ECO100Y5 Chapter Notes - Chapter 9: Average Variable Cost, Marginal Revenue, Perfect Competition

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Chapter 9 reading notes a market is said to have a competitive structure when its firms have little or no market power. Assumptions of perfect competition: all the firms in the industry sell an identical product. Economists say that the firms sell a homogenous product: consumers know the nature of the product being sold and the prices charged by each firm. Because everyone has the same and equal demand of their products. Total, average, and marginal revenue: tr - total revenue - total amount received by the firm from the sale of a product. If q units are sold at p dollars. Tr = p(q). p=bq-a. this equation is like the y=mx+b formula. This is in the notebook: ar - average revenue - the amount of revenue per unit sold. It is equal to total revenue divided by the number of units sold and is equal to the price at which the product is sold.

Related Questions

25. One difference between perfect competition and monopolistic competition is A) firms in a perfectly competitive market produce similar but slightly different products. B) in perfect competition, the product produced has no close substitutes. C) monopolistic competition has barriers to entry, whereas perfect competition has none. D) a small number of firms compete in a monopolistically competitive market and a large number of firms compete in a perfectly competitive market. E) firms in monopolistic competition have some degree of market power.

A major difference between monopolistic competition and perfect competition is:

a. there are barriers to entry in monopolistic competition. There are no barriers to entry in perfectly competitive markets.

b. monopolistically competitive firms sell differentiated products. Perfectly competitive firms sell identical products.

c. government regulation restricts the ability of monopolistically competitive firms to change their prices. Perfectly competitive firms face no price regulation.

d. the market demand curve in a monopolistically competitive market slopes downward. The market demand curve in a perfectly competitive market is horizontal

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The terms price maker, price setter, and price searcher are all meant to imply the same thing, which is

Select one:

a. firms operating in a perfectly competitive market have pricing power.

b. it is impossible for any firm to have pricing power.

c. a firm operating in any market but perfect competition that also determines the quantity it produces and the price at which it sells the products.

d. any firm can determine the price at which it sells a product, but no firm can determine the quantity it produces.

e. a price increase will likely drive every customer for the producer of this product to another product.

In monopoly,

Select one:

a. the number of firms is large.

b. there is ease of entry into the market and exit from the market.

c. the product has many good substitutes.

d. economic profits are zero in the long run.

e. None of these choices.

ECO100Y5 Chapter Notes - Chapter 9: Average Variable Cost, Marginal Revenue, Perfect Competition

ECO100Y5 Full Course Notes

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