question
For a perfectly competitive firm, profit maximization (or loss minimization) occurs at the level of output at which
answer
MR = MC
question
The price charged by a perfectly competitive firm is determined by
answer
Market demand and market supply, together
question
For a perfectly competitive firm, if price is greater than average variable cost at the profit-maximizing (or loss-minimizing) level of output, then it follows that
answer
total revenue is greater than variable cost
question
What type of discrimination discriminates against buyers
answer
third-degree price discrimination
question
One of the conditions necessary for price discrimination is that the seller be a price searcher
answer
true
question
Public franchises, patents, and government licenses are examples of _________ barriers to entry
answer
legal
question
The U.S. Postal Service is an example of a public franchise
answer
True
question
By adhering to the MR=MC rule, a single-price monopoly
answer
maximizes its profit, which in some cases mean minimizing its losses
question
In the prisoner's dilemma, each prisoner would be better off if neither one confesses
answer
true
question
One of the key characteristics of oligopoly is that
answer
each firm is aware that its actions will influence other firms and that the actions of the other firms affect it
question
if a firm is a price taker, its demand curve is
answer
horizontal
question
the monopoly firm may earn positive economic profits in the long run because
answer
of high barriers to entry
question
by definition, monopolists sell a product for which there are no close substitutes
answer
true
question
second-degree price discrimination is discrimination among
answer
quantities
question
by adhering to the MR = MC rule, a single-price monopoly
answer
maximizes its profit, which may in some cases mean minimizing its losses
question
in the long run equilibrium, the monopolistic competitor will most likely
answer
be earning zero economic profit
question
in an oligopoly market, unlike in other market structures, firms
answer
can act independently
question
Which of the following is an assumption of the theory of oligopoly
answer
firms produce and sell either homogenous or differentiated goods
question
the demand curve faced by a perfectly competitive firm is horizontal at the price determined in the market
answer
true
question
the seller of good X sells 1,000 units of the good. each unit is being sold for the highest price each consumer is willing to pay for the good. the seller practices
answer
perfect (first degree) price discrimination
question
the addition of variable costs changes where the profit-maximizing/cost-minimizing quantity will be
answer
true
question
at the level of output at which a single-price monopolist maximizes profit, price is
answer
greater than marginal cost
question
a monopolistic competitive firm is a price taker, while an oligopolist is a price searcher
answer
false
question
the theory of oligopoly assumes
answer
a few sellers and many buyers
question
if a market comes close to meeting (but does not perfectly meet) all the assumptions of the theory of perfect competition, it follows that
answer
the theory of perfect competition still may be able to predict behavior in the market
question
a "price taker" is a firm that
answer
does not have the ability to control the price of the product it sells
question
in the theory of perfect competition
answer
the single firm faces a horizontal demand curve
question
marginal revenue is defined as
answer
the change in total revenue caused by selling one additional unit of output
question
the profit-maximizing monopolist produces the quantity of output at which marginal revenue equals marginal cost
answer
true
question
in order for a monopolist to be earning a profit, price must be greater than
answer
average total cost
question
why can't an economist say for certain that a monopolistic competitive firm will always earn zero economic profits in the long run
answer
the firms in the industry do not produce identical products
question
what type of demand curve does a monopolistic competitive firm face
answer
downward sloping
question
the monopolistic competitive firm will most likely earn a normal profit in the long run because of
answer
easy entry and exit
question
the demand curve facing a firm in monopolistic competition is downward sloping, because the firm
answer
sells a differentiated product
question
for a perfectly competitive firm
answer
price is equal to marginal cost at the output level that maximizes profit
question
a perfectly competitive firm should increase its level of production as long as
answer
marginal revenue is greater than marginal cost
question
why must profits be zero in long-run competitive equilibrium?
answer
if profits are not zero, firms will enter or exit the industry
question
a seller that has the ability (to some degree) to control the price of the product it sells is called a price
answer
searcher
question
a monopoly may exist because
answer
one firm has the exclusive ownership of a necessary resource
question
which of the following is not an example of a legal barrier to entry
answer
economies of scale
question
monopolistic competitive firms and perfectly competitive firms are similar in that both
answer
face no barriers to entry or exit
question
which of the following is not an assumption of the theory of monopolistic competition
answer
there are high barriers to entry
question
if two firms that form a cartel agreement are in a prisoner's dilemma game, then
answer
both firms will have an incentive to break the agreement
question
the theory of oligopoly assumes
answer
a few sellers and many buyers and significant barriers to entry
question
in the perfect competition, the firms marginal revenue curve is
answer
the same as the firm's demand curve
question
in the short run, the best policy for a perfectly competitive firm is to
answer
produce and sell its product as long as price is greater than average variable cost
question
a public franchise is a right granted
answer
to a firm by government that prevents other firms from producing the same product or service
question
cents off coupons can be seen as a form of third-degree price discrimination
answer
true
question
which of the following is the best example of a barrier to entry into a monopolistic industry
answer
a public franchise
question
the monopolistic competitor is a
answer
price searcher
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