Firms in a perfectly competitive market achieve both allocative and productive efficiency in the short run.
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Which of the following firms is most likely to be a perfectly competitive firm?a farm that grows soybeansA perfectly competitive firm is currently producing at a point where price is $10 and both marginal cost and average variable cost are $7. To maximize profit or minimize loss in the short run, the firm should ________increase its outputMonopolists always earn positive short-run economic profit.FalseA natural monopoly emerges from legal restrictions imposed by a government.FalseRent-seeking activities are socially wasteful because they use scarce resources but do not add to society's output.TrueA monopolist maximized profit at the quantity where the slope of its total revenue curve equals the slope of its total cost curve.TrueWhich of the following factors explains the difference in long-run profits earned by a monopolist and a perfectly competitive firm?there are no barriers to entry in perfect competitionA non-discriminating monopolist observes that marginal revenue is $23 and marginal cost is $30 at its present output level. In order to maximize profit, it shouldraises price and lower outputWhich of the following can be concluded about a monopolist whose marginal revenue is zero for a particular output level?total revenue earned by the monopolist is at its maximum at that output level.Why would a monopolist sort customer by age or separate customers in time?to prevent those who pay the lower price from reselling the product to those paying the higher priceWhen compared to firms in perfect competition, monopolists tend to change_____high prices and offer lower quantities of outputSuppose a single firm supplies all the ceramic windlasses in the United States. The demand curve that the firm faces iselastic only at the profit-maximizing output.Which of the following does a monopoly control that a perfectly competitive firm does not control?priceThe demand curve a monopolist faces is _____the same as the market demand curveIf a firm is deciding how much output to produce and sell in a perfectly competitive market, and if the price of the good is greater than its marginal cost,more should be producedWhen compared to firms in perfect competition, monopolists tend to charge __________ prices and offer ___________ quantities of outputhigher; lowerThe defining characteristic of oligopoly is product differentiation.FalseGame theory provides us with a general approach to understanding the behavior of firms when their choices are interdependent.TrueA group of firms that agree to coordinate their production and pricing decisions to monopoly profit is called an oligopoly.FalseCartels are inherently unstable.TrueWhich of the following is not considered a barrier to entry?perfect price discriminationAn agreement among firms in the industry to divide the market and fix the price is called ________-collusionA common feature of a monopolistic competition, pure monopoly, and perfect competition is that _______-the profit-maximizing condition in each market is the sameCollusion among firms to raise prices is rare in monopolistically competitive markets because _______there are too many firmsWhat does each firm have to consider in the oligopolistic industry?a rising long-run average cost curveIn both monopolistic competition and a non-price-discriminating monopoly, ______the marginal revenue curve lies below the demand curveIn an oligopoly, the demand curve facing an individual firm depends upon the ________behavior of competing firms