question
In a perfectly competitive market, a firm will
answer
accept the market price a given
question
What does the demand curve for an individual perfectly competitive firm look like?
answer
horizontal
question
If a competitive firm is producing a level of output where MC=MR, the firm should
answer
continue producing this amount, as it is profit-maximizing
question
Monopolistic Competition Characteristics
answer
1. many, small buyers and sellers
2. no barriers to entry
3. differentiated products
4. short run economic profit possible
5. Long run economic profit not possible
2. no barriers to entry
3. differentiated products
4. short run economic profit possible
5. Long run economic profit not possible
question
product differentiation
answer
a positioning strategy that some firms use to distinguish their products from those of competitors
question
Monopolistic competition is similar to perfect competition except for which of the following
answer
Both are price takers
question
Which market structure includes firms that charge a higher price than marginal cost, have no need to differentiate products from competitors, and are able to make economic profits in the long run?
answer
Monopoly
question
Which of the following is true regarding monopoly vs. perfect competition?
answer
monopoly has higher price and lower output
question
A from with market power sells a good where demand tends to be price elastic. In this case, we would expect the size of the markup to be
answer
smaller than if demand were price inelastic
question
What characteristic is necessary for a firm to engage in price discrimination?
answer
Market power (price setting power)
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