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Individuals in a market who must take the market price as given are:
 
a)            price-takers
b)            quantity-takers
c)            quantity-minimizers.
d)            price-searchers.
   
If a Florida strawberry farmer operates in a perfectly competitive market, that farmer
will have a ________ share of the market, and consumers will consider her strawberries to be ________.
 
a)            small; standardized
b)            large; standardized
c)            small; differentiated
d)            large; differentiated
   
Which of the following is a necessary condition for perfect competition?
 
a)            Firms produce a standardized product.
b)            Extensive advertising is used to promote the firm's product.
c)            A small number of firms control a large share of the total market.
d)            Movement into and out of the market is limited.
   
Total revenue is a firm's:
 
a)            change in revenue resulting from a unit change in output.
b)            difference between revenue and cost.
c)            total output times the price at which it sells that output.
d)            ratio of revenue to quantity.
   
The price received by a firm in a perfectly competitive market:
 
a)            is greater than the market price.
b)            is less than the market price.
c)            is equal to the market price.
d)            decreases with the quantity of output sold by the firm.
   
If a perfectly competitive firm is producing a quantity where MR = MC, then profit:
 
a)            can be increased by decreasing the price.
b)            can be increased by decreasing the quantity.
c)            can be increased by increasing production.
d)            is maximized.
   
Zoe's Bakery determines that P < ATC and P > AVC. Zoe:
 
a)            sells at below her beak-even price but higher than her shut-down price.
b)            has maximized her profits.
c)            should continue to operate, as she is making an economic profit.
d)            should shut down immediately, as she is taking an economic loss.
   
A perfectly competitive firm will not produce any output in the short run and will shut down if the price is:
 
a)            less than average variable cost.
b)            less than marginal cost.
c)            greater than average variable cost and less than average total cost.
d)            greater than marginal cost.
   
In a perfectly competitive market:
 
a)            neither producers nor consumers are price-takers.
b)            both producers and consumers are price-takers
c)            producers are price-takers.
d)            consumers are price-takers.
   
The price increase is a result of an increase in demand from younger generations, mainly millennials,
increasing their desire to purchase real Christmas trees.
The Christmas tree farm and the overall industry will respond as follows

b. The price increase is a result of fewer Christmas tree farms harvesting trees in response to consumers purchasing more artificial trees.
The effect of the price increase on the Christmas tree industry will be as follows
 
a. In the short run, producers earn profits and increase supply. Supply is less elastic in the short run than in the long run.
b. In the short run, the increase in price leads to profits for tree farms.
   
a. A profit-maximizing business incurs an economic loss of $10,000 per year. Its fixed cost is $15,000 per year.
This firm should _________ if it is a profit-maximizing firm.

b. Suppose instead that this business has a fixed cost of $6,000 per year. This firm should ______ if it is a profit-maximizing firm.
 
a. produce in the short run but exit in the long run
b. shut down in the short run and exit in the long run
   
The production of agricultural products like wheat is one of the few examples of a perfectly competitive industry.
This question analyzes results from a study released by the U.S. Department of Agriculture about wheat production
in the United States in 2016.
Round answers to two places after the decimal where necessary.

a. The average variable cost per acre planted with wheat was $115 per acre.
Assuming a yield of 44 bushels per acre, what is the average variable cost (AVC) per bushel of wheat?
AVC: $ ______________ per bushel

b. The average price of wheat received by a farmer in 2016 was $4.89 per bushel.
The average farm would have _______________ in the short run.

c. With a yield of 44 bushels of wheat per acre, the average total cost per farm was $7.71 per bushel.
The harvested acreage for wheat in the United States decreased from 48.8 million acres in 2013 to 43.9
million acres in 2016. This might have happened because the price was ______________ .

d. Using the above information, market wheat production will ________ after 2016.
 
a. 2.61
b. stayed in operation
c. less than the average total cost, leading some farmers to exit the market
d. decrease
   
The first sushi restaurant opens in town. Initially, people are very cautious about eating tiny portions of raw fish, as
this is a town where large portions of grilled meat have always been popular. Soon, however, an influential health
report warns consumers against grilled meat and suggests that they increase their consumption of fish, especially
raw fish. The sushi restaurant becomes very popular and its profit increases.

a. In the short run, we expect _______ and, in the long run, we expect ____ in the town's sushi restaurant industry.
b. Local steakhouses suffer from the popularity of sushi and start incurring losses. In the long run, we expect ______ in town.
 
a. other firms to enter because of positive profits, prices to decrease and the profit for the original sushi restaurant to decrease
b. the number of steakhouses to decrease
   
Evaluate each of the following statements.

a. A profit-maximizing firm in a perfectly competitive industry should select the output level at which the
difference between the market price and marginal cost is greatest.
This statement is ___________________________________________________________________________

b. An increase in fixed cost lowers the profit-maximizing quantity of output produced in the short run.
This statement is ____________________________________________________ in the short run.
 
a. false. The firm should select the output where market price is equal to marginal cost.
b. false. This change does not impact price nor marginal cost, thus it does not impact the profit-maximizing output
 
   
In the short run, if P > ATC, a perfectly competitive firm:
 
a) produces output and incurs an economic loss.
b) produces output and earns zero economic profit.
c) does not produce output and earns economic profit.
d) produces output and earns an economic profit.
   
Your roommate is having difficulty understanding how a firm can keep operating despite losing money, earning a negative
profit. How will firms respond to losing money?
a. If price is below the firm's minimum average variable cost, the firm will ____________ , since it will ___________________ .
b. If price is below the firm's minimum average total cost but above its minimum average variable cost,
the firm will _______________ , since it will _________________ .

a. shut down; not be able to cover either its fixed costs or its variable costs
b. continue operating in the short run; be able to cover its variable costs and some of its fixed costs
   
For each of the following, determine if the business is a price-taking producer and why.

a. A cappuccino café in a university town where there are dozens of very similar cappuccino cafés is ______________________ product.
b. The makers of Pepsi are ______________________ product.
c. One of many sellers of zucchini at a local farmers' market is __________________ product.
a. considered a price taker because there are many producers and a standardized
b. not considered a price taker because there is one manufacturer of Pepsi and a differentiated
c. considered a price taker because there are many producers and a standardized
   
For each of the following, identify whether the industry is perfectly competitive and why.

a. Aspirin ______ a perfectly competitive industry because there are __________ manufacturers, it is _________ to enter, and there is a _______________ product.
b. Beyonce concerts _________ produced in a perfectly competitive industry because _____________________ .
c. SUVs _______ produced in a perfectly competitive industry because there are _____ SUV producers and SUVs are ______________ .
a. is; many; easy; standardized
b. are not; there is only one Beyonce
c. are not; few; differentiated
   
Perfectly competitive industries are characterized by:
standardized goods.
 
Antonio sells cell phone cases in a perfectly competitive market. If Antonio sells 40 cell phone cases at a
price of $40 per unit, his marginal revenue is:
$40.
 
In the short run, a perfectly competitive firm produces output and earns ZERO economic profit if:
P = ATC.
 
Generally, when preferences for a good rise, demand for the good rises. If a perfectly competitive market
starts in long-run equilibrium, holding all else constant, this will result in a higher market price, which will
lead to _____ in the industry and _____ the market. This causes price to _____.
positive economic profits; attracts new firms into; fall
 
If the long-run market supply curve for a perfectly competitive market is upward sloping, then this industry
exhibits _____ costs.
increasing
 
If a perfectly competitive firm is producing a quantity where MC > MR, then profit:
can be increased by decreasing production.
 
For a firm producing at a quantity of output below the profit-maximizing quantity of output, an increase in output adds:
more to total revenue than to total cost.
 
In perfect competition:
total revenue is found by multiplying the market price by the firm's quantity of output.
 
Jennifer's Sunglass Hut operates in a perfectly competitive industry and has standard cost curves. The variable costs
at Jennifer's Sunglass Hut decrease, so all the cost curves (except fixed cost) shift downward. The demand for Jennifer's
 sunglasses does not change, nor does the firm shut down. To maximize profits after the variable cost decrease,
Jennifer's Sunglass Hut will _____ its price and _____ its level of production.
not change; increase
 
In the short run, fixed cost:
is constant.
 
