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?
- In a perfectly competitive market where is equilibrium?
- Why is allocative efficiency not achieved in a monopoly?
- At what poin in a perfectly competitive mkt. are profits maximized in the shortrun?
- What are the four market models (structures?
- a Where marginal revenue is equal to marginal costs.
- b perfect (pure) competition, monopoly,monopolistic competition, oligopoly
- c 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.
- d P(what product is worth to consumers) > MC (what the resources used to make the product are worth)
- e Zero economic profits (normal rate of return) this is where MR=MC
5 Multiple choice questions
- the firm is earning zero economic profits and is covering explicit and implicit costs
- economies of scale, x-inefficiency, the need for monopoly preserving expenditures, and the VERY long-run prespective
- Normal rate of return
- shut down now
5 True/False questions
What does price regulation of natural monopolies NOT lead to? → does not lead to shortages as long as price is above marginal cost
In a perfectly competitive mkt. if (price)AR >AVC or equal to what should the firm do? → continue business
At what point on the ATC curve is equilibrium? → At the lowest point on the ATC curve.
If the monopolists reduces output, what will the price do? → The price will fall.
Where do monoplys set price? → NO, because the monopoly will produce less so they can charge a higher price.