ECON 1201 Lecture Notes - Lecture 20: Marginal Revenue, Perfect Competition, Toothpaste

22 views2 pages

blackguinea-pig613

30 Oct 2018

School

Department

Course

Professor

For unlimited access to Class Notes, a Class+ subscription is required.

lavenderskunk360 and 18 others unlocked

ECON 1201 Full Course Notes

Verified Note

74 documents

Document Summary

A (cid:468)e(cid:623) (cid:1634)one o(cid:568) t(cid:623)o (cid:468)i(cid:568)ms in this a(cid:568)ea a(cid:568)e dominant(cid:1635) Ba(cid:568)(cid:568)ie(cid:568)s (cid:1634)not impossi(cid:427)le, (cid:427)ut di(cid:468)(cid:468)i(cid:428)ult to ente(cid:568) ma(cid:568)ket(cid:1635) P(cid:568)i(cid:428)e take(cid:568) (cid:1634)(cid:469)i(cid:622)en p(cid:568)i(cid:428)e, does not make the p(cid:568)i(cid:428)e(cid:1635) Make(cid:568) (cid:1634)people a(cid:568)e (cid:623)illin(cid:469) to pa(cid:629) (cid:468)o(cid:568) a perceived in(cid:428)(cid:568)ease in (cid:567)ualit(cid:629)(cid:1635) Va(cid:568)(cid:629)in(cid:469) de(cid:469)(cid:568)ees (cid:1486) e(cid:428)onomi(cid:428) p(cid:568)o(cid:468)it (cid:1634)due to la(cid:428)k o(cid:468) (cid:427)a(cid:568)(cid:568)ie(cid:568)s o(cid:468) ent(cid:568)(cid:629)(cid:1635) Whi(cid:428)h o(cid:468) the (cid:468)ollo(cid:623)in(cid:469) ma(cid:568)kets is likel(cid:629) to (cid:427)e most (cid:428)ompetiti(cid:622)e? a(cid:1635) ca(cid:427)le tele(cid:622)ision (cid:427)(cid:1635) automo(cid:427)iles and t(cid:568)u(cid:428)ks (cid:428)(cid:1635) oil (cid:568)e(cid:468)inin(cid:469) d(cid:1635) farm (cid:428)ommodities. Sin(cid:428)e ea(cid:428)h (cid:468)i(cid:568)m is a p(cid:568)i(cid:428)e-take(cid:568), ea(cid:428)h (cid:468)i(cid:568)m"s total (cid:568)e(cid:622)enue (cid:623)ill (cid:427)e p(cid:568)i(cid:428)e * (cid:567)uantit(cid:629) sold. And p(cid:568)o(cid:468)it = total (cid:568)e(cid:622)enue - total (cid:428)ost. As (cid:568)e(cid:622)enue in(cid:428)(cid:568)eases and (cid:428)ost de(cid:428)(cid:568)eases, p(cid:568)o(cid:468)it in(cid:428)(cid:568)eases. Mar(cid:469)inal revenue (cid:1634)mb(cid:1635): (cid:428)han(cid:469)e in total (cid:568)e(cid:622)enue (cid:469)ene(cid:568)ated (cid:427)(cid:629) an additional unit o(cid:468) output. P(cid:568)o(cid:468)it is ma(cid:628)imized (cid:623)hen mb = mc (cid:1634)ma(cid:568)(cid:469)inal (cid:428)ost(cid:1635) Ea(cid:428)h time a (cid:468)i(cid:568)m p(cid:568)odu(cid:428)es anothe(cid:568) unit, the(cid:568)e a(cid:568)e e(cid:628)t(cid:568)a (cid:428)osts and e(cid:628)t(cid:568)a (cid:568)e(cid:622)enues. I(cid:468) p(cid:568)odu(cid:428)in(cid:469) anothe(cid:568) unit adds mo(cid:568)e to (cid:568)e(cid:622)enue than (cid:428)ost, p(cid:568)i(cid:428)e (cid:623)ill in(cid:428)(cid:568)ease.

Related Questions

21)

Compared to the results in a perfectly competitive market, a monopoly does which of the following?

	It charges a higher price.
	It charges a price greater than the marginal cost.
	It produces less output.
	All of the above
	None of the above

22)

"X-inefficiency" refers to the idea that

	government restrictions on competition create a monopoly, which results in inefficiency.
	the cost of rent-seeking activity should be added to the welfare cost of monopoly.
	Generation X is less efficient due to a lack of competitive spirit.
	a lack of competitive pressure results in a monopoly not keeping its costs down to the lowest possible level.
	price discrimination results in inefficiently low cross-elasticities of demand.

