ECON 200 Lecture Notes - Lecture 7: Monopolistic Competition, Marginal Product, Production Function

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14 Dec 2019

School

University of Arizona

Department

Economics

Course

ECON 200

Professor

Chandini Sankaran

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ECON 200 Full Course Notes

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The study of how a firm"s decisions regarding prices and quantity supplied depend on market conditions that they face. Very large number of buyers and sellers. Homogenous (identical) product being produced and sold. Each firm offers a slightly differentiated product. Sometimes a dominant firm, but not always. Razors: gillette has majority of market power over bic. Ex. airline companies, i. e. southwest, delta, american, etc. Relationship between quantity of inputs to produce a good and quantity of output of that good. In the short run, there is at least one fixed input. Marginal product of labor (mpl)--- change in output(q)/change in labor(l): A change in output resulting from one additional unit of labor inputs. The contribution of an additional unit of labor (l) Eventually, as labor continues to go up, marginal product drops--- If we hire one more work (l), what happens to output becomes inefficient. Consider the short run production of a small firm that makes sweaters.

Related Questions

1. A monopoly market structure is characterized by

a. large number of firms, standardized products, easy entry and exit.

b. large number of firms, differentiated products, easy entry and exit.

C. small number of firms, standardized or differentiated products, difficult entry.

d. one firm, a unique product without close substitutes, and impossible entry.

e. one firm, differentiated product, impossible entry.

2. Which of the following is not a characteristic of monopolistic competition?

a. Differentiated products

b. A downward-sloping demand curve for individual firms

c. Firms that are price makers

d. Impeded entry into the industry

e. A large number of firms

3. One factor that distinguishes oligopoly from other market structures is

a. the ease of entry into the market.

b. the interdependence of firms.

c. the slope of the demand curve.

d. the degree of product differentiation.

e. the amount of advertising expenditures.

lavenderbat941

13. If a monopolistic competitor is producing an output for which marginal revenue is $40 and the marginal cost is $32, to maximize profits the firm should
A. decrease the level of output.
B. keep the level of output constant.
C. continue to make $8 per unit.
D. increase the level of output.

14. A monopolistic competitor will not make an economic profit unless
A. it engages in price discrimination.
B. its marginal revenue is greater than its marginal cost.
C. it faces an inelastic demand curve.
D. its price is greater than its average total cost.

15. The definition of monopolistic competition includes
A. few firms and ease of entry and exit.
B. few firms and barriers to entry and exit.
C. many firms and barriers to entry and exit.
D. many firms and ease of entry and exit.

16. Characteristics of monopolistic competition include all of the following except
A. significant barriers to entry.
B. a relatively large number of sellers and buyers.
C. small market share for each seller.
D. differentiated products.

olivecricket650

1. Which of the following is a characteristic of pure monopoly?

A. close substitute products

B. barriers to entry

C. the absence of market power

D. "price taking"

2. An example of a monopoly would be

A. one of many U.S. wheat farmers

B. one of the few U.S. automakers

C. AT&T cell phone service

D. the local water company

3. In which market structure do firms exist in very large numbers, each firm produces an identical product, and there is freedom of entry and exit?

A. monopoly

B. oligopoly

C. only perfect competition

D. only monopolistic competition

E. both perfect competition and monopolistic competition

4. Which of the following is the best example of a perfectly competitive market?

A. farming

B. diamonds

C. athletic shoes

D. soft drinks

E. electricity distribution

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ECON 200 Lecture Notes - Lecture 7: Monopolistic Competition, Marginal Product, Production Function

ECON 200 Full Course Notes

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