module 4 smartbook - Assignment Essays

question

What does the free entry and exit assumption imply for a perfectly competitive market?

answer

In the long run, economic profits are zero.
Firms will enter when profits exist.
Firms will leave if they sustain losses.

question

Since each producer in a perfectly competitive market has no influence on market price, the demand curve for the individual firm is

answer

a horizontal line equal to the market price.

question

In order to maximize profits in the short run, a manager must determine how much output should be produced, given

answer

only variable inputs within his or her control.

question

Given a revenue function, R = R(Q), what is the marginal revenue (MR)?

answer

MR = dR/dQ

question

Define the competitive firm's demand.

answer

Df = P = MR

question

A market with many "small" buyers and sellers, identical products, no transaction costs, and free entry and exit where buyers and sellers have perfect information is called __________.

answer

perfect competition

question

In a perfectly competitive market, the individual producer's demand curve is the market

answer

price

question

A period of time during which at least one input is fixed is called the

answer

short

question

For a perfectly competitive firm, marginal revenue is equal to the market

answer

price

question

The demand curve for a perfectly competitive firm is a

answer

flat, price

question

What do the key assumptions of a perfectly competitive market imply?

answer

No one firm can influence market price.

question

The price an individual producer in a perfectly competitive market faces is determined by:

answer

the market supply and market demand

question

On a graph, profits are given by the vertical distance between the cost function and the

answer

revenue

question

In perfect competition, profits are maximized at a level of output such that

answer

the vertical distance between the revenue line and the cost curve is greatest.

question

In perfect competition, profit equals

answer

Revenues - Costs

question

At the point where the cost curve C(Q) and the revenue line R(Q) are the farthest vertical distance apart, what is true of the slopes of these lines?

answer

The slopes are equal.

question

A perfectly competitive firm maximizes profits at the level of output such that market price

answer

equals

question

A firm should shut down when P ___ AVC.

answer

less than

question

True or false: A perfectly competitive firm's short-run supply curve is its marginal cost above the minimum point of the average cost (AC) curve.

answer

false

question

π = P(Q) - C(Q) defines

answer

profits

question

A perfectly competitive firm maximizes profits at a point where P ___ MC over the range where MC is _________.

answer

equals; increasing

question

If P exceeds AVC but is less than ATC, the firm

answer

is sustaining a loss.
should remain open.

question

A perfectly competitive firm's short-run supply curve is its marginal cost above the minimum point of the _______ curve.

answer

average variable cost (AVC)

question

What happens to the industry supply as firms exit a perfectly competitive industry in the long run?

answer

Supply decreases

question

Suppose a market contains one supplier of a good that has no close, available substitutes. What type of market structure is this?

answer

Monopoly

question

The demand curve faced by a monopolist is

answer

the same as the market demand curve.

question

If P is less than AVC, the firm _____.

answer

should shut down
is sustaining a loss

question

Which of the following is NOT a source of monopoly power?

answer

Free entry and exit

question

When firms in a competitive industry sustain losses, they will

answer

leave

question

The market structure where a firm has a large degree of market power is called

answer

monopoly

question

A monopolist faces a downward-sloping demand curve. As a result,

answer

it can choose a price or a quantity, but not both.

question

When price (P) exceeds minimum average variable cost (AVC), each unit of output sold generates

answer

question

Economies of scale and scope, cost complementarity, and patents are all sources of

answer

monopoly

question

What happens in a perfectly competitive industry when firms earn profits?

answer

Supply increases
Price falls
Profits of remaining firms fall

question

When long-run average costs fall as output increases, we say that the firm experiences

answer

economies

question

The monopolist is restricted to price-quantity combinations that lie on the demand curve as a result of decisions made by

answer

buyers

question

The monopolist's marginal revenue (MR) is given by

answer

MR = dP/dQ Q+P
MR = P(1+E/E)
MR = dR/dQ

question

As firms exit a perfectly competitive industry in the long run, what happens to the profits of the remaining firms?

answer

Profits increase due to increased market price.

question

When long-run average costs rise as output increases, we say that the firm experiences

answer

diseconomies

question

Marginal revenue is the

answer

slope

question

When a monopolist increases output by one unit, total revenue

answer

increases by less than price.

question

For a monopolist, the marginal revenue curve has twice the slope of the demand curve. This implies

answer

marginal revenue is less than price.

question

For a monopolist, it is necessary to _______ price to increase output by one unit. As a result, the price received from all previous units _________.

answer

decrease; decreases

question

Which of the following is a linear inverse demand curve?

answer

P(Q) = 100 - 2Q

question

In order to maximize profits, a monopolist should produce where marginal revenue is ________ marginal cost.

answer

equal to

question

The inverse demand function for a monopolist is given by P = 50 - 4Q. If the profit-maximizing output level is 5 (QM = 5), the monopoly price is

answer

question

A monopolist's marginal revenue (MR) is given by:

answer

MR+p(1+e/e)

question

True or false: P(Q) = 1,000 - 6Q is a linear inverse demand curve.

