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Unlike a perfectly competitive market, a monopoly creates a deadweight loss because
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it produces a lower output and charges a higher price
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Which of the following is true
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a monopoly has no supply curve and its marginal revenue is never greater than the price
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as output increases in the short run, average fixed cost
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falls
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example cost of production would be
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cost of space in your home used for a home office or home business
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monopolistic competition is similar to perfect comp because
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there are no barriers to entry
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monopolistic comp. is similar to a monopoly because
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marginal revenue is less than price
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diseconomies of scale occur in the long run when
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average total cost rise as output increases
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in a perfectly comp market, one farmer's wheat is
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is identical or the same as another farmers wheat
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Long run equilibrium under a perfect comp
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economic profit is zero because marginal revenue equals the minimum of average total cost
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the long run supply curve for a firm in a perfectly comp market
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is the portion of its marginal cost that lies above its atc.
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suppose that a perfectly comp market is in the short run with firms earning a positive economic profit. what change is most likely to occur in this market int he long run
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new firms will enter the market, shifting the market supply curve to the right`
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if a perfectly comp. firm raised the price of its product
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the output it sells will decrease to 0
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if a monopoly lowers it price
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its marginal revenue must decrease
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diminishing marginal product of labor hold that
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output per additional worker declines as more workers are hired
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total revenue minus explicit cost is called
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accounting profit
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for a monopoly , why is marginal revenue less than price
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to sell more units of output, the price must be lowered
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defining characteristics of a natural monopoly is
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the natural monopoly has falling atc over the relevant range of output
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the firm will make the most profits if it produces that quantity of output for which
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marginal revenue equals marginal cost
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in comparison to a monopoly, the demand curve for a monopolistic comp. firm is
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more elastic
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perfectly comp firms have
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horizontal demand curves and they can sell as much output as they want at the market price
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the long run is a time period that is
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when all of the firms inputs are variable
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in a game, the dominant strategy is
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the best strategy for a player to follow, regardless of the strategies followed by other players
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the exit of firms from a perfectly comp market will
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decrease market supply and increase market price
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if firms in a monopolistic comp market are earning positive economic profit in the short run, then
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new firms will enter the market in the long run and the demand curve for existing firms will shift to the left causing prices and profits to fall.
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if average total cost are declining, marginal cost must be
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less than average total cost
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perfectly comp firm maximizes profit when marginal cost equal
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marginal revenue and price
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perfectly comp firm will continue to operate in the short run when the market price is below its average total cost if
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price is greater than the minimum average variable cost
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average total cost is u shaped because
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average fixed cost are declining pulling atc downward and average variable cost are rising pulling atc upward
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to determine whether a monopoly is earning an economic profit we compare price with
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average total cost
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marginal cost tells us
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the amount total cost changes when output changes by one unit
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