question
Although a monopolistically competitive firm in long-run equilibrium is producing output at an average total cost higher than the minimum, economists are not greatly concerned about this inefficiency because:
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consumers gain satisfaction from having a wide variety of products available.
question
In the long run, the profit-maximizing, monopolistically competitive firm fails to produce a level of output where:
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economic profits are realized.
question
Suppose your father, who is a potato farmer in Idaho, has decided that he grows the "best, damn potatoes in the world." In other words, he is claiming that his potatoes are different than potatoes grown by other farmers. If his claim is true (and he can convince consumers of this), then:
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C. he faces a downward sloping demand curve and his quantity decisions will have an effect on market price for his potatoes.
D. while he may make a profit in the short-run, in the long-run competition will still force his profits to zero.
D. while he may make a profit in the short-run, in the long-run competition will still force his profits to zero.
question
The demand curve that confronts a monopolistically competitive firms is:
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less elastic than the demand curve facing a perfectly competitive firm.
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In a monopolistically competitive industry, a firm in long-run equilibrium will be operating where price is:
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greater than MC but equal to ATC.
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The important difference between the characteristics of perfectly competitive and monopolistically competitive markets is that firms in monopolistically competitive industries:
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sell similar but not identical products.
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All of the following are methods that firms in an oligopolistic industry may use to create entry barriers except:
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substantial "natural" economies of scale in production.
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A member of a cartel would be most likely to increase its profits by:
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cheating on cartel output restrictions by under cutting the prices of other cartel members (assuming that it did not get caught cheating).
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One of the identifying characteristics of oligopoly is sticky prices. When economists state that prices are sticky with respect to oligopolistic industries, they mean that:
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prices are less responsive to changes in demand in oligopolies than in perfectly competitive markets.
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Which of the following is not a characteristic of an oligopolistic market structure?
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zero economic profits in the long-run.
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According to limit pricing models of oligopolist pricing behavior, existing firms in an oligopolistic industry can deter the entry of new firms by:
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setting lower prices and producing more than that which maximizes short-run profits, if economies of scale and capital costs are significant.
question
Legal barriers to entry do not include:
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outright government prohibition of entry.
B. protection of inventions or creative works by patent and copyright law.
C. licensing and bonding restrictions.
D. substantial economies of scale in production.
B. protection of inventions or creative works by patent and copyright law.
C. licensing and bonding restrictions.
D. substantial economies of scale in production.
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The doctrine of "conscious parallelism":
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was developed to deal with the socially undesirable economic effects caused by oligopolies making similar pricing decisions.
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The public-interest theory of regulation suggests that:
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consumers and workers need protection from such things as monopoly power, externalities, business misrepresentations, and other abuses as well as protection from their own ignorance.
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"Good" monopolies or trusts were exempt from antitrust action under the:
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"rule of reason" approach to antitrust enforcement.
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If all monopolies and large firms were broken up into a larger number of small competing firms, the most likely result would be:
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higher prices in industries which have large economies of scale.
question
The economic rationale for antitrust laws is that monopoly markets are inefficient and must be made to:
answer
set price and output as if the market were competitive.
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