question
Firms in price-searcher markets with low barriers to entry face a __________ demand curve
answer
Downward sloping
question
Price searcher markets w/ low barriers to entry use..
answer
.. use product quality, style, convenience of location, advertising, and price as competitive weapons
question
Because each firm competes with rivals offering similar products, each confronts a highly _________ demand curve for its products.
answer
elastic
question
A profit-maximizing price searcher will expand output as long as marginal revenue exceeds marginal cost, lowering its price in the process, until....
answer
MR=MC
question
Competitive price-searcher markets provide more variety but may raise costs relative to price-taker markets because
answer
(1)price exceeds marginal cost at the profit-maximizing output level,
(2)long-run average cost is not minimized, and
(3)advertising is costly.
(2)long-run average cost is not minimized, and
(3)advertising is costly.
question
When barriers to entry are low, however, price searchers have an incentive to
answer
(1)produce efficiently;
(2)undertake production if, and only if, their actions are expected to increase the value of the resources used; and
(3)be innovative in offering new product options.
(2)undertake production if, and only if, their actions are expected to increase the value of the resources used; and
(3)be innovative in offering new product options.
question
T/F entrepreneurs promote economic progress
answer
True
question
Entrepreneurship is an inherently ________ force
answer
Desctructive
question
Many sellers and low barriers to entry is called an...
answer
Monopolistic Competition
question
Small number of sellers compose the entire industry is called an..
answer
Oligopoly
question
Sherman Antitrust Act
answer
-1890
-The US Govt. will:
-break up existing monopolies
-prosecute firm engaging in collusion
-prevent mergers that reduce competition
-The US Govt. will:
-break up existing monopolies
-prosecute firm engaging in collusion
-prevent mergers that reduce competition
question
Monopoly
answer
-greek for "single seller"
-high barriers to entry
-single seller with a well defined product.
-profit loss when ATC is high than demand curve
-high barriers to entry
-single seller with a well defined product.
-profit loss when ATC is high than demand curve
question
Four major sources to barrier to entry
answer
economies of scale, government licensing, patents, and control of an essential resource.
question
Creative Destruction
answer
Joseph Shumpeter discussion of business failures
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