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15 Cards in this Set
- Front
- Back
1) A purely competitive seller is |
1) a price taker |
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2) The marginal revenue curve of a purely competitive firm |
2) is horizontal at the market price. |
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The MR = MC rule applies |
to firms in all types of industries |
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The demand curve in a purely competitive industry is________ while the demand curve to a single firm in that industry is________ |
downsloping; perfectly elastic |
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If a purely competitive firm is producing at the MR = MC output level and earning an economic profit then |
New firms will enter this market |
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When a purely competitive firm is in long-run equilibrium |
price equals marginal cost |
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The diagram portrays |
the equilibrium position of a competitive firm in long-run |
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Refer to the diagram. If this competitive firm produces output Q, it will |
earn a normal profit |
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Because the monopolist's demand curve is downsloping |
price must be lowered to sell more output |
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For a pure monopolist, marginal revenue is less than price because |
when a monopolist lowers price to sell more output, the lower price applies to all units sold. |
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Refer to the diagram for a pure monopolist. Monopoly price will be |
C |
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In the short run, a profit maximizing monopolistically competitive firm sets it price |
above marginal cost |
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Monopolistically competitive firm |
May realize either profits or losses in the short run but realize normal profits in the long run |
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Refer to the diagram for a monopolistically competitive firm. Long-run equilibrium price will be |
A |
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Refer to the diagram for a monopolistically competitive firm. Long-run equilibrium output will be |
D |