# Microeconomics Final Part 2

### 28 terms by gdankydank

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Chapters 15 + 16, (56-68, 71-72, 79-81, 84-86, 89

### a monopolist can influence market price while a competitive firm cannot.

A monopoly firm is different from a competitive firm in that:

### the monopolist's demand curve is the industry demand curve while the competitive firm's demand curve is perfectly elastic

A significant difference between monopoly and perfect competition is that:

### \$17

If a monopolist increases output from 14 to 15 by lowering its price from \$32 to \$31, marginal revenue is:

### exceeds the marginal revenue

For a monopolist, the price of the product:

### the increase in revenue is less than the increase in cost.

If a monopolist produces beyond the quantity where MC = MR, then:

### the marginal benefit of the monopolist's product to society exceeds the marginal cost.

The deadweight loss from monopoly exists because:

### producer surplus falls but consumer surplus rises.

Suppose a monopolist is at the profit-maximizing output level. If the monopolist sells another unit of output, then:

### price discrimination

In 2000, Amazon.com tested "dynamic pricing." Dynamic pricing would allow a web site to use the personal information collected on a customer, such as income or location, to individualize the price of a product for each customer. Economists consider this type of pricing to be an example of:

### above that of a normal monopolist.

A price-discriminating monopolist will produce an output:

### a single firm can supply the entire market demand for a product at a lower average total cost than would be possible if two or more firms supplied the market.

A natural monopoly occurs when:

### ATC > MC

For a natural monopoly:

### average total cost (ATC)

If government regulators want a natural monopolist to earn only zero economic profit, then they will set price equal to:

### rent-seeking activities in which people spend resources to gain monopolies for themselves.

One of the normative arguments against monopoly is that it may cause:

### Contestable market model of oligopoly

In which of the following models of firm behavior do firms make strategic pricing decisions and also charge a perfectly competitive price?

### few barriers to entry

Under monopolistic competition, there are:

### few sellers

Oligopoly is characterized by:

### right and making it more inelastic

Goals of advertising include shifting the firm's demand curve to the:

### so that marginal revenue and marginal cost are equal (MR=MC)

If the fast-food industry is monopolistically competitive, then a profit-maximizing firm in this industry sells its product at a price:

### oligopolistic

Suppose there are only four airlines that service the air route between two cities. If there is a barrier to entering the market (such as a limited number of gates), then the market is best characterized as:

### the demand curve shifts to the right for the remaining firms in the industry

As firms leave a monopolistically competitive industry that is sustaining economic losses:

### raised revenue by more than it raises cost of advertising

In 2004, Wendy's began to offer fruit or salad as a substitute for French fries in its value meals. It made sense for Wendy's to advertise this fact as long as doing so:

### downward-sloping demand curve and price exceeds marginal cost in equilibrium.

The difference between a perfectly competitive firm and a monopolistically competitive firm is that a monopolistically competitive firm faces a:

### firms produce differentiated products

In a monopolistically competitive market:

### roughly equal to the cost of producing a box of facial tissue

Suppose there are no barriers to entry in the market for facial tissue, where two brands (Kleenex and Puffs) dominate the industry. According to the theory of contestable markets, the price charged for facial tissue will then be:

### average revenue

The price at which a monopolistic competitor sells its product is equal to:

### these profits will be eliminated in the long-run as new firms enter the industry.

If a monopolistically competitive firm is earning economic profits in the short-run, then:

### monopolistically competitive

An industry that has many sellers offering slightly differentiated products is called:

### is likely to be successful only if firms cannot enter an industry easily

Predatory pricing:

Example: