5 Written Questions
5 Matching Questions
- Why does a monopoly continue to make profits in the long run while an industry in perfect competition cannot?
- Why is allocative efficiency not achieved in a monopoly?
- What happens to price in the longrun if firms are making economic losses in a perfectly competitive mkt.?
- Is a stock market a perfectly competitive market?
- a P(what product is worth to consumers) > MC (what the resources used to make the product are worth)
- b In perfect competition if profits are being made other firms will enter the industry bringing prices down. In a monoply no new firms can enter due to barriers, therefore the monoply will continue to make profits.
- c YES
- d An exclusive right of inventors to produce and sell a new product or machine for 20 years from the time of application
- e Firms leave the industry and the price goes up
5 Multiple Choice Questions
- Economies of Mass production
- It is above the MR curve and is the SAME as the demand curve because the firm and the industry are one.
- the firm is earning zero economic profits and is covering explicit and implicit costs
- behave more like a perfectly competitive firm
- More firms enter and this pushes the price down
5 True/False Questions
In a perfectly competitive mkt. if TR>TVC or equal to what should the firm do? → shut down now
Is selling at higher rates to business travelers price discrimination? → Economies of Mass production
WHY do costs differ between perfect competion industry and monpoly industry? → ATC x Q
If the monoplist increases output, what will the price do? → Yes they do
What is equal to Price in a perfectly competitive mkt.? → P=MR=AR=D