answer

true

question

If MR is less than MC, a profit-maximizing monopolist should:

answer

decrease output to maximize profits

question

Given a profit-maximizing level of output, QM, the monopoly price is the price on the

answer

demand

question

A monopolist charges a ________ price and produces ________ output than a perfectly competitive industry.

answer

higher; less

question

When many buyers and sellers freely enter and exit a market having similar, yet differentiated products, it is called ________.

answer

monopolistic competition

question

Determine a key difference between monopolistic competition and monopoly.

answer

In monopolist competition, there are other firms that sell similar products.

question

In monopolistic competition, each firm uses the ___________ demand curve and the marginal revenue curve to establish output and price. In monopoly, the firm uses the __________ demand curve and the marginal revenue curve to establish output and price.

answer

individual; market

question

The welfare loss to society due to the level of output produced by a monopolist is called the

answer

deadweight

question

Fast-food hamburgers are characterized by a large group of sellers producing slightly different goods. What type of market is this?

answer

monopolistically competitive

question

What is the fundamental difference between monopolistic competition and perfect competition?

answer

Products in monopolistic competition are differentiated

question

What is the key difference in determining the profit-maximizing price and output under monopoly versus monopolistic competition?

answer

There is no difference.

question

A firm in monopolistic competition faces a demand function equal to:P = 200 - 2Q,and a cost function equal toC(Q) = 10 + 4Q.The profit-maximizing price equals $

answer

102

question

When firms in monopolistic competition sustain economic losses, firms tend to

answer

leave

question

In the long run, firms in monopolistic competition produce a level of output where

answer

P = ATC > minimum average costs
P > MC

question

If consumers are willing to pay more for "Roper's Rice" than they are for "Rice by Russell", then "Roper's Rice" is enjoying additional value due to _______.

answer

brand equity

question

A firm in monopolistic competition faces a demand function equal to:P = 200 - 2Q,and a cost function equal toC(Q) = 10 + 4Q.The profit-maximizing level of output equals

answer

question

When firms in monopolistic competition earn positive economic profits, how will additional firms react?

answer

Additional firms enter and produce variations of the product.

question

True or false: In the long-run, firms in a monopolistically competitive market earn positive economic profits.

answer

false

question

Suppose an organic salad shop attempts to increase demand for its food by differentiating itself as a healthy alternative to fast-food hamburgers. This is an example of

answer

comparative

question

When firms in monopolistic competition earn positive economic profits, other firms tend to

answer

join

question

Which is a strategy firms use to tailor goods and services to meet the needs of a particular segment of the market?

answer

Niche marketing

1 of 68

question

What does the free entry and exit assumption imply for a perfectly competitive market?

answer

In the long run, economic profits are zero.
Firms will enter when profits exist.
Firms will leave if they sustain losses.

question

Since each producer in a perfectly competitive market has no influence on market price, the demand curve for the individual firm is

answer

a horizontal line equal to the market price.

question

In order to maximize profits in the short run, a manager must determine how much output should be produced, given

answer

only variable inputs within his or her control.

question

Given a revenue function, R = R(Q), what is the marginal revenue (MR)?

answer

MR = dR/dQ

question

Define the competitive firm's demand.

answer

Df = P = MR

question

A market with many "small" buyers and sellers, identical products, no transaction costs, and free entry and exit where buyers and sellers have perfect information is called __________.

answer

perfect competition

question

In a perfectly competitive market, the individual producer's demand curve is the market

answer

price

question

A period of time during which at least one input is fixed is called the

answer

short

question

For a perfectly competitive firm, marginal revenue is equal to the market

answer

price

question

The demand curve for a perfectly competitive firm is a

answer

flat, price

question

What do the key assumptions of a perfectly competitive market imply?

answer

No one firm can influence market price.

question

The price an individual producer in a perfectly competitive market faces is determined by:

answer

the market supply and market demand

question

On a graph, profits are given by the vertical distance between the cost function and the

answer

revenue

question

In perfect competition, profits are maximized at a level of output such that

answer

the vertical distance between the revenue line and the cost curve is greatest.

question

In perfect competition, profit equals

answer

Revenues - Costs

question

At the point where the cost curve C(Q) and the revenue line R(Q) are the farthest vertical distance apart, what is true of the slopes of these lines?

answer

The slopes are equal.

question

A perfectly competitive firm maximizes profits at the level of output such that market price

answer

equals

question

A firm should shut down when P ___ AVC.

answer

less than

question

True or false: A perfectly competitive firm's short-run supply curve is its marginal cost above the minimum point of the average cost (AC) curve.

answer

false

question

π = P(Q) - C(Q) defines

answer

profits

question

A perfectly competitive firm maximizes profits at a point where P ___ MC over the range where MC is _________.

answer

equals; increasing

question

If P exceeds AVC but is less than ATC, the firm

answer

is sustaining a loss.
should remain open.

question

A perfectly competitive firm's short-run supply curve is its marginal cost above the minimum point of the _______ curve.

