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Monopolistically competitive industries consist of:
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many firms, each selling a slightly different product.
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Monopolistically competitive firms _____.
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are price makers
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A monopolistic competitor's demand curve is
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more elastic than a monopolist's or oligopolist's but less elastic than a perfect competitor's demand curve
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Which of the following factors makes a monopolistically competitive firm a price maker?
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Product Differentiation
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Which of the following is true of the relationship between price and marginal cost under monopolistic competition?
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Price exceeds marginal cost at the profit-maximizing level of output.
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Monopolistic competition is different from perfect competition because monopolistic competitors
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produce differentiated products
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A common feature of monopolistic competition, pure monopoly, and perfect competition is that
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the profit-maximizing condition in each market is the same
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In long-run equilibrium, a monopolistically competitive firm will produce:
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along the downward sloping portion of its ATC curve
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Monopolistically competitive firms do not achieve allocative efficiency in the long run because
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price is greater than marginal cost
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In the long run, the demand curve facing a monopolistically competitive firm:
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is tangent to the firm's average total cost curve
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Which of the following characteristics does perfect competition share with monopolistic competition?
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Zero long-run economic profit
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Which of the following characteristics distinguishes oligopoly from other market structures?
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Interdependence among firms in the industry
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An oligopoly consists of
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a few interdependent firms
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It is harder to explain the behavior of firms in an oligopoly than in other market structures because:
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firms base their decisions on what their rivals do
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a cartel is
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a group of oligopolistic firms that engage in collusion
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a payoff matrix is a list that shows
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the rewards and penalties associated with pursuing various strategies.
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The dominant-strategy equilibrium in a game implies that each firm:
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ignores the decisions of the other firms.
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Which of the following is true of a patent in the United States?
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It gives a firm a temporary exclusive right to produce a particular good.
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A natural monopoly forms when a firm has
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a downward-sloping long-run average cost curve
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A monopolist's demand curve is
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identical to its market demand curve
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Which of the following is true of the marginal revenue earned by a non-price discriminating monopolist that charges a single price?
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The marginal revenue earned by a monopoly is less than the price of its product.
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As a monopolist increases the quantity of output produced
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both price and marginal revenue decrease, but marginal revenue falls faster than price
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A firm facing a downward-sloping demand curve sells 50 units of output at $10 each. Which of the following can be concluded about the firm's marginal revenue for this output level?
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Marginal revenue is less than $10 but more than zero.
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A profit-maximizing monopolist supplies the quantity at which
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total revenue exceeds total cost by the greatest amount.
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Which of the following does a monopoly control that a perfectly competitive firm does not control?
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price
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Which of the following conditions is true at the profit-maximizing output for both a perfectly competitive firm and a monopoly?
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Marginal revenue equals marginal cost
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Which of the following is true of a monopoly in the short run?
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It is constrained by consumer demand in setting price
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A monopolist is said to have market power because:
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it faces a downward-sloping demand curve
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In the short run, a monopolist will always shut down when:
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total variable cost is greater than total revenue at all output levels.
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Which of the following factors explains the difference in long-run profits earned by a monopolist and a perfectly competitive firm?
answer
There are no barriers to entry in perfect competition
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Which of the following is most likely to be true of a monopoly in long-run equilibrium if it enjoys a patent and earns economic profit in the short run?
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It will earn a positive economic profit in the long run
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Barriers to entry:
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may allow monopolies to earn profit in the long run.
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Unlike perfectly competitive firms, monopolists:
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earn long-run economic profits
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When compared to firms in perfect competition, monopolists tend to charge:
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higher prices and offer lower quantities of output.
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economies of scale
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factors that cause a producer's average cost per unit to fall as output rises
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