Given the assumptions of a perfectly competitive industry, explain why firms operating in that industry
are reluctant to invest in new technological development.
Firms in a perfectly competitive industry are reluctant to invest in new technological development due
to _________________ . If any firm invested in new technology and earned profits, other firms will ______
the market, which will cause the price to fall and the profits to get eroded. Furthermore, due to the product
being ____________ and producers being ________________ , they cannot charge a higher price and recoup their investment.
free entry and exit of firms
enter
standardized
price-takers
 
Nikos' lawn-mowing service is a profit-maximizing, competitive firm. If Nikos mows ten lawns per day at a price
of $27 per lawn and has a total cost of $280, of which $30 is a fixed cost, what should Nikos do in the long run?
Leave the industry, since he is not covering his fixed costs
 
For the Texas beef industry to be considered perfectly competitive, ranchers in Texas must have _____ on
prices, and beef must be a _____ product.
no noticeable effect; standardized
 
If the firm produces a quantity at which total cost exceeds total revenue, then:
economic profit is negative.
 
In the short run, a firm will continue to sell its product as long as:
the price is greater than average variable costs.
 
A firm's decision about whether or not to stay in business should be based on:
its economic profit.
 
A curve that shows the quantity of a good or service supplied at various prices after all long-run adjustments to
a price change have been completed is a long-run:
industry supply curve.
 
If a firm's economic profits are equal to zero, its accounting profits are most likely:
greater than economic profits.
 
Goods that are subject to network externalities tend to be ones:
for which the value of the good to an individual is higher when more people use it.
 
A local community college charges lower tuition fees to local town residents than to nonresidents. This pricing
strategy increases the profits of the community college. Using this information, we can conclude that nonresidents
must have a ________ for attending the community college than residents.
less price-elastic demand.
 
Network externalities exist when a good's value to the consumer rises as:
the number of people who use the good increases.
 
The monopoly firm's profit-maximizing price is:
given by the point on the demand curve for the profit-maximizing quantity.
 
A firm in a perfectly competitive industry is maximizing its profits at 400 units. If the marginal revenue and marginal
cost are both $35 and the firm's average total cost is $25, this firm's profit is
$4,000
 
Farmer Ted sells winter wheat in a perfectly competitive market. The market price for a bushel of winter wheat
is $9. Ted has 270 bushels of wheat to sell. If his total variable cost is $2000 and his total fixed cost is $500, then
Ted is minimizing his losses.
 
Provided that there are no external benefits or costs, resources are efficiently allocated when:
P = MC.
 
Temporary monopolies via the provision of sole ownership rights to profit from the production, use, or sale of a good are provided by:
patents and copyrights.
 
Suppose that a profit-maximizing monopoly firm undergoes a substantial technological change that reduces its marginal
and average total costs by $40. If in response to its reduction in cost the firm changes its price in a profit-maximizing way,
then we can predict that its total output will:
rise.
 
In 1999, a judge declared that Microsoft was a monopolist. Assuming that it is maximizing its profits at its current
level of output, we may conclude that if Microsoft were to increase its price, its total revenue would:
fall.
 
An increase in the fixed costs of a monopoly firm would ________ price and ________ quantity in the short run.
not change; not change.
 
Which of the following statements is correct for a firm that can price-discriminate?
It should adjust prices so that customers with price-elastic demand pay lower prices than those with inelastic demand.
 
Suppose that the Yankee Cap Company is a profit-maximizing firm that has a monopoly in the production of baseball
caps. The firm sells its baseball caps for $25 each. For this information, we can assume that the
Yankee Cap Company is producing a level of output at which:
marginal cost equals marginal revenue.
 
The demand curve for a monopoly is:
the industry demand curve.
 
A monopoly responds to a decrease in marginal cost by ________ price and ________ output.
decreasing; increasing
 
Wendy has a monopoly in the retailing of motor homes. She can sell five per week at $21,000 each. If she wants to sell
six, she can only charge $20,000 each. The price effect of selling the sixth motor home is:
-$5,000.
 
If there is free entry and exit in a perfectly competitive industry, the long-run equilibrium will:
be at the level of zero economic profit for each firm.
 
