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15 Cards in this Set

  • Front
  • Back

1) A purely competitive seller is

1) a price taker

2) The marginal revenue curve of a purely competitive firm

2) is horizontal at the market price.

The MR = MC rule applies

to firms in all types of industries

The demand curve in a purely competitive industry is________ while the demand curve to a single firm in that industry is________

downsloping; perfectly elastic

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

When a purely competitive firm is in long-run equilibrium

price equals marginal cost

The diagram portrays

the equilibrium position of a competitive firm in long-run

Refer to the diagram. If this competitive firm produces output Q, it will

earn a normal profit

Because the monopolist's demand curve is downsloping

price must be lowered to sell more output

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.

Refer to the diagram for a pure monopolist. Monopoly price will be

C

In the short run, a profit maximizing monopolistically competitive firm sets it price

above marginal cost

Monopolistically competitive firm

May realize either profits or losses in the short run but realize normal profits in the long run

Refer to the diagram for a monopolistically competitive firm. Long-run equilibrium price will be

A

Refer to the diagram for a monopolistically competitive firm. Long-run equilibrium output will be

D