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Terms in this set (19)
The difference between a perfectly competitive firm's total revenue and its total cost is
A) always positive.
B) always negative.
C) always zero.
D) greatest at the profit-maximizing level of output.
A firm is producing the profit-maximizing amount of output when it is producing where its ________ curve intersects its ________ curve.
A) MC; MR B) MC;AVC
C) MC;ATC D) MC; TR
In the table below, the firm (A)
A) must be in a perfectly competitive market because its marginal revenue is constant.
B) must be in a perfectly competitive market because its marginal cost curve eventually rises.
C) cannot be in a perfectly competitive market because its short-runeconomic profits are greaterthan zero.
D) cannot be in a perfectlycompetitive market because its long-run economic profits are greater than zero. Output Total Revenue. Total Cost.
0. 0 25
1 30 49
2 60 69
3 90 91
4 120 117
5 150 147
6 180 180
A firm's shutdown point is the quantity and price at which the firm's total revenue just equals its
A) total cost. B) total variable cost.
C) total fixed cost. D) marginal cost.
The owners will shut down a perfectly competitive firm if the price of its good falls below its minimum
A) average total cost.
B) average marginal cost.
C) average variable cost.
D) wage rate.
Giuseppe's Pizza is a perfectly competitive firm. The firm's costs are shown in the table above. If the market price is $15, what is Giuseppe's profit-maximizing output? A) 2 pizzas per hour
B) 4 pizzas per hour
C) 5 pizzas per hour
D) 0 pizzas per hour
A monopoly is best defined as a firm that
A) produces a good or service for which no close substitute exists and which is protected by a barrier that prevents other firms from selling that good or service.
B) purchases its resources from only one supplier because of a barrier preventing it from buying from other suppliers.
C) produces a good or service for which no close substitute exists and that sells all its output to one buyer because there is barrier preventing other buyers from purchasing the good or service.
D) cannot control the price it sets for its good or service because there is barrier that prevents the firm from changing the price.
Which of the following is LEAST likely to be a monopoly?
A) the holder of a public franchise
B) a pharmaceutical company with a patent on a drug
C) a store in a large shopping mall
D) an artist who owns a copyright for a painting
The existence of economies of scale can create ________.
A) a natural monopoly
B) a government monopoly
C) a legal monopoly
D) a market in which many firms make identical products
Which of the following is a characteristic of a single-price monopoly?
A) The firm is a price taker.
B) Demand is perfectly elastic
.C) There are many close substitutes for the firm's product.
D) Price exceeds marginal revenue.
. Single-price monopolies maximize profit by producing the amount of output where
A) total revenue is maximized.
B) price is equal to marginal cost.
C) price is equal to marginal revenue.
D) marginal revenue is equal to marginal cost.
Which of the following is ALWAYS true for a profit-maximizing single-price monopolist?
A) P > MC
B) P > MR
C) MR> MC
D) All of the above are always true.
The creation of a monopoly results in gains to
A) producers at no expense to consumers.
B) consumers at no expense to producers.
C) producers at the expense of consumers.
D) consumers at the expense of producers.
Which of the following is part of the market structure for monopolistic competition?
A) barriers to entry B) a large number of firms compete
C) each firm produces a differentiated product
D) Both answers B and C are correct.
Monopolistic competition is a market structure in which:
A) A small number of firms compete. B) Firms produce identical products.
C) Firms compete on product quality, price, and marketing.
D) Natural or legal barriers prevent the entry of new firms.
One difference between perfect competition and monopolistic competition is that
A) a perfectly competitive industry has fewer firms
.B) in perfect competition, firms produce slightly differentiated products.
C) monopolistic competition has barriers to entry.
D) firms in monopolistic competition face a downward-sloping demand curve.
In the long run, a firm in monopolistic competition has its price equal to ________ and also has its price ________.
A) marginal cost; exceeding its average total cost.
B) marginal cost; equal to its average total cost
C) average total cost; exceeds its marginal cost
D) average total cost; less than its marginal cost
In the long run, a monopolistically competitive firm ________ make an economic profit and a monopoly ________ make an economic profit. A.can; can
A firm's markup is the amount by which ________ exceeds ________.
A.price; average total cost B.price; marginal cost
C.average total cost; marginal cost D.price; average variable cost
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