Compared to a perfectly competitive market, a monopolist will produce ________ and charge a ________ price.
less; higher
 
If the price is less than the average variable cost at the profit-maximizing quantity of output in the short run,
a perfectly competitive firm will:
shut down production.
 
A perfectly competitive firm will produce:
with a loss in the short run if its price is greater than AVC but less than ATC.
 
If a perfectly competitive firm is producing a quantity where MC < MR, then profit:
can be increased by increasing production.
 
The long-run industry supply curve:
will be more elastic than the short-run industry supply curve.
 
Individuals in a market who must take the market price as given are:
price-takers.
 
The marginal revenue received by a firm in a perfectly competitive market:
is the change in total revenue divided by the change in output.
 
Which of the following is most likely to cause firms to exit a perfectly competitive industry?
consumer income falls
 
Suppose that the market for candy canes operates under conditions of perfect competition, that it is initially in
long-run equilibrium, and that the price of each candy cane is $0.10. Now suppose that the price of sugar rises,
increasing the marginal and average total costs of producing candy canes by $0.05. Based on the information
given, we can conclude that in the short run a typical producer of candy canes will be making:
negative economic profits.
 
If a monopolist is producing a quantity that generates MC > MR, then profit:
can be increased by decreasing production.
 
A perfectly competitive small organic farm that produces 1,000 cauliflower heads in the short run has an ATC = $6
and AFC = $2. The market price is $3 per head and is equal to MC. In order to maximize profits, this farm should:
shut down.
 
Price-takers are individuals in a market who:
have no ability to affect the price of a good in a market.
 
A perfectly competitive firm is selling a product at the market price of $11. It produces and sells the profit-
maximizing quantity of 20 units, and at this level of output, its average total cost is $10 and its average variable
cost is $8. What is the firm's level of profit?
$20.
 
A perfectly competitive firm will maximize profit by:
producing at the point at which marginal revenue equals the marginal cost of the last unit produced.
 
For the Colorado beef industry to be classified as perfectly competitive, ranchers in Colorado must
have ________ on prices and beef must be a ________ product.
no noticeable effect; standardized
 
Consider the corn industry (a perfectly competitive industry). The price per bushel is $2 and there are constant
returns to scale. If the long-run, minimum ATC is $1.50 per bushel, it should follow that (ceteris paribus):
the long-run price will be $1.50 per bushel.
 
The competitive model assumes all the following except:
patents and copyrights.
 
A perfectly competitive industry with constant costs initially operates in long-run equilibrium. When demand increases,
one will observe that:
in the short run, prices and profits will be higher, but in the long run, price will fall back to its original level
and firms will again earn zero economic profit.
 
If a perfectly competitive firm is producing a quantity where MC > MR, then profit:
can be increased by decreasing production.
 
Maximizing profits also means that a firm is attempting to:
produce at the output level where the difference between total revenue and total cost is the greatest.
 
If the price is consistently below average total cost, then in the short run a perfectly competitive firm should:
There is not enough information given to answer this question.
 
In the short run, for a perfectly competitive firm, the portion of the MC curve at or above the shut-down price is also its:
individual short-run supply curve.
 
Hank operates a perfectly competitive firm in the long run. For several periods the market price has been $20,
and he knows his break-even price is $22. Hank should:
exit the industry, since he is making losses.
 
The shut-down point in the short run is:
the minimum point of AVC.
 
Firms will make a profit in the long run or short run if the price is:
greater than ATC. (average total cost).
 
In a perfectly competitive market, tastes and preferences lead to an increase in the demand for the good. Holding
everything else constant, this will lead to an increase in price that will result in:
positive economic profits for firms, which will attract new firms, which in turn will result in a reduction in the price.
 
When a perfectly competitive industry is in equilibrium:
the value of marginal cost is the same for all firms.
 
A perfectly competitive industry with constant costs initially operates in long-run equilibrium. When demand
increases, one will observe that in the long and short runs:
output will increase.
 
The resources needed for growing cucumbers are relatively abundant. Many new firms could enter this industry
and not change costs. If that happens,
the long-run industry supply curve will be horizontal.
 
