ECO 1102 Chapter Notes - Chapter 14: Marginal Revenue, Marginal Cost, Takers

23 views4 pages

sangriapug0

25 May 2016

School

Department

Course

Professor

For unlimited access to Textbook Notes, a Class+ subscription is required.

roza220x and 38789 others unlocked

ECO 1102 Full Course Notes

Verified Note

46 documents

Document Summary

A market is competitive if each buyer and seller is small compared to the size of the market and, Sharp 1 has little ability to influence market prices. A competitive market has two characteristics: there are many buyers and sellers in the market, and the goods offered by the various sellers are largely the same. Each buyer and seller takes the market price as given and are said to be price takers. Firms can freely enter and exit the market due to the conditions prevailing. Average revenue is the total revenue divided by the quantity sold, for all types of firms, average revenue equals the price of the good. Marginal revenue is the change in total revenue from an additional unit sold; for competitive firms, marginal revenue equals the price of good. 14. 2 profit maximization and the competitive firm"s supply curve.

Related Questions

1. Which of the following is a difference between a perfectly competitive market and a monopoly?

A. There are huge barriers to entry in a perfectly competitive market, while there are no barriers to entry in a monopoly.

B. The market demand curve faced by a perfectly competitive firm is horizontal, while the market demand curve in a monopoly is downward-sloping.

C. The sellers in a perfectly competitive market are price-makers, while a seller in a monopoly market is a price-taker.

D. The equilibrium price in a perfectly competitive market exceeds marginal revenue, while the equilibrium price in a monopoly equals marginal revenue.

2. Which of the following firms is likely to have the highest market power?

A. An oligopoly with homogeneous products

B. A monopoly

C. A monopolistic competitor

D. A perfectly competitive firm

graygrasshopper945

70) In a monopolistically competitive industry, the long-run equilibrium output corresponds to the tangency of the firm's LRAC and its demand curve. This output is also where marginal revenue equals marginal cost because A) firms will have negative profits at any other level of output. B) the average total cost is equal to average revenue at that output. C) firms are price takers in this market structure. D) marginal cost is above price. E) firms prefer it this way.

32. Which of the following is not a difference between monopolies and perfectly competitive markets?

A. Monopolies face downward sloping demand curves while perfectly competitive firms face horizontal demand curves.

B. Monopolies charge a price higher than marginal cost while perfectly competitive firms charge a price equal to marginal cost.

C. Monopolies can earn profits in the long run while perfectly competitive firms break even.

D. Monopolies choose to produce the quantity at which marginal revenue equals marginal cost while perfectly competitive firms do not.

40. Which of the following statements is not correct?

A. Both monopolies and monopolistically competitive firms can earn economic profits in the long run.

B. Both monopolistically competitive and perfectly competitive firms can earn economic profits in the short run.

C. Only competitive firms produce the welfare-maximizing level of output.

D. Firms in perfect competition, monopolistic competition, and monopoly maximize profits by producing where marginal revenue equals marginal cost.

43. A monopolistically competitive firm is currently producing 20 units of output. At this level of output the firm is charging a price equal to $20, has marginal revenue equal to $12, has marginal cost equal to $12, and has average total cost equal to $18. From this information we can infer that

A. the profits of the firm are negative.

B. firms are likely to leave this market in the long run.

C. the firm is currently maximizing its profit.

D. All of the above are correct.

ECO 1102 Chapter Notes - Chapter 14: Marginal Revenue, Marginal Cost, Takers

ECO 1102 Full Course Notes

Document Summary

Get access

Related textbook solutions

Principles of Economics

Principles of Macroeconomics

Principles of Microeconomics

Related Documents

ECO 1102 Lecture Notes - Marginal Revenue, Perfect Competition, Demand Curve

ECO 1102 Lecture Notes - Lecture 5: Fudge, Demand Curve, Perfect Competition

ECO 1102 Lecture Notes - Lecture 4: Excess Supply, Substitute Good, Normal Good

Related Questions