micro ch 8-10 - Assignment Essays

question

The profit maximizing or loss minimizing quantity of output for any firm to produce exists at that output level in which:

answer

marginal revenue equals marginal cost. MR= MC

question

True or False- In long-run equilibrium, a competitive firm produces at the point of minimum average total cost.

answer

true

question

In a perfectly competitive market buyers want to buy 20,000 units and sellers want to sell 20,000 units of a product when the price is $50 per unit. ABC Corporation, one seller in this market,

answer

faces a perfectly elastic demand curve at a price of $50.

question

Consider a firm operating with the following: price = 10; MR = 10; MC = 10; ATC = 10. This firm is:

answer

perfectly competitive in long-run equilibrium.

question

Which of the following best illustrates perfect competition?

answer

wheat farming

question

In the short run, a firm should shut down its business if price is less than:

answer

AVC- average variable cost

question

In the perfectly competitive market, all firms in the market are assumed to be producing:

answer

identical products

question

If a firm has no ability to influence the market price of its product, it:

answer

has a horizontal individual demand curve.

question

A profit-maximizing firm will continue to expand output:

answer

as long as the revenues from the production and sale of an additional unit exceeds the marginal cost of the unit.

question

A natural monopoly is a market where:

answer

a single large firm can produce the entire market output at a lower per-unit cost than a group of smaller firms.

question

a natural monopoly is a market where

answer

a single large firm can produce the entire market output at a lower per-unit cost than a group of smaller firms.

question

Which of the following distinguishes a natural monopoly from monopoly caused by ownership of a vital resource?

answer

The natural monopoly has a downward-sloping long-run average cost curve as opposed to a U-shaped long-run average cost curve.

question

Monopoly

answer

must lower price in order to increase output

question

A monopolist will maximize profits by:

answer

producing the output where marginal revenue equals marginal cost. like a perfectly competitive firm

question

For a monopolist with a downward-sloping demand curve,

answer

as price decreases, marginal revenue decreases.

question

If marginal costs increase, a monopolist will:

answer

increase price and decrease output

question

The monopolist's demand curve

answer

identical to the market demand curve

question

Alcoa had a monopoly in the U.S. aluminum market from the late nineteenth century until the end of World War II. Which barrier to entry was the source of Alcoa's monopoly power?

answer

ownership of a vital resource

question

economies of scale

answer

factors that cause a producer's average cost per unit to fall as output rises

question

diseconomies of scale

answer

the situation in which a firm's long-run average costs rise as the firm increases output

question

At any point where a monopolist's marginal revenue is positive, the downward-sloping straight-line demand curve is:

answer

elastic but not perfectly elastic, and a perfectly competitive firm's demand curve is perfectly elastic.

question

Suppose both a monopolist and a perfectly competitive firm are producing in their respective markets at a point where marginal cost is $8 and marginal revenue is $10. What should the profit-maximizing firms do?
Correct!

answer

Both the monopolist and the perfectly competitive firm should increase output until MC = MR.

question

Because monopolists are protected by high barriers to entry

answer

may be able to earn long-run economic profits.

question

Which of the following scenarios demonstrates price discrimination?

answer

Tickets to a play are sold for $15 for students and $25 for adults.

question

To maximize its profit, a monopoly should choose a price where demand is:

answer

elastic

question

Which of the following is true about advertising?

answer

Advertising may be the only way that a new entrant can penetrate a market dominated by long-established firms.

question

Critics of advertising argue that it:

answer

serves as a barrier to entry for new firms.

question

In Exhibit 10-4, the exhibit represents a kinked-demand oligopoly model. Suppose the current price is $50. If one firm in the oligopoly now attempts to raise price, all firms will:

answer

ignore this price increase and cause the price raising firm to move along D1

question

Suppose Ford, GM, and Dodge make the majority of pick-up trucks sold in the United States If they all sell for approximately the same price, and Ford offers a $2,000 rebate on new truck sales, what can Ford expect to see?

answer

an immediate response by GM and Dodge

question

The monopolistic competition market structure is characterized by:

answer

many firms and differentiated products

question

Perfect competition and monopolistic competition are similar because under both market structures,

answer

there are many firms.

question

Monopolistic competition is inefficient because:

answer

firms have excess capacity in the long run.

question

The automobile, steel, and oil markets are all examples of:

answer

oligopolies

question

When the price and output decisions of one firm include the possible price and output reactions of the firm's rivals, the market is

answer

an oligopoly characterized by mutual interdependence.

question

The marginal revenue curve of a monopolistically competitive firm will always lie:

answer

below the firm's demand curve.

question

Which of the following is the best example of an oligopoly?

answer

the automobile industry

question

In a price leadership oligopoly model,

answer

one firm is the price leader and all other firms follow.

question

A monopolistic competitive firm is inefficient because the firm:

answer

produces an output where average total cost is not minimum.

question

The short-run equilibrium for a monopolistically competitive firm is at P = $28.47, ATC = $22.13, and MC = MR = $17.47. Which of the following is true?

answer

Additional firms will be attracted into the industry.

