Eng 200 Midterm 200

Assume a pure monopolist is currently operating at a price-quantity combination on the inelastic segment of its demand curve. If the monopolist is seeking maximum profits, it should
charge a higher price
Suppose that a business incurred implicit costs of $200,000 and explicit costs of $1 million in a specific year. If the firm sold 4k units of its output at $300 per unit, its accounting profits were
$200,000 and its economic profits were zero
The demand schedule or curve confronted by the indicidual purely competitive from is
perfectly elastic
the loss of a purely competitive firm which shuts down in the short run
is equal to its total fixed costs
in a purely competitive industry
there may be economic proits in the short run, but not in the long run
An important economic problem associated with pure monopoly is that, at the profit maximizing outputs, resources are
underallocated because price exceeds marginal cost
diseconomies of scale arise primarily because
of the difficulties inolved in managing and coordinating a large business enterprise
a price discriminating pure monopolist will attempt to charge each buyer
the maximum price each would be willing to pay
suppose that a pure monopolist can sell 10 units of output at $5 per unit and 11 units at $4.90 per unit. the marginal revenue of the eleventh unit is
monopolistic competition and oligopoly are alike in that
nonprice competition is common to both
creative destruction is
the process by which new firms and new products replace existing dominant firms and products
monopolistic competition means
many firms producing differentiated products
a pure monoplist is producing an output such that ATC = $4, P = $5, MC = $2, and MR = $3. This firm is realizing
an economic profit that could be increased by producing more output
the first successful commercial introduction of a new product refers to
In the short run the sure-screen t-shirt company is producing 500 units of output. its average cariable costs are $2.00 and its average fixed costs are $.50. The firm's total costs
are $1,250
In an oligopolistic market
products may be standardized or differentiated
economic profits are calculated by subtracting
explicit and implicit costs from total revenue
in the incerted-u theory
R&D expenditures first rise as a percentage of firms' sales as industry concentration increases, but then fal as higer industry concentration occurs
To economists the main difference between the short run and the long run is that
in the long run all resources are vaiable, while in the short run at least on resource is fixed
which of the following is a unique feature of oligopoly
mutual interdependence
the kinked-demand curve model of oligopoly is useful in explaining
why oligopolistic prices might change only infrequently
as it relates to the R&D decision, the interest-rate-cost-of-funds curve
is the marginal cost element in the MB = MC decision framwork
which of the following is a true statement
innovation normally follows incention and precedes diffusion
the mr = mc rules
applies both to pure monopoly and pure competition
the law of diminishing reutrns indiicates that
as extra units of a variable resource are added to a fixed resource, marginal product will decling beyond some point
If the serveral oligopolistic firms that comprise an industry behave collusively, the resulting price and output will most likely resemble those of
pure monopoly
which of the following supports of the contention that pure conpetitors have a weak incentive to engage in R&D?
entry to purely competitive industries is easy and thus profit from innovation is quickly competed away
As it relates to R&D, the imitation problem is that
a firm's rivals may be able to copy its new product or process innovation, reducing its return on R&D
Pure monopoly means
a single firm producing a product for which there are no close ssubstitutes
A firm finds that its MR= MC output, its TC = $1,000, TVC = $800, TFC = $200, and total revenue is $900. This firm should
produce because the resulting loss is less than its TFC
The vertical distance between a firm's ATC and AVC curves represents:
AFC, which decreases as output increases