Quiz 7

Question 1

the change in total revenue generated by an additional unit of output

Answer 1

marginal revenue

Question 2

a firm in an industry with only a small number of producers

Answer 2

oligopolist

Question 3

an industry with only a small number of producers

Answer 3

Oligopoly

Question 4

when no one firm has a monopoly, but producers nonetheless realize that they can affect market prices, an industry is characterized this

Answer 4

imperfect competition

Question 5

the exclusive legal right of the creator of a literary or artistic work to profit from that work; like a patent, it is a temporary monopoly

Answer 5

copyright

Question 6

something that prevents other firms from entering an industry. Crucial in protecting the profits of a monopolist. There are four types of these: control over scarce resources or inputs, increasing returns to scale, technological superiority, and government-created barriers such as licenses

Answer 6

barriers to entry

Question 7

a cost that does not require the outlay of money; it is measured by the value, in dollar terms, of forgone benefits

Answer 7

implicit cost

Question 8

the opportunity cost of the capital used by a business; that is the income that could have been realized had the capital been used in the next best alternative way

Answer 8

Implicit cost of capital

Question 9

the square of each firm’s share of market sales summed over the industry. It gives a picture of the industry market structure.

Answer 9

Herfindahl-Hirschman Index

Question 10

a monopoly that exists when increasing returns to scale provide a large cost advantage to having all output produced by a single firm

Answer 10

natural monopoly

Question 11

a cost that involves actually laying out money

Answer 11

explicit cost

Question 12

an industry controlled by a monopolist

Answer 12

monopoly

Question 13

describes an industry that potential producers can easily enter or current producers can leave

Answer 13

Free entry and exit

Question 14

an economic profit equal to zero. It is an economic profit just high enough to keep a firm engaged in its current activity

Answer 14

Normal profit

Question 15

the proposition that the optimal quantity is the quantity at which marginal benefit is equal to marginal cost

Answer 15

Principle of marginal analysis

Question 16

measure the percentage of industry sales accounted for by the “X” largest firms

Answer 16

concentration ratios

Question 17

a business’s revenue minus the explicit cost and depreciation

Answer 17

accounting profit

Question 18

a market structure in which there are many competing firms in an industry, each firm sells a differentiated product, and there is free entry into and exit from the industry in the long run

Answer 18

monopolist competition

Question 19

a business’s revenue minus the opportunity cost of resources; usually less than the accounting profit

Answer 19

economic profit

Question 20

a firm that is the only producer of a good that has no close substitutes

Answer 20

monopolist

Question 21

a temporary monopoly given by the government to an inventor for the use or sale of an invention

Answer 21

patent

Question 22

a good is a standardized product; when consumers regard the products of different forms as the same good

Answer 22

commodity

Question 23

a graphical representation showing how the cost of producing one more unit depends on the quantity that has already been produced

Answer 23

marginal cost curve

Question 24

profit is maximized by producing the quantity of output at which the marginal revenue of the last unit produced is equal to its marginal

Answer 24

Optimal output rule