Ashley, who makes knitted caps, determines that her marginal cost of producing one more knitted cap is
equal to $10. A consumer offers her $12 if she sells one more knitted cap to her. Ashley will:
sell the additional knitted cap, since the marginal revenue is greater than the marginal cost for the unit.
 
The slope of the total revenue curve is:
constant under perfect competition.
 
For a perfectly competitive firm, marginal revenue:
is equal to price.
 
That the market is initially in long-run equilibrium. Subsequently, an increase in population increases the
demand for haircuts. In the short run, we expect that the typical firm is likely to begin:
earning an economic profit.
 
Suppose that Jody sells fish in a perfectly competitive market. He can sell each fish for $20, and today he
brought 20 fish to the fish market. If his total variable cost is $110 and his total fixed cost is $50, then:
he has earned an economic profit.
 
Which of the following is the best example of a commodity in a perfectly competitive industry?
apples.
 
If a perfectly competitive firm is producing a quantity where MC = MR, then profit:
is maximized.
 
The shut-down price is:
the minimum of AVC curve.
 
A perfectly competitive firm will earn a profit and will continue producing the profit-maximizing quantity of
output in the short run if the price is:
greater than average total cost.
 
A perfectly competitive firm's marginal cost curve above the average variable cost curve is its:
short-run supply curve.
 
Suppose Sarah's pottery studio is charging the market price, which is just higher than her minimum average total cost.
This means that Sarah:
is earning a small economic profit.
 
If the price is consistently below the average variable cost, then in the short run a perfectly competitive firm should:
shut down.
 
In oligopoly, a firm must realize that:
it is in an industry in which another major firm may dominate, and the firm will need to judge its actions accordingly.
 
A Japanese steel firm sells steel in the United States and in Japan. Since the United States buys steel from a
number of sources, the U.S. demand for Japanese steel is more price-elastic than the Japanese demand for
Japanese steel. If the Japanese steel firm wishes to maximize its profits, it should:
charge a lower price in the United States and a higher price in Japan.
 
For a monopolist with a downward-sloping demand curve, the quantity effect dominates the price effect at:
lower levels of production
 
In a monopoly in the long run:
entry by other firms will not occur.
 
Diamond rings are relatively scarce because:
De Beers limits the quantity of diamonds supplied to the market.
 
A monopoly is an industry structure characterized by:
barriers to entry and exit.
 
Suppose GoSports pennant monopoly is broken up and the pennant industry becomes perfectly competitive.
We would expect the ________ to increase from the breakup and ________ to decrease from the breakup.
consumer surplus and total surplus; producer surplus
 
The practice of charging different prices to different customers for the same good or service, even though
the cost of supplying those customers is the same, is:
price discrimination.
 
Which of the following is not a barrier to entry?
a ban on certain kinds of advertising
 
The GoSports Company is a profit-maximizing firm with a monopoly in the production of school team pennants.
The firm sells its pennants for $10 each. We can conclude that GoSports is producing a level of output at which:
marginal cost equals marginal revenue.
 
In the short run, a monopoly will stop producing if:
P < AVC.
 
A firm that is a natural monopoly will:
maximize profit by producing where MR = MC.
 
To practice effective price discrimination, a monopolist must be able to:
prevent the resale of goods among groups of buyers.
 
A natural monopolist that is price regulated at the marginal cost output level will:
eventually incur losses if MC is less than ATC.
 
Wendy has a monopoly in the retailing of motor homes. She can sell five per week at $21,000 each.
If she wants to sell six, she can charge only $20,000 each. The quantity effect of selling the sixth motor home is:
$20,000.
 
The table above gives the total cost information for Hank and Helen's cherry farm. They sell their cherries in a
perfectly competitive market, where the price is $6.00 per pound.
What is the profit-maximizing quantity of cherries?
5 pounds.
 
The supply curve found by summing up the short-run supply curves of all of the firms in a perfectly competitive industry is called the:
short-run market supply curve.
 
An assumption of the model of perfect competition is:
many buyers and sellers.
 
Lilly is the price-taking owner of an apple orchard. The price of apples is high enough that Lilly is earning
positive economic profits. In the long run, Lilly should expect:
lower apple prices due to the entry of new firms.
 
