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BU.001.311 Chapter Notes -Video Game Industry, Monopolistic Competition, Perfect Competition

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JHU
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BU Undergraduate Studies
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BU.001.311
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There are four main market structures in the economy today: perfect competition: price takers firms in the market are price takers - they cannot affect market price or price at which they buy their inputs. Marginal firm: economic profit of last firm to enter is sh. Economic profit: calculation includes and accounts for opportunity costs rather than the usual revenue minus cost function: monopoly: price setters only supplier of a good that has no close substitutes. A firm may be a monopoly if their costs are significantly lower than similar firms. *typically charge very high prices : oligopoly: price setters. Market with only a few firms - substantial barriers to entry. Sometimes patents preventing the use of certain technology lead to oligopolies: monopolistic competition: price setters. Firms are price setters - but entry is easy - little to no barriers. These markets have marginal firms like perfectly competitive markets. No - easy entry no - easy entry.

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Related Questions

A. A competitive firm

  1. can consider only its location in setting the price.
  2. must base its competitive price on product differentiation.
  3. has the ability to set its own price.
  4. must accept the price determined by the intersection of the market supply and demand curves.
  5. has no supply curve.

B. If a firm is making an economic profit, then

  1. the factors of production are being paid their opportunity costs.
  2. there will be no change in the number of firms if the industry is perfectly competitive.
  3. the factors of production are being paid less than their opportunity costs.
  4. the factors of production are being paid more than their opportunity costs.
  5. the firm will exit the industry

C. Along a downward-sloping monopoly demand curve,

  1. marginal revenue is greater than price.
  2. the elasticity of demand is constant.
  3. marginal revenue decreases when the price decreases.
  4. marginal revenue is equal to zero when the price is equal to zero

D. If, in the short run, a perfectly competitive firm is producing at a point where the total cost is greater than total revenue, then the firm should

  1. shut down because economic profits are negative.
  2. continue to produce as long as P > AVC.
  3. continue to produce because accounting profits are positive.
  4. set a higher price for its output.
  5. set a lower price for its output

E. For a perfectly competitive firm, the demand curve is

  1. the marginal revenue curve.
  2. perfectly inelastic.
  3. always equal to marginal cost.
  4. the same as the market demand curve

F. A firm in a(n) industry will have the most elastic demand curve

  1. monopolistic
  2. oligopolistic
  3. monopolistically competitive
  4. perfectly competitive

G. If the demand curve of a monopolist is in the inelastic range, then

  1. total revenue will fall if the price increases.
  2. total revenue will be unchanged if the price increases.
  3. total revenue will rise if the price increases.
  4. the total supply will increase by an equal amount if demand increases.
  5. the price will be unchanged if total revenue increases

H. Monopolistic competition and oligopoly are examples of

  1. monopoly.
  2. perfect competition.
  3. theories of consumer behavior.
  4. imperfect competition.
  5. the extreme cases on the market structure continuum

I. Under which market structure do firms face the flattest (most elastic) demand curve?

  1. perfect competition
  2. monopolistic competition
  3. oligopoly
  4. monopoly

J. At the point of long-run equilibrium for a perfectly competitive firm,

  1. economic profits are zero.
  2. TR > TC.
  3. TR < TC.
  4. P = AVC.
  5. normal profits are zero.

1. If it is easy for a firm to get into or exit from a market, then a firm in that market will be able to earn positive economic profits

a. only in a perfectly competitive or a monopoly market structure.

b. only in the short run.

c. only in an oligopolistic or a monopolistically competitive market structure.

d. only if it is a monopoly.

e. only if it is an oligopoly.

2. When economic profit is positive,

a. accounting profit can be negative.

b. accounting profit can be zero.

c. accounting profit must be positive.

d. total revenue is maximum.

e. a normal profit is earned.

If it is easy for a firm to get into or exit from a market, then a firm in that market will be able to earn positive economic profits

Select one:

a. only in a perfectly competitive or a monopoly market structure.

b. only in the short run.

c. only in an oligopolistic or a monopolistically competitive market structure.

d. only if it is a monopoly.

e. only if it is an oligopoly.

When economic profit is positive,

Select one:

a. accounting profit can be negative.

b. accounting profit can be zero.

c. accounting profit must be positive.

d. total revenue is maximum.

e. a normal profit is earned.