The firm's short-run supply curve runs up the marginal cost curve from the shutdown point all the way up the curve. What does this imply about the firm's production decisions? The firm will produce as long as price covers average variable costs The firm will shut down immediately if price falls below average total costs The firm will produce regardless of costs The firm will produce only if price covers average total costs

The firm will produce as long as price covers average variable costs

Exit from a competitive industry will occur until economic losses are driven to zero. What does this indicate about the long-term equilibrium in a competitive market? Firms will exit until only the largest firms remain Firms will continue to incur losses indefinitely Firms will exit until all firms are profitable Firms will exit until only normal profits are made

Firms will exit until only normal profits are made

If the demand curve of a perfect competitor is tangent to the firm's average total cost curve, the firm is definitely in the long run. What does this imply about the firm's economic profit? The firm is earning negative economic profit The firm is incurring losses The firm is earning positive economic profit The firm is earning zero economic profit

The firm is earning zero economic profit

If perfect competitors are earning economic profits, what is likely to happen in the industry? Firms will collude to maintain profits Market price will rise New firms will enter the industry and market price will fall Existing firms will exit the industry

New firms will enter the industry and market price will fall

A monopolist operates at the minimum point of its average total cost (ATC) curve in neither the short run nor the long run. What does this imply about its cost efficiency? The monopolist is cost-efficient The monopolist is maximizing profits The monopolist is not cost-efficient The monopolist is minimizing losses

The monopolist is not cost-efficient

Microeconomic Firm Behavior: Profit Maximization in Perfect Competition Models

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Economics - Managerial Economics

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Cards in this deck(36)

When a firm's marginal cost (MC) is greater than its marginal revenue (MR), what should a profit-maximizing firm do?

The firm's short-run supply curve runs up the marginal cost curve from the shutdown point all the way up the curve. What does this imply about the firm's production decisions?

If the price of a competitive firm's output is between the firm's average total cost curve and its average variable cost curve at the level of output where marginal revenue equals marginal cost, what will the firm do in the short run?

Exit from a competitive industry will occur until economic losses are driven to zero. What does this indicate about the long-term equilibrium in a competitive market?

To maximize profits, a perfectly competitive firm should increase output until the price is equal to which of the following?

If the demand curve of a perfect competitor is tangent to the firm's average total cost curve, the firm is definitely in the long run. What does this imply about the firm's economic profit?

If perfect competitors are earning economic profits, what is likely to happen in the industry?

If marginal cost is greater than marginal revenue, what should a firm do to maximize its profit?

When more substitutes become available, a monopolist has _____ power to raise price. Fill in the blank.

A monopolist operates at the minimum point of its average total cost (ATC) curve in neither the short run nor the long run. What does this imply about its cost efficiency?

When marginal cost is greater than marginal revenue, how can a monopolist increase its profit or minimize its loss?

For a monopolist, the price of the product exceeds the marginal revenue. What does this indicate about the monopolist's pricing strategy?

At a monopolist's profit-maximizing level of output, you can expect that the price is greater than which of the following?

Patents function to temporarily protect monopoly power. What is the primary purpose of this protection?

If a monopolist's marginal cost equals its marginal revenue, what can be concluded about its profits?

Marginal revenue for a monopolist decreases as price decreases because all units of the good are being sold for a lower price. What does this imply about the demand curve?

There are only two justifications for monopoly: _____ and _____. Fill in the blanks.

A monopolistically competitive industry has many firms producing what type of products?

The basis for monopolistic competition is which of the following?

Assume a monopolistically competitive firm is producing at an output level at which marginal revenue is $15 and marginal cost is $18. What should the profit-maximizing firm do?

Advertising is likely to shift the firm's average total cost curve upward and make demand more inelastic. What is the primary goal of this strategy?

Monopolistically competitive firms prevent the efficient use of resources because in long-run equilibrium, which condition holds true?

In monopolistic competition, firms can have some market power by producing what type of products?

Monopolistic competition differs from perfect competition because monopolistic competitors do not produce at which point on the average total cost curve?

In the long run, if some firms are losing money in monopolistic competition, what will happen to the market supply and price?

The demand curve for monopolistic competitive firms is elastic because there are many substitutes for the product. What does this imply about consumer choice?

A monopolistically competitive industry has a differentiated product and what other characteristic?

The greater the barriers to entry into an industry are, the more likely that existing firms will enjoy what in the long run?

What are the limitations of will in relation to industry and monopolist?

The demand curve facing an oligopoly will be less elastic the larger its share of the market and the more differentiated the product. What does this imply about the firm's pricing power?

The most important fact about an oligopolized industry is that there are how many firms?

The higher the degree of oligopolization, the greater the likelihood of what occurring among firms?

Of the forms of competition listed below, the one that represents the MOST competition is which of the following?

If each firm in an oligopolistic market matches price decreases but does not match price increases, what happens to the demand curve?

If your competitors will follow your price cuts and ignore price hikes, your firm faces what type of demand curve?

Sticky prices in oligopoly markets are represented by which model?

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