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18 terms

ME 3

STUDY
PLAY
For the representative firm n monopolistic competition, there will tend to be economic profits
Or losses in the short run, but the firm will break even in the long run.
Assuming no economies of scale and identical costs, if the firms in a purely competitive industry were replaced by a profit-maximizing monopolist, the likely result would be a(n):
Increase in price and reduced output
Which statement about oligopoly is false?
Prices in oligopoly are predicted to fluctuate widely and frequently
A monopolistic-ally competitive industry is like a purely competitive industry in that:
Neither industry has significant barriers to entry
A monopolist will definitely discontinue production in the short run if:
Price is less than average variable cost
Assume that in a monopolisticaly competitive industry, firms are earning economic profit. This situation will:
Attract other firms to enter the industry because the barriers to entry are low
The marginal cost curve intersects the average total cost curve in monopolistic competition:
At the minimum average total cost
Which se best describes the basic features of monopolistic competition?
Easy entry, many firms, and differentiated products.
One shortcoming of the kinked demand curve model of oligopoly is that it does not explain:
How the going price gets determined
Which is true of pure competition but not of monopolistic competition?
Long-run economic profits are zero
Demand and marginal revenue curves are downward sloping for monopolistically competitive firms because:
Product differentiation allows each firm some degree of monopoly power
In the kinked demand model, there will be a vertical brek in the firm's:
Marginal revenue curve
Mutual interdependence means that each firm in oligopolistic industry:
Considers the reactions of its rivals when it determines its price policy
With natural monopoly, the fair return price:
Is allocatively inefficient; the socially optimal price is allocatively efficient.
If an oligopolist's demand curve has a "kink" in it, then:
Over some interval, a change in the oligopolist's marginal cost will not cause a change in the oligopolists profit-maximizing price
In the kinked demand model of noncollusive oligopoly, if one firm increases its price, the most likely reaction of the other firms will be to:
Not change their prices
In the kinked demand model of a noncullisive oligopoly, if one firm decreases its price, the most likely reaction of the other firms will be to:
Decrease their prices
One feature of pure monopoly is that the monopolist is:
A price maker