answer

average variable cost (AVC)

question

What happens to the industry supply as firms exit a perfectly competitive industry in the long run?

answer

Supply decreases

question

Suppose a market contains one supplier of a good that has no close, available substitutes. What type of market structure is this?

answer

Monopoly

question

The demand curve faced by a monopolist is

answer

the same as the market demand curve.

question

If P is less than AVC, the firm _____.

answer

should shut down
is sustaining a loss

question

Which of the following is NOT a source of monopoly power?

answer

Free entry and exit

question

When firms in a competitive industry sustain losses, they will

answer

leave

question

The market structure where a firm has a large degree of market power is called

answer

monopoly

question

A monopolist faces a downward-sloping demand curve. As a result,

answer

it can choose a price or a quantity, but not both.

question

When price (P) exceeds minimum average variable cost (AVC), each unit of output sold generates

answer

question

Economies of scale and scope, cost complementarity, and patents are all sources of

answer

monopoly

question

What happens in a perfectly competitive industry when firms earn profits?

answer

Supply increases
Price falls
Profits of remaining firms fall

question

When long-run average costs fall as output increases, we say that the firm experiences

answer

economies

question

The monopolist is restricted to price-quantity combinations that lie on the demand curve as a result of decisions made by

answer

buyers

question

The monopolist's marginal revenue (MR) is given by

answer

MR = dP/dQ Q+P
MR = P(1+E/E)
MR = dR/dQ

question

As firms exit a perfectly competitive industry in the long run, what happens to the profits of the remaining firms?

answer

Profits increase due to increased market price.

question

When long-run average costs rise as output increases, we say that the firm experiences

answer

diseconomies

question

Marginal revenue is the

answer

slope

question

When a monopolist increases output by one unit, total revenue

answer

increases by less than price.

question

For a monopolist, the marginal revenue curve has twice the slope of the demand curve. This implies

answer

marginal revenue is less than price.

question

For a monopolist, it is necessary to _______ price to increase output by one unit. As a result, the price received from all previous units _________.

answer

decrease; decreases

question

Which of the following is a linear inverse demand curve?

answer

P(Q) = 100 - 2Q

question

In order to maximize profits, a monopolist should produce where marginal revenue is ________ marginal cost.

answer

equal to

question

The inverse demand function for a monopolist is given by P = 50 - 4Q. If the profit-maximizing output level is 5 (QM = 5), the monopoly price is

answer

question

A monopolist's marginal revenue (MR) is given by:

answer

MR+p(1+e/e)

question

True or false: P(Q) = 1,000 - 6Q is a linear inverse demand curve.

answer

true

question

If MR is less than MC, a profit-maximizing monopolist should:

answer

decrease output to maximize profits

question

Given a profit-maximizing level of output, QM, the monopoly price is the price on the

answer

demand

question

A monopolist charges a ________ price and produces ________ output than a perfectly competitive industry.

answer

higher; less

question

When many buyers and sellers freely enter and exit a market having similar, yet differentiated products, it is called ________.

answer

monopolistic competition

question

Determine a key difference between monopolistic competition and monopoly.

answer

In monopolist competition, there are other firms that sell similar products.

question

answer

individual; market

question

The welfare loss to society due to the level of output produced by a monopolist is called the

answer

deadweight

question

Fast-food hamburgers are characterized by a large group of sellers producing slightly different goods. What type of market is this?

answer

monopolistically competitive

question

What is the fundamental difference between monopolistic competition and perfect competition?

answer

Products in monopolistic competition are differentiated

question

What is the key difference in determining the profit-maximizing price and output under monopoly versus monopolistic competition?

answer

There is no difference.

question

A firm in monopolistic competition faces a demand function equal to:P = 200 - 2Q,and a cost function equal toC(Q) = 10 + 4Q.The profit-maximizing price equals $

answer

102

question

When firms in monopolistic competition sustain economic losses, firms tend to

answer

leave

question

In the long run, firms in monopolistic competition produce a level of output where

answer

P = ATC > minimum average costs
P > MC

question

If consumers are willing to pay more for "Roper's Rice" than they are for "Rice by Russell", then "Roper's Rice" is enjoying additional value due to _______.

answer

brand equity

question

A firm in monopolistic competition faces a demand function equal to:P = 200 - 2Q,and a cost function equal toC(Q) = 10 + 4Q.The profit-maximizing level of output equals

answer

question

When firms in monopolistic competition earn positive economic profits, how will additional firms react?

answer

Additional firms enter and produce variations of the product.

question

True or false: In the long-run, firms in a monopolistically competitive market earn positive economic profits.

answer

false

question

Suppose an organic salad shop attempts to increase demand for its food by differentiating itself as a healthy alternative to fast-food hamburgers. This is an example of

answer

comparative

question

When firms in monopolistic competition earn positive economic profits, other firms tend to

answer

join

question

Which is a strategy firms use to tailor goods and services to meet the needs of a particular segment of the market?

answer

Niche marketing

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