Exam 5

Question 1

Market Structures

Answer 1

Models of how the firms in a market interact with buyers to sell their output

Question 2

Market structures in decreasing order of competitiveness

Answer 2

1. Perfectly Competitive
2. Monopolistically Competitive
3. Oligopolies
4. Monopolies

Question 3

Price takers

Answer 3

A firm looks at a price in the market and sets their item to that price

Question 4

Differentiated

Answer 4

When a product is distinctive such as its physical aspects, location where it is sold, intangible aspects, or consumers perception of the product

Question 5

Perfectly Competitive Markets

Answer 5

1) There are many buyers and sellers
2) All firms sell identical products
3) There are no barriers to new firms entering the market

Question 6

Profit= Total Revenue- Total Cost

Answer 6

Pi= TR -TC

Question 7

Price= Average Revenue = Marginal Revenue

Answer 7

P= AR = MR

Question 8

Average revenue= Total revenue/ Quantity

Answer 8

AR=TR/Q

Question 9

Marginal Revenue

Answer 9

MR=TR/Q

Question 10

Price= Total Revenue/ Quantity= Total Revenue/Quantity

Answer 10

P=TR/Q=TR/Q

Question 11

Sunk Costs

Answer 11

Cots that have been paid or will be paid by obligation/contract and cannot be recovered. Even if they haven’t been paid yet the firm is still obligated to pay them such as rent

Question 12

Profits, Break Even, or Losses

Answer 12

MC=MR Profit maximizing quantity
P> ATC firm is making profit- should continue operations
P= ATC breaks even- makes the decision to
shut down in the short run
P< ATC firm is making loss- already shut down in short run