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micro econ final exam > final review > Flashcards

final review Flashcards

1
Q

A market structure in which several or many sellers each produce similar, but slightly differentiated products. Each producer can set its price and quantity without affecting the marketplace as a whole.

A

monopolistic competition

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2
Q

The situation prevailing in a market in which buyers and sellers are so numerous and well informed that all elements of monopoly are absent and the market price of a commodity is beyond the control of individual buyers and sellers.

A

perfect competition

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3
Q

Is an enterprise that is the only seller of a specific good or service in its market.

A

monopoly

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4
Q
  1. Large number of small firms
  2. each producing a differentiated product/service (consumer has a preference for the firm over another)
  3. price searcher, some control over price.
  4. low barriers to entry
  5. significant non-price competition
A

monopolistic competition

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5
Q

. competition is efficient

  1. competition is good for consumers: more choices and lower prices.
  2. there is always an incentive to try to get rid of your competition if you are a firm.
  3. firms are trying to maximize profits.
A

perfect competition

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6
Q
  1. firm = industry
  2. producing a product that has no close substitutes. (no reasonable alternatives)
  3. firm is a price searcher, some control over the price
  4. high barriers to entry
  5. little non-price competition
A

monopoly

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7
Q

ammonopolistically competitive firm in the long run equilibrium has…

A

zero economic profits due to low barriers to entry

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8
Q
  1. few firms in the industry
  2. producing differentiated or homogeneous product
  3. price searchers: some control over price
  4. mutual interdependence
  5. high barriers to entry
  6. non-price competition- maybe (tire industry and car industry are examples)
A

oligopoly

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9
Q

MC=MR is profit maxing/less
P=ATC => breaks even
socially efficient? yes, P=MC
only one that is socially efficient

A

perfect competition

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10
Q
  • faces the law of diminishing returns.
  • no long run because low barriers to entry
  • MC=MR
  • P=ATC => breaks even due to low barriers
  • not socially efficient, P>MC
A

monopolistic competition

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11
Q

-highly but not perfectly elastic

A

perfect competition

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12
Q

highly inelastic

A

monopoly

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13
Q
  • MC=MR
  • P>ATC in LR due to high barriers
  • socially efficient? no, P>MC
  • no close substitutes
A

monopoly

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14
Q
  • few firms
  • mutual interdependence
  • long run profit likely? yes, high barriers to entry
  • socially efficient? no, P>MC
A

oligopoly

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15
Q

a regulation breaking large firms with “market power”

A

antitrust regulation

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16
Q

a regulation looking over a monopoly firm to help it set its price

A

economic regulation

17
Q

a regulation to deal with external costs

A

social regulation

18
Q

in monopolistic competition, because each firm produces a differentiated product, but has a lot of competition, it faces…

A

a downsloping and highly elastic demand curve.

monopolistic competition

19
Q

what are consequences of monopoly? what’s wrong with it?

A
  1. it doesn’t give consumers any choices
  2. it is socially inefficient
  3. does it use its profits to protect itself rather than become more efficient
20
Q

could a monopolist make a loss?

if it made a short run loss would it keep producing?

A

yes, if demand went down and costs went up.

yes, as long as it covers its variable costs.
in the long run, no.

21
Q

in monopoly, because a monopolist is the only producer of a good with no close substitutes it faces…

A

a downward sloping and very inelastic demand curve

22
Q

what are the barriers to entry for a monopoly?

A
  1. government- designated monopolies (patents)
  2. control of a natural resource
  3. “natural” monopolies: significant economies of scale
23
Q

The firm in the short run…

A

Every firm either maximizes or minimizes losses by producing where marginal cost = marginal revenue

24
Q

in perfect competition because each firm is a price taker it faces…

A

a perfectly elastic demand curve

25
Q

in oligopoly, price and output for an oligopoly industry will fall somewhere between…

A

perfect competition and monopoly

micro econ final exam (1 decks)

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