-Cola and Pepsi sell most of the soft drinks consumed around the world.
question
Suppose and monopolistically competitive firm is producing the profit-maximizing level of output and is earning an economic profit in the short run. Then:
answer
marginal revenue equals marginal cost
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