23)

Firms in which of the following market structures can engage in price discrimination?

	monopoly
	oligopoly
	monopolistic competition
	All of the above
	None of the above

24)

Monopolistic competition and perfect competition are in all of the following ways except

	Barriers to entry are low in both
	There are many firms in both
	Firms in both produce the output level where MR=MC
	Nonprice competition is important in both

25)

To get rid of excess capacity from the monopolistic competition in the long run, what would have to be given up?

	Free entry and exit.
	economic rent
	resource allocative efficiency
	differentiated product
	productive efficiency

taupeant454

1. if the government attempts to break up a natural monopoly to enforce competition in an industry

A. the average cost of producing the good will increase

B. the smallest firm will have a significant cost advantage over the larger, less efficient firms

C. the average cost of producing the good will decrease

D. the price paid by consumers will be expected to remain the same.

2. which statement is true?

A. the monopolistic competitor always makes a profit in the short run

B. the monopolistic competitor operates at peak efficiency

C. product differentiation takes place in the minds of the buyers

D. none of these statements is true

3. Price discrimination

A. occurs when a good or service is resold

B. is prohibited by law

C. occurs when a seller charges two or more prices for the same good or service

D. occurs when the seller charges different prices for different quality products

4. Monopolistic competition may lead to each of the following except

A. inefficiency

B. overdifferentiation

C. overcapacity

D. monopoly profits

5. In the long run in monopolistic competition

A. most firms are making a profit

B. the absence of entry barriers ensures that there are no profits

C. economies of scale ensure that there are no profits

D. most firms are losing money

6. Price discrimination means

A. charging different prices for identical goods that have identical production costs

B. paying wages according to race or sex rather than productivity

C. exploiting the working masses by charging the highest single price possible.

D. eliminating all costs so that only pure profits are realized

7. The definition of monopolistic competition includes

A. few firms and ease of entry and exit

B. few firms and barrieres to entry and exit

C. many firms and barriers to entry and exit

D. many firms and ease of entry and exit

8. Which statement is true?

A. there are many firms in a monopolistically competitive industry.

B. monopolistic competitors produce an identical product

C. in order for product differentiation to take place, there must be clear physical differences amont the products sold

D. none is true

9. Long-run equilibrium for firms in monopolistically competitive industries is similar to that for firms in perfect competition in that

A. price equals minimum possible average total cost

B. price equals marginal cost

C. marginal revenue equals average total cost

D. price equals average total cost

10. Which statement is false?

A. Oligopolies are illegal in most states

B. most oligopolies engage in outright collusion

C. Ford motor company is an oligopoly

D. none of these statements is false

11)

A constant-cost, perfectly competitive industry experiences a permanent increase in demand. In adjusting to this change, what will happen to the price of the product?

	It will increase in the short-run and then decrease in the long-run, but end up above its original level in the long-run.
	It will increase in the short-run and then increase further in the long-run.
	It will increase in the short-run and then decrease back to its original level in the long-run.
	It will increase in the short-run and then decrease below its original level in the long-run.
	It will decrease in the short-run but return to its original level in the long-run.

12)

Assume that a perfectly competitive firm owns or rents a higher-quality resource that results in lower average total costs and higher economic profits in the short run. What will happen in the long-run?

	The price of the higher-quality resource will be bid upward resulting in economic rents and equalizing costs across firms.
	New firms will enter and compete with any excess profits away.
	None of the other answers is correct.
	The government will tax away any excess profits.
	The firm with the higher-quality resource will earn positive economic profits in the long run.

13)

Which of the following are characteristics of long-run equilibrium?

	No firm has an incentive to change its level of output.
	No firm has an incentive to change its plant size.
	Economic profit is zero
	All of the above
	None of the above

14)

Which of the following statements is consistent with the textbookâs analysis of perfect competition?

	Although individual perfectly competitive firms wonât pay to advertise, the industry as a whole may well advertise.
	Higher costs for one firm in the industry will result in that firm charging a higher price than the other firms in the industry.
	If all the firms in an industry charge an identical price for their products, this is clear evidence of collusive behavior.
	All of the above
	None of the above

15)

The assumptions that define the market structure known as monopoly include which of the following?

	High barriers to entry.
	There is one seller.
	There are no close substitutes available.
	All of the above
	None of the above

amethystbear647

ECON 1201 Lecture Notes - Lecture 20: Marginal Revenue, Perfect Competition, Toothpaste

ECON 1201 Full Course Notes

Document Summary

Get access

Related Documents

ECON 1201 Lecture Notes - Lecture 19: Market Power, Toothpaste, Perfect Competition

ECON 1201 Lecture Notes - Lecture 27: Monopolistic Competition, Perfect Competition, Product Differentiation

ECON 1201 Study Guide - Final Guide: Public Good, Information Asymmetry, Profit Maximization

Related Questions