Micro econ 175
Terms in this set (24)
Refer to Table 13-9. What is the marginal cost of producing the 1st poster?
The average-total-cost curve intersects
marginal cost at the minimum of average total cost
Thirsty Thelma owns and operates a small lemonade stand. When Thelma is producing a low quantity of lemonade she has few workers and her equipment is not being fully utilized. Because she can easily put her idle resources to use,
the marginal cost of one more glass of lemonade is smaller than if output were high.
The efficient scale of the firm is the quantity of output that
minimizes average total cost.
The tax on gasoline
enhances efficiency by serving as a corrective device in a market with negative externalities
When an externality is present, the market equilibrium is
inefficient, and the equilibrium does not maximize the total benefit to society as a whole.
result in smaller than efficient equilibrium quantity
A paper plant produces water pollution during the production process. If the government forces the plant to internalize the negative externality, then the
supply curve for paper would shift to the left.
If a competitive firm is currently producing a level of output at which marginal revenue exceeds marginal cost, then
a one-unit increase in output will increase the firm's profit.
Which of these curves is the competitive firm's short-run supply curve?
the marginal cost curve above average variable cost
A firm will shut down in the short run if the total revenue that it would get from producing and selling its output is less than its
Timmy's Trophies operates in a perfectly competitive market. If trophies sell for $20 each and average total cost per trophy is $15 at the profit-maximizing output level, then in the long run
more firms will enter the market.
If a profit-maximizing monopolist faces a downward-sloping market demand curve, its
marginal revenue is less than the price of the product.
A natural monopoly occurs when
there are economies of scale over the relevant range of output.
In monopolistically competitive markets, positive economic profits
suggest that new firms will enter the market.
An agreement among firms regarding price and/or production levels is called
A monopolistically competitive market has characteristics that are similar to
both a monopoly and competitive firm.
In perfect competition as well as in monopolistic competition,
there are many firms in a single market.
A group of firms that act in unison to maximize collective profits is called a
The equilibrium quantity in markets characterized by oligopoly is
higher than in monopoly markets and lower than in perfectly competitive markets.
The more firms an oligopoly has,
the more likely the firms will charge a price closer to the perfectly competitive price.
The profit-maximizing rule for a firm in a monopolistically competitive market is to always select the quantity at which
marginal revenue is equal to marginal cost.
Which of the following is an example of a monopolistically competitive industry?
New York city restaurants
Suppose a market is initially perfectly competitive with many firms selling an identical product. Over time, however, suppose the merging of firms results in the market being served by only three or four firms selling this same product. As a result, we would expect
a decrease in market output and increase in the price of the product.