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In a competitive price-searcher market, the marginal revenue of the firm will be
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less than price.
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A practice whereby a seller charges different prices to different consumers of the same product or service is called
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price discrimination.
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Sellers in competitive price-searcher markets
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face competition both from existing firms and potential new entrants.
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When a competitive price-searcher market is in long-run equilibrium, the firms in the market will earn
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zero economic profits.
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Refer to Figure 23-11. Which of the graphs shown would be consistent with a firm in a price-searcher market that would earn economic losses if it operated where it was maximizing profit?
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Panel b
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If a firm finds that its marginal cost exceeds its marginal revenue at the current level of output, then to maximize profit, it will
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decrease output, regardless of whether it is a price taker or a price searcher.
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Refer to Figure 23-3. What is the maximum economic profit this firm will be able to earn?
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zero
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Which of the following statements about price discrimination is correct?
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To maximize profit, a price discriminator distinguishes groups with different demands and charges higher prices to those with the more inelastic demand.
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In both price-taker and competitive price-searcher markets, when a firm experiences an increase in the demand for its product (starting from long-run equilibrium)
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the firm will expand output and earn positive economic profit in the short run.
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A contestable market is defined as a market
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in which the costs of entry and exit are low.
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When a firm is a price searcher, its marginal revenue is
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less than price when the firm is maximizing profits.
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Refer to Figure 23-3. If the cost and demand conditions of this competitive price-searcher firm are representative of the market, what will happen in the future?
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The current demand conditions facing this firm will tend to persist into the future.
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If a movie theater is going to gain by charging students a lower ticket price than other customers,
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the demand of students must be more elastic than that of other customers.
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Refer to Figure 23-9. What is the maximum economic profit this firm will be able to earn?
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zero profit
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Because barriers to entry are low in competitive price-searcher markets, in the long run, a firm's price will be equal to
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average total cost.
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