question
The demand schedule or curve confronted by the individual, purely competitive firm is
answer
perfectly elastic.
question
Refer to the provided graph for a purely competitive firm in the short run. If the firm is maximizing profit, the price of the product is
answer
F.
question
Price is taken to be a "given" by an individual firm selling in a purely competitive market because
answer
each seller supplies a negligible fraction of the total market.
question
In a purely competitive industry, each firm
answer
can easily enter or exit the industry.
question
A purely competitive firm currently producing 30 units of output earns marginal revenues of $12 from each extra unit of output it sells. If it sells 30 units, then its total revenues would be
answer
$360
question
The MR = MC rule can be restated for a purely competitive seller as P = MC because
answer
each additional unit of output adds exactly its price to total revenue.
question
At P 2 in the accompanying diagram, this firm will
answer
produce 44 units and earn only a normal profit.
question
Which of the following is true for a purely competitive firm in short-run equilibrium?
answer
The firm's marginal revenue is equal to its marginal cost.
question
Refer to the diagram for a purely competitive producer. The firm's short-run supply curve is
answer
the bcd segment and above on the MC curve.
question
A purely competitive seller is
answer
a "price taker."
question
Which of the following statements is correct?
answer
The long-run supply curve for a purely competitive increasing-cost industry will be upsloping.
question
The process by which new firms and new products replace existing dominant firms and products is called
answer
creative destruction
question
The diagram shows the average total cost curve for a purely competitive firm. At the long-run equilibrium level of output, this firm's total revenue
answer
$400
question
The graphs are for a purely competitive market in the short run. The graphs suggest that in the long run, assuming no changes in the given information,
answer
new firms will be attracted into the industry.
question
If firms enter a purely competitive industry, then in the long run this change will shift the industry
answer
supply curve to the right, and the individual firm's demand curve will shift down.
question
Creative destruction is
answer
the process by which new firms and new products replace existing dominant firms and products.
question
The term productive efficiency refers to
answer
the production of a good at the lowest average total cost.
question
The "invisible hand" in a competitive market pushes the firms in the market to
answer
use resources and produce output that maximize consumer and producer surplus.
question
In a purely competitive industry, an optimal allocation of scarce resources occurs when
answer
P = MC.
question
Line (1) in the diagram reflects a situation where resource prices
answer
increase as industry output expands.
question
Which of the following statements is true of price discrimination?
answer
Successful price discrimination will provide the firm with more profit than if it did not discriminate.
question
The gains to monopolists from exercising market power
answer
are less than the losses to consumers in monopoly markets, resulting in a net loss to society.
question
Which of the following is a barrier to entry?
answer
patents and licenses
question
Refer to the two diagrams for individual firms. Figure 1 pertains to __________, while Figure 2 refers to ________.
answer
a purely competitive firm; an imperfectly competitive firm
question
An exclusive legal right as sole producer for 20 years granted to an inventor of a product is called a
answer
patent.
question
Natural monopolies result from
answer
extensive economies of scale in production.
question
At its profit-maximizing output, a pure nondiscriminating monopolist achieves
answer
neither productive efficiency nor allocative efficiency.
question
If a nondiscriminating imperfectly competitive firm is selling its 100th unit of output for $35, its marginal revenue
answer
will be less than $35.
question
The MR = MC rule
answer
applies both to pure monopoly and pure competition.
question
Suppose that a pure monopolist can sell 20 units of output at $10 per unit and 21 units at $9.75 per unit. The marginal revenue of the 21st unit of output is
answer
$4.75.
question
The Herfindahl index
answer
is another name for the four-firm concentration ratio.
question
Under monopolistic competition, entry to the industry is
answer
more difficult than under pure competition but not nearly as difficult as under pure monopoly.
question
If the number of firms in a monopolistically competitive industry increases and the degree of product differentiation diminishes,
answer
the industry would more closely approximate pure competition.
question
Refer to the above graphs. The long-run equilibrium for a monopolistically competitive firm is represented by graph
answer
B
question
The Herfindahl index for a pure monopolist is
answer
10,000
question
Refer to the diagrams, which pertain to monopolistically competitive firms. Short-run equilibrium entailing economic loss is shown by
answer
diagram c only.
question
A significant difference between a monopolistically competitive firm and a purely competitive firm is that the
answer
latter's demand curve is perfectly elastic.
question
The restaurant, legal assistance, and clothing industries are each illustrations of
answer
monopolistic competition.
question
In the short run, a profit-maximizing monopolistically competitive firm sets it price
answer
above marginal cost
question
Concentration ratios measure the
answer
percentage of total industry sales accounted for by the largest firms in the industry.
question
In which of these continuums of degrees of competition (lowest to highest) is oligopoly properly placed?
answer
pure monopoly, oligopoly, monopolistic competition, pure competition
question
Refer to the diagram. Equilibrium price is
answer
d
question
In the long run, an oligopoly
answer
may be able to earn positive economic profits.
question
Cartels are difficult to maintain in the long run because
answer
individual members may find it profitable to cheat on agreements.
question
Two characteristics of oligopoly pricing that have frequently been observed are that
answer
oligopolistic prices tend to be "sticky" or inflexible, and when the firms do change their prices, they tend to do so together.
question
The diagram portrays
answer
collusive oligopoly.
question
As a general rule, oligopoly exists when the four-firm concentration ratio
answer
is 40 percent or more.
question
If there are significant economies of scale in an industry, then
answer
a firm that is large may be able to produce at a lower unit cost than can a small firm.
question
Collusion refers to a situation where rival firms decide to
answer
agree with each other to set prices and output.
question
A positive effect of advertising for society is that it
answer
raises barriers to entry into the industry and protects existing firms.
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
