Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
30 Cards in this Set
- Front
- Back
|
What is a homogeneous product?
|
little distinction from the competition, perceived to be identical by the consumer
|
|
|
Perfect competition includes
|
> many buyers and sellers
> standardized products > fully informed buyers and sellers > firms free to enter and exit market |
|
|
Perfect competition can change only
|
production. Price is set by market.
|
|
|
Who sets prices in a perfect competition firm?
|
the market sets the price. PC firms have no choice.
|
|
|
Why are PC firms price takers and not price makers?
|
many small firms with multiple substitutes
|
|
|
How does the demand curve appear in a PC market?
|
Horizontal, perfectly elastic
|
|
|
How much product can a PC firm sell at market price?
|
As much as they can produce
|
|
|
Marginal revenue is
|
the change in total revenue divided by the change in quantity
|
|
|
In a PC firm, what is the equation P=AR=MR?
|
Price, marginal revenue, and average revenue are all equal
|
|
|
When is profit maximized?
|
When MR=MC
|
|
|
What is a monopoly?
|
single seller of a product with no close substitute
|
|
|
4 barriers monopolies put in place to discourage new firms
|
patents
licensing economies of scale control over resources |
|
|
What is a natural monopoly?
|
one whose long run average cost declines as the firm increases output
|
|
|
True or untrue? A monopoly can set their prices at anything they want
|
untrue
|
|
|
In both a MONO and a PC, to maximize profit
|
increase production as long as MR > MC
|
|
|
Describe a MONO short-run supply curve
|
MONO does not have one
|
|
|
Beside barring new competition, what else do MONO barriers provide for?
|
They allow for long run profit earnings
|
|
|
Graphically, what distinguishes a MONO from a PC?
|
the slope of the demand curve
|
|
|
MONO in term of production are
|
inefficient producers
|
|
|
Which firm, a MONO or a PC are able to produce less but charge a higher price?
|
MONO, they are price setters and can reduce output levels
|
|
|
What it a MONO Competitive firm?
|
many firms selling a slightly different product
|
|
|
Why is collusion rare in a MONO-C firm>
|
too many firms
|
|
|
Of MONO or MONO-C firms, which one produces heterogeneous products?
|
MONO-C
|
|
|
Are MONO-C price makers or price takers?
|
Price makers
|
|
|
Again, what do each MONO, PC, and MONO-C have in common in relation to max profits?
|
at max profit, MC=MR
|
|
|
In both MONO and MONO-C, the MR curve>
|
lies below the demand curve
|
|
|
A commonality between a PC and a MONO-C firm>
|
both have zero long run economic profits
|
|
|
What type of firms allow no barriers to entry
|
both PC and MONO-C
|
|
|
What is an oligopoly?
|
a few interdependent firms
|
|
|
What is an oligopoly with collusion?
|
a cartel
|
