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Spring Semester > Econ Exam 4 > Flashcards

Econ Exam 4 Flashcards

1
Q

a single seller of a product with no close substitutes

A

monopolist

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2
Q

the profit-maximizing quantity for both a perfectly competitive firm and a monopoly

A

Marginal revenue equals marginal cost.

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3
Q

One likely result of monopoly power is ________

A

a higher price than would exist in a competitive industry

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4
Q

Barriers to entry allow _______ to earn profit in the long run

A

monopolies

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5
Q

Perfectly competitive firms are price takers because ______

A

each firm is too small, compared to the market, to affect price

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6
Q

The demand curve for the output of a perfectly competitive firm is ______.

A

perfectly elastic

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7
Q

The golden rule of profit maximization states that any firm maximizes profit by producing where ________

A

marginal revenue equals marginal cost

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8
Q

If a perfectly competitive firm shuts down in the short run, they must pay_______.

A

only fixed cost

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9
Q
  • One seller
  • Unique product
  • Barriers to entry
A

Monopoly

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10
Q

Government grants one person/firm exclusive right to produce something.

A

Government Created Monopolies

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11
Q

Ex: Invention Incentives:
- patent
- copyright
- licenses + other restrictions

A

Government Created Monopolies

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12
Q

A single firm can produce any amount of Q at least cost

A

Natural Monopolies

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13
Q

There is only “Room in the mkt” for one firm.

A

Natural Monopolies

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14
Q

Long-run: ATC decreases, Q increases

A

economies of scale

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15
Q

Ex: Utilities
- water
- electric
- etc

A

Natural Monopolies

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16
Q

1 firm controls a key resource of production
Ex.: ALCOA, pro sports

A

Monopoly Resources

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17
Q

Main difference from “Perfect Comp,” is Monopolist control ____

A

Price

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18
Q

Monopolist: To sell more, must decrease P _______

A

On all units

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19
Q

P x Q = ______

A

TR

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20
Q

For a monopolist MR is always _____ P after first unit sold.

A

<

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21
Q

Profit max occurs where ____

A

MR = MC

22
Q

P > AVC: ______

A

continue producing

23
Q

P < AVC: _______

A

shut down

24
Q

__ = MR = MC

A

P

25
Q

When P > MC, firms should ________ production.

A

Increase

26
Q

d1 = _______

A

MR1

27
Q

When P > ATC there is ______

A

Profit

28
Q

The characteristics of a market that influence how trading takes place

A

Market Structure

29
Q
  • The number of buyers + sellers
  • Product uniformity across firms
  • Ease of entry/exit
A

Market Structure

30
Q

All markets sit between _____ and _______

A

Monopolistic Competition and Oligopoly

31
Q

Each is very small relative to the market

A

Many buyers + sellers

32
Q
  • Perfect substitutes
  • Standardized products
A

Firms sell commodity

33
Q

Over time firms + resources can easily enter or leave the market with no penalty or obstacle

A

Free entry/exit

34
Q

Buyers + sellers are fully informed about prices and availability of all resources and products

A

Perfect Information

35
Q

Price is determined by Market S + D
Ex.: Agriculture markets
Basic commodities
Widely traded stock
Foreign Exchange

A

B + S are Price Takers

36
Q

Profit = _____ - ______

A

TR - TC

37
Q

Only way to change TR is to change ______

A

Q

38
Q

A Perfect Competition firms SR S Curve = ______

A

MC Curve

39
Q

In a perfect competition, temporarily shut down if ____ < _____

A

TR < VC

40
Q

Shut down rule: If P < AVC firm will have a ______ loss if temporarily shut down

A

Smaller

41
Q

Decision to temporarily stop production

A

Short Run (SR)

42
Q

Decision to go out of business

A

Long run (LR)

43
Q

Break even point

A

PB

44
Q

When P = min ATC

A

Break even or PB

45
Q

The Q level that minimizes ATC

A

Efficient Scale of Production

46
Q
  1. Find Q* (MR = MC)
  2. At Q*, find ATC
  3. Find profit or loss at Q*
A

Short run decision making process

47
Q

In SR # of firms is ____

A

Fixed

48
Q

Profits/losses are the forces driving _____ changes

A

LR

49
Q

In LR entry/exit are ______

A

Important

50
Q

AR = _____ / ______

A

TR divided by Q

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