exam 3 Flashcards
which market model has the least number of firms
pure monopoly
there is no control over price by firms in
pure competition
which is true under conditions or pure competition
no single firm can influence the market price by changing the output
competitive firms are assumed to
have identical products
the demand curve faced by a purely competitive firm
demand = marginal revenue
if a firm is a price taker, then the demand curve for the firm’s product is
perfectly elastic
refer to the above graph for a firm in pure competition. Line A represents
total revenue
assume the price of a product sold by a purely competitive firm is $5. given the data in the accompanying table, at what output is total profit highest in the short run
40`
refer to the above table. if the firm shuts down in the short run, the total cost will be
2500
refer to the above table. if the product sells for $1200 a unit, the firm’s profit maximizing output is
4
refer to the above table. if the product sells for $1200 a unit, the firm’s profit maximizing output is
4
in a typical graph for a purely competitive firm, where the total cost and total revenue curves intersect, there is a
normal profit
Refer to the above table. the equilibrium price of the product is
40
refer to the above table. the marginal revenue from the third unit of output is
40
a profit maximizing firm in the short run will expand output
as long as marginal revenue is greater than marginal cost
a firm sells a product in a purely competitive market. the marginal cost of the product at the current output is 5 dollars and the market price is 5. what should the firm do
shut down if the minimum possible average variable cost is 5.25
Refer to the above graph. The level of output at which this firm will produce is
OC
Refer to the above graph. the level of output at which this firm will shut down is
OA
Refer to the graph above. The level of output at which this firm is maximizing an economic profit is
OC
Refer to the above cost chart. If the marginal revenue is $6, what output level will the firm produce
14
the individual firm’s short - run supply curve is that part of its
marginal cost curve lying above its average variable cost curve
the individual firm’s short - run supply curve is that part of its
marginal cost curve lying above its average variable cost curve
Refer to the above graph. to maximize profits, the firm would produce
OE units which will equals profits ABGH
based on the graph above, the firm earning is
O economic profit
Refer to the above graph. if represents a profit - maximizing firm producing under conditions or pure competition. When the firm is in equilibrium in the short run, its average fixed cost is
DE
Refer to the above graph. It represents a profit - maximizing firm producing under conditions of pure competition. when the firm is in equilibrium in the short run, its average variable cost is
DB
Refer to the above graph. It shows the cost curves for a competitive firm. if the market price falls to $.55 the optimal output rate is
0
Refer to the graph above the graph. it shows the short - run cost curves for a purely competitive firm together with a number with a number of different prices. At what price is the firm making only normal profit
P3
refer to the above graph. it shows the short - run cost curves for a purely competitive firm together with a number of different prices. At what price is the shut down point for the firm
P1 shut down
The long run supply curve would be perfectly elastic
Constant cost industry
Allocative efficiency occurs when the
Marginal cost equals the marginal benefit to society
In long - run equilibrium under conditions of pure competition and productive efficiency, all firms produce at minimum
Average total cost
In long - run equilibrium under conditions of pure competition and productive efficiency, all firms produce at minimum
Average total cost
One feature of pure monopoly is that the monopolist is
A price maker
On defining characteristic of pure monopoly is that
produce products with no close substitutes
the classic example of a private, unregulated monopoly is
DE beers
Natural monopolies result from
extensive economies of scale in production
Natural monopolies result from
extensive economies of scale in production
One feature of pure monopoly is that the demand curve
Slopes downward
a pure monopoly firm will never change a price in the inelastic range of its demand carve because lowering price to get into this region will
decrease total revenue, increase total cost, and decrease profit
refer to the above graph showing the short - run revenue for a monopolist. what price should be charged in order to maximize total revenue
P3
Refer to the above table. what is the change in total revenue if she lowers the price from $20 to $18
30
at the profit - maximizing level of output, a monopolist will always operate where
price is greater than marginal cost
at the profit - maximizing level of output, a monopolist will always operate where
price is greater than marginal cost
A profit maximizing monopolist facing the situation shown in the graph above should
Shut down in the short run
The supply curve for a monopolist
nonexistent
monopolist are said to be allocatively inefficient because
at the profit maximizing output, the marginal benefit to society from increasing output is greater than the marginal cost to society
based on the graph above, what is the difference between the purely competitive equilibrium level of output an the pure monopolist equilibrium level of output
20
Refer to the above graph. if the monopoly shown is able to begin practicing [erfect price discrimination, what will the profit - maximizing quantity be
q2
for the last unit sold by a perfectly price discriminating monopolist, price will be
p=mc
a major characteristic of monopolistic competition is
a relatively large number of firm selling the product
which assumption is part of the model of monopolistic competition
no collision
one difference between monopolistic competition and pure competition is that
there is some control over price in monopolistic competition
refer to the above graph. a successful advertising campaign by a monopolistic competitive firm will cause the demand curve to shift from
A to B and becomes less elastic
refer to the above graph. in the short run, this monopolistic competitive firm will set price at
65 and produce 35 units of output
refer to the above graph. in the short run, this monopolistic competitive firm will set price at
65 and produce 35 units of output
53
525
54
earn a normal profit but not an economic profit
55
a
56
firm produce at an output level less than the least cost output
57
few sells
58
oligopoly competition
59
mutual independence
60
2600
61
over some interval, a change in the oligopolists marginal cost will not cause a change in the oligopolist profit - maximizing price
62
p3 mr = mc
63
follow the price cut but ignores a price increase embodies the possibility that changes in unit costs will have no effect on equilibrium price and output
64
be self - concealing and contribute to economic inefficiency
65
pure economic profit
