One defining characteristic of pure monopoly is that:
A.The monopolist is a price taker
B.The monopolist uses advertising
C.The monopolist produces a product with no close substitutes
D.There is relatively easy entry into the industry, but exit is difficult
Which is a barrier to entry?
B.Diseconomies of scale
Other things equal, which reduces competition in an industry?
B.Freedom of entry for new firms
C.An increase in the number of producers
D.An increase in the number of buyers
The representative firm in a purely competitive industry:
A.Will always earn a profit in the short run
B.May earn either an economic profit or a loss in the long run
C.Will always earn an economic profit in the long run
D.Will earn an economic profit of zero in the long run
An example of a monopolistically competitive industry would be:
Firms in an industry will not earn long-run economic profits if:
A.Fixed costs are zero
B.The number of firms in the industry is fixed
C.There is free entry and exit of firms in the industry
D.Production costs for a given level of output are minimized
Marginal product is:
The law of diminishing returns indicates that:
Which of the following is most likely to be a variable cost?
A.fuel and power payments
B.interest on business loans
C.rental payments on IBM equipment
D.real estate taxes
If average total cost is declining, then:
The selling of stock is debt financing for a corporation.
Average fixed costs diminish continuously as output increases.
Patents and copyrights were established by the government to reduce oligopoly and monopoly power.
Prices in oligopolistic industries are predicted to fluctuate widely and frequently compared to other market structures.
The positive view of advertising suggests that it contributes to economic efficiency in the economy.
Price fixing is illegal under Section 1 of the Sherman Act.
Rent-seeking behavior refers to activities designed to transfer income or wealth to a particular firm or resource supplier at someone else's or society's expense.
A purely competitive firm is a price maker, but a monopolist is a price taker.
(Exhibit: Short-Run Costs) At the given price, the most profitable level of output occurs at quantity:
(Exhibit: Short-Run Costs) If the price declines, the minimum quantity of output supplied in the short run is quantity:
(Exhibit: Short-Run Costs) If the price declines, production will continue in the short run, even though the firm incurs a loss, between quantities:
(Exhibit: Short-Run Costs) This firm's supply curve begins at quantity:
(Exhibit: Profit Maximization in Monopolistic Competition) A firm in monopolistic competition will maximize profits by producing the level of output where:
A.P = MC
B.MR = MC
C.P = MR
(Exhibit: Profit Maximization in Monopolistic Competition) In the short run, a firm in monopolistic competition may experience economic profits as shown in Panel (a) as the distance:
(Exhibit: Profit Maximization in Monopolistic Competition) If other firms see economic profits in the industry, they will enter it, and the demand curve for firms already in the industry will shift to the ________ ; in the long run, this will result in economic profit _______ and price _______ .
A.right; = 0; = ATC; = minimum ATC
B.right; > 0; > ATC
C.left; < 0; < ATC
D.left; = 0; = ATC; > minimum ATC
(Exhibit: Profit Maximization in Monopolistic Competition) In monopolistic competition, long-run equilibrium is characterized by:
(Exhibit: Profit Maximization in Monopolistic Competition) In Panel (a), if the firm raises its price above P, it will:
(Exhibit: Profit Maximization in Monopolistic Competition) In determining the price in monopolistic competition:
Question 29 of 29 20.0/ 20.0 Points
Which of the following is (are) most likely to be produced under conditions resembling perfect competition – automobiles, beer, corn, diamonds, and eggs. Defend your answer in economic terms