1 of 39

question

The profit maximizing or loss minimizing quantity of output for any firm to produce exists at that output level in which:

answer

marginal revenue equals marginal cost. MR= MC

question

True or False- In long-run equilibrium, a competitive firm produces at the point of minimum average total cost.

answer

true

question

In a perfectly competitive market buyers want to buy 20,000 units and sellers want to sell 20,000 units of a product when the price is $50 per unit. ABC Corporation, one seller in this market,

answer

faces a perfectly elastic demand curve at a price of $50.

question

Consider a firm operating with the following: price = 10; MR = 10; MC = 10; ATC = 10. This firm is:

answer

perfectly competitive in long-run equilibrium.

question

Which of the following best illustrates perfect competition?

answer

wheat farming

question

In the short run, a firm should shut down its business if price is less than:

answer

AVC- average variable cost

question

In the perfectly competitive market, all firms in the market are assumed to be producing:

answer

identical products

question

If a firm has no ability to influence the market price of its product, it:

answer

has a horizontal individual demand curve.

question

A profit-maximizing firm will continue to expand output:

answer

as long as the revenues from the production and sale of an additional unit exceeds the marginal cost of the unit.

question

A natural monopoly is a market where:

answer

a single large firm can produce the entire market output at a lower per-unit cost than a group of smaller firms.

question

a natural monopoly is a market where

answer

a single large firm can produce the entire market output at a lower per-unit cost than a group of smaller firms.

question

Which of the following distinguishes a natural monopoly from monopoly caused by ownership of a vital resource?

answer

The natural monopoly has a downward-sloping long-run average cost curve as opposed to a U-shaped long-run average cost curve.

question

Monopoly

answer

must lower price in order to increase output

question

A monopolist will maximize profits by:

answer

producing the output where marginal revenue equals marginal cost. like a perfectly competitive firm

question

For a monopolist with a downward-sloping demand curve,

answer

as price decreases, marginal revenue decreases.

question

If marginal costs increase, a monopolist will:

answer

increase price and decrease output

question

The monopolist's demand curve

answer

identical to the market demand curve

question

Alcoa had a monopoly in the U.S. aluminum market from the late nineteenth century until the end of World War II. Which barrier to entry was the source of Alcoa's monopoly power?

answer

ownership of a vital resource

question

economies of scale

answer

factors that cause a producer's average cost per unit to fall as output rises

question

diseconomies of scale

answer

the situation in which a firm's long-run average costs rise as the firm increases output

question

At any point where a monopolist's marginal revenue is positive, the downward-sloping straight-line demand curve is:

answer

elastic but not perfectly elastic, and a perfectly competitive firm's demand curve is perfectly elastic.

question

answer

Both the monopolist and the perfectly competitive firm should increase output until MC = MR.

question

Because monopolists are protected by high barriers to entry

answer

may be able to earn long-run economic profits.

question

Which of the following scenarios demonstrates price discrimination?

answer

Tickets to a play are sold for $15 for students and $25 for adults.

question

To maximize its profit, a monopoly should choose a price where demand is:

answer

elastic

question

Which of the following is true about advertising?

answer

Advertising may be the only way that a new entrant can penetrate a market dominated by long-established firms.

question

Critics of advertising argue that it:

answer

serves as a barrier to entry for new firms.

question

In Exhibit 10-4, the exhibit represents a kinked-demand oligopoly model. Suppose the current price is $50. If one firm in the oligopoly now attempts to raise price, all firms will:

answer

ignore this price increase and cause the price raising firm to move along D1

question

answer

an immediate response by GM and Dodge

question

The monopolistic competition market structure is characterized by:

answer

many firms and differentiated products

question

Perfect competition and monopolistic competition are similar because under both market structures,

answer

there are many firms.

question

Monopolistic competition is inefficient because:

answer

firms have excess capacity in the long run.

question

The automobile, steel, and oil markets are all examples of:

answer

oligopolies

question

When the price and output decisions of one firm include the possible price and output reactions of the firm's rivals, the market is

answer

an oligopoly characterized by mutual interdependence.

question

The marginal revenue curve of a monopolistically competitive firm will always lie:

answer

below the firm's demand curve.

question

Which of the following is the best example of an oligopoly?

answer

the automobile industry

question

In a price leadership oligopoly model,

answer

one firm is the price leader and all other firms follow.

question

A monopolistic competitive firm is inefficient because the firm:

answer

produces an output where average total cost is not minimum.

question

The short-run equilibrium for a monopolistically competitive firm is at P = $28.47, ATC = $22.13, and MC = MR = $17.47. Which of the following is true?

answer

Additional firms will be attracted into the industry.

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