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If a purely competitive firm is producing at the MR = MC output level and earning an economic profit, then:
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new firms will enter this market
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In a purely competitive industry:
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there may be economic profits in the short run but not in the long run
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Productive efficiency refers to:
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cost minimization, where P=minimum ATC
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Allocative inefficiency happens in a monopoly because at the profit-maximizing output level
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P>MC
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If the industry depicted in this graph were purely competitive, then the market price would be
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$25, which is lower than what the price would have been if the industry were a monopoly
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Price discrimination is more common is service industries because
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low-price buyers will find it virtually impossible to resell the products of such industries to high-price buyers
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When purely competitive firm is in long run equilibrium
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price equals marginal cost
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Allocative efficiency means that
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society scarce resource are used to produce products that align with consumer preferences
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Refer to the graph for a profit maximizing monopolist. At equilibrium, the firm will be earning
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positive profits
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A monopoly results in productive inefficiency because at the profit-maximizing output level
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ATC is not at its minimum level
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One feature of pure monopoly is that the firm is:
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a price maker
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Refer to the diagram, which pertain to a purely competitive firm producing output q and the industry in which it operates. IN the long run we should expect
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firms to leave the industry, market supply to fall, and product price to rise
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Allocative efficiency occurs when the
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marginal cost equals the marginal benefit to society
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What do economics of scale, the ownership of essential raw material, and patents have in common?
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They are all barriers to entry
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The "invisible hand" in a competitive market pushes the firms in the market to
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use resource and produce output that maximize consumer and producer surplus
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Suppose market for corn is purely competitive constant-cost industry that is in long-run equilibrium. Now assume that an increase in consumer demand occurs. After all resulting adjustments have been completed, the new equilibrium price will be
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the same as the initial equilibrium price, but the new industry output will be greater than the original output
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Which of the following statements is true of price discrimination
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Successful price discrimination will provide the firm with more profit than if it did not discriminate
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The demand curve faced by a purely competitive firm
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Is the same as its marginal revenue curve
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which of the following would contribute most to a firm experiencing "economies of scale"
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specialization of labor and management within the firm
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A firm should continue to operate even at a loss in the short run if
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It can cover its variable costs and some of its fixed costs
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If long-run average total cost curve decreases as output increases, this is due to
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economies of scale
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A profit-maximizing firm in the short run will expand output
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as long as marginal revenue is greater than marginal cost
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Which of the following is a feature of a purely competitive market
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Products are standardized or homogeneous
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In a purely competitive industry, each firm
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can easily enter and exit the industry
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A firm encountering economies of scale over some range of output will have a
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falling long-run average cost curve
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The short-run supply curve for a competitive firm is the
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segment of the MC curve lying above the AVC curve
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Marginal utility is the
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extra satisfaction received from consuming one more unit of a product
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A consumer is maximizing her utility with a particular money income when
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MUa/Pa=MUb/Pb=MUc/Pc=... =Mun/Pn
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Given the above figure, when David eat a third piece of pizza his marginal utility is ____ and his total utility
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falling, rising
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To the economist, total cost includes:
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explicit and implicit cost
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The basic characteristic of the short run is that
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the firm does not have sufficient time to change the size of its plant
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Marginal product is
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the increase is total output attribute to the employment of one more worker
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In the diagram, curves 1,2, and 3 represents the
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total, average, and marginal product curves respectively
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Answer the question on the basis of the following information. Marginal cost is
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Change in TVC/Change in Q
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Demand-side market failures occur when
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demand curves don't reflect consumers' full willingness to pay for a good or service
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Producer surplus is the difference between
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the minimum prices producers are willing to accept for a product and the higher equilibrium price
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Allocative efficiency occurs only at that output where
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the combined amounts of consumer surplus by the greatest amount
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What are the two characteristics that differentiate private goods from public goods
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rivalry and excludability
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Which of the following is correct
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If demand is elastic, a decrease in price will increase total revenue
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The price elasticity of supply measures how
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responsive the quantity supplied of X is to change in the price of X
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The main determinant of elasticity of supply is the
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amount of time the producer has to adjust inputs in response to a price change
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Cross elasticity of demand is
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negative for complementary goods.
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