question
A perfectly competitive firm
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c. sets its price as given by the market equilibrium
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A competitive firm maximizes profit by choosing the quantity at which
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b. marginal cost equals price
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A competitive firms's short-run supply curve is its _________ cost curve above its _________ cost curve.
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d. marginal, average variable
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In the long-run equilibrium of a competitive market with identical firms, what are the relationships among price P, marginal cost MC, and average total cost ATC?
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d. P = MC and P = ATC
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Suppose the book-printing industry is competitive and begins in long run equilibrium. If there is a new process that reduces the costs for each firm in the industry, short run economic profits will be _________, though in the long run economic profit will be _____ as firms _______ the industry.
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a. positive, zero, enter
question
A profit-maximizing firm in a competitive market is currently producing 100 units of output. It has a price of $10, average total cost of $8, and fixed cost of $200. Given this, profit is _______, marginal cost is _______, and average variable cost is_________.
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b. $200, $10, $6
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Suppose the home construction industry is perfectly competitive. When the industry expands or contracts in the long run, the minimum possible average cost of home building remains fixed at $50 per square foot. Suppose the industry is currently in equilibrium. If the demand for housing increases,
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b. the price of home construction will go up in the short run, but return to an equilibrium price of $50 per square foot in the long run
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The existence of losses induces firms to __________ an industry, which shifts the market supply curve to the__________ and __________ market price.
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a. exit, left, increases
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For a profit maximizing monopoly that charges the same price to all consumers, what is the relationship between price P, marginal revenue MR, and marginal cost MC?
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b. P > MR and MR = MC
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Compared to the social optimum, a monopoly firm chooses
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a. a quantity that is too low and a price that is too high
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When a monopolist practices price discrimination
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b. it charges different consumers different prices for the same good
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Suppose the DeBeers company exercises monopoly power in the distribution of diamonds. This year, the company earns economic profits and maximizes profit. This implies that the price of diamonds per carat will
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d. exceed both the marginal cost and average cost of diamonds.
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The graph below shows the average cost, marginal cost, demand, and marginal revenue curves for an industry. If the industry is monopolized, the price is ___ and the quantity is ____. If the industry is competitive the price is ___ and the quantity is ____.
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. 8, 30. 6, 45 Correct
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A significant long-run difference between monopoly and competition is that
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a. there's free entry and exit in a competitive industry, whereas barriers to entry exist in a monopolized market.
b. the monopolist controls market supply, whereas the competitive firm's influence on market supply is imperceptible.
c. the demand curve for the monopolist is the industry demand curve, whereas the demand curve faced by the competitive firm is perfectly elastic.
d. All of the above. Correct
b. the monopolist controls market supply, whereas the competitive firm's influence on market supply is imperceptible.
c. the demand curve for the monopolist is the industry demand curve, whereas the demand curve faced by the competitive firm is perfectly elastic.
d. All of the above. Correct
question
If the government attempts to break up a natural monopoly to enforce competition in an industry,
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a. the average cost of producing the good will increase. Correct
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