Sign in to save your progress, vote, and build your own decks.Sign in
Micro
63 cards·by VictoriaSpeiser
If there is an additional unit of output...
the changes in TVC and TC are equal
If a pure monopolist is producing at that output where P=ATC, then..
it's economic profits will be zero
If a purely competitive firm's total revenue curve is linear and up sloping to the right
then...
product price is constant at all levels of output
IN a purely competitive industry, equilibrium price..
will equal marginal revenue
Law of diminishing returns
as extra units of a variable resource are added to a fixed resource, marginal product will
decline beyond some point
The long run supply cure for a purely competitive increasing cost industry is...
upsloping
For most producing firms, average total costs...
decline as output is carried to a certain level, and then begin to rise
The marginal revenue curve for a monopolist...
becomes negative when output increases beyond some particular level
When total product is increasing at an increasing rate, marginal product is...
positive and increasing
A purely monopolistic industry....
earns only a normal profit in the long run
Example of short-run adjustment
a local bakery hires 2 additional bakers
Barriers to entry
economies of scale, the ownership of essential raw materials, and patents
The pure monopolist's demand curve is relatively elastic...
in the price range where marginal revenue is positive
Monopolistic competition
an industry comprised of 40 firms, none of which has more than 3% of the total market for a
differentiated product
In the short run, the individual competitive firm's supply curve is that segment of the...
marginal cost curve lying above the average variable cost curve
The demand schedule curve confronted by the individual, purely competitve firm is...
perfectly elastic
If the price of your product is less than minimum AVC, you should...
close down because by producing, your losses will exceed your total fixed costs
A pure monopolist should never produce in the ...
inelastic segment of its demand curve because it can increase total revenue and reduce total
cost by increasing price
If average total cost is declining, then...
marginal cost must be less than average total cost
The basic characteristic of the short run is...
the firm does not have sufficient time to change the size of its plant
A purely competitive firm
upsloping and equal to the portion of the marginal cost curve that lies above the average
variable cost curve
Demand curve for a purely competitive firm
perfectly elastic
Th supply curve of a pure monopolist
does not exist
Diseconomies of scale occur when...
long run average total costs rise as output increases
The non discriminating pure monopolist's demand curve...
is the industry demand curve
Allocative efficiency
P=MC
As output increases, total variable cost...
increases at a decreasing rate and then at an increasing rate
If a purely competitive firm is producing at the P=MC output and realizing an economic profit
at that output...
marginal revenue exceeds ATC
Concentration ratios measure the...
percentage of total sales accounted for by the four largest firms in the industry
A natural monopoly occurs when...
long run average costs decline continuously through the range of demand
In a purely competitve industry...
there may be economic profits but not in the long run
The monopolistically competitve seller's demand curve will become more elastic the...
larger the number of competitors
A pure monopolist will realize an economic profit if...
price exceeds AC at the profit-maximizing or loss-minimizing level of output
Non price competition refers to...
product development, advertising, and product packaging
A competitive firm in the short run can determine the profit-maximizing output by
equating...
marginal revenue and marginal cost
Assume a purely competitve, increasing cost industry is in long run equilibrium. If a decline
in demand occurs, firms will...
leave the market and price and output will both decline
Pure monopolists may obtain economic profits in the long run because...
of barriers to entry
Oligopoly
clear-cut mutual interdependence with respect to price-output polices
If a firm decideds to produce no output in the short run, its costs will be...
its fixed costs
In a pure monopoly, at the profit maximizing output, resources are...
under allocated because price exceeds marginal cost
Demand curve for a purely competitive industry
downsloping
In the short run, a purely competitive firm will always make an economic profit if..
P>ATC
When does marginal cost intersect average total cost?
at the average total costs' minimum point
Short run vs long run in pure competition
firms can enter/exit the market in the long run but not in the short run
How many firms does an oligopoly have?
4, each with about 25% of the total market for a prodcut
If a purely competitive firm is producing at MR=MC output level and earning an economic
profit, then..
more firms will enter the market
Example of implicit cost
Forgone rent from the building owned and used by Company X
Where is the entry of new firms the most difficut?
pure monopoly
The MR=MC rule applies...
to firms in all types of industries
Difference between average and total costs
total costs is based on the number of units
Break even point
total revenue = total cost
Implicit and explicit costs are differnt in that..
implicit costs refer to non-expenditure and explicit costs refer to out of pocket costs
If in the short run a firm's total product is increasing then its..
marginal product must also be increasing
Fixed cost
any cost that does not change when the firm change its output
Accounting profits =
total revenue - total explicit costs
If a pure monopolist is producing at that output where P=ATC then,..
its economic profits will be zero
Average total costs =
total cost divided by the number of goods produced
Marginal product
change in total product
Total cost =
variable + fixed costs
Toal variable cost =
total cost for number its asking - total cost of $0
Economic profit =
accounting profit - explicit costs
Marginal cost
change in total cost that results from producing one more unit of output
Total product
marignal product + previous total product