If a monopolist is producing a quantity that generates MC < MR, then profit:
can be increased by increasing production.
 
The large barriers to entry are a reason a monopoly:
earns an economic profit in the long run.
 
Which of the following statements about the differences between monopoly and perfect competition is incorrect?
Monopoly profits can continue to exist in the long run because the monopoly produces more and charges a
higher price than a comparable perfectly competitive industry.
 
Natural monopolies include all of the following except:
a diamond mining company.
 
A monopoly can be temporary because of:
technological change.
 
Because monopoly firms are price-setters:
they can sell more only by lowering price.
 
A natural monopoly exists whenever a single firm
has economies of scale over the entire range of production that is relevant to its market.
 
A monopoly is an industry structure characterized by:
barriers to entry and exit.
 
Suppose that a monopoly computer chip maker increases production from 10 microchips to 11 microchips.
If the market price declines from $30 per unit to $29 per unit, marginal revenue for the eleventh unit is:
$19.
 
Marginal revenue for a monopolist is:
not equal to price.
 
In contrast to perfect competition, a:
monopoly produces less at a higher price.
 
A statement that best reflects an evaluation of monopoly firms is that:
they are economically inefficient.
 
A firm that faces a downward-sloping demand curve is a:
price-setter.
 
Suppose a monopoly can separate its customers into two groups. If the monopoly practices price
discrimination, it will charge the lower price to the group with:
the higher price elasticity of demand.
 
A monopolist is likely to ________ and ________ than a comparable perfectly competitive firm.
produce less; charge more.
 
Public policies toward monopoly in the United States often consist of:
the regulation of natural monopolies.
 
At the profit-maximizing level of production, a perfectly competitive industry will produce an ________ level
of production, and a monopolist produces an ________ level of production.
efficient; inefficient.
 
Which of the following is a barrier to entry?
control of scarce resources, economies of scale, and government-created barriers (i.e., patents and copyrights).
 
A monopoly is a market characterized by:
a single seller.
 
For a monopolist, the market demand curve:
is also the demand for the monopolist's product.
 
Which of the following is true?
If demand is downward sloping, P > MR.
 
The demand curve facing a monopolist is:
downward sloping.
 
Which of the following is true regarding monopolies?
Monopolies produce too little and charge too much from the standpoint of efficiency.
 
Which of the following is not an example of price discrimination?
a special Fourth of July sale.
 
In perfect competition, the firm produces the output such that ________, and in monopoly, the firm
produces the output such that ________.
P = MR = MC; P > MR = MC
 
If a monopolist can engage in perfect price discrimination, then:
it produces at the socially efficient level.
 
Market structures are categorized by the following two criteria:
the number of firms and whether or not products are differentiated.
 
Price discrimination leads to a ________ price for consumers with a ________ demand.
lower; more elastic
 
The municipal swimming pool charges lower entrance fees to local residents than to nonresidents. Assuming that
this pricing strategy increases the profits of the pool, we can conclude that nonresidents must have a ________ for
swimming at the pool than residents.
less elastic demand
 
Suppose that Jody sells fish in a perfectly competitive market. He can sell each fish for $5, and today
he brought 20 fish to the fish market. If his total variable cost is $110 and his total fixed cost is $50, then:
he should have stayed home.
 
A downward-sloping demand curve will ensure that:
P > MR.
 
Which of the following is a barrier to entry?
control of scarce resources, economies of scale, and government-created barriers (i.e., patents and copyrights)
 
In the short run, a monopoly will stop producing if:
P < AVC.
 
Suppose that the market for candy canes operates under conditions of perfect competition, that it is initially in long-run
equilibrium, and that the price of each candy cane is $0.10. Now suppose that the price of sugar rises, increasing the
marginal and average total cost of producing candy canes by $0.05; there are no other changes in production costs.
Based on the information given, we can conclude that in the long run we will observe:
firms leaving the industry.
 
Perfectly competitive industries are characterized by:
goods that are standardized
 
Maximizing profits also means that a firm is attempting to:
produce at the output level where the difference between total revenue and total cost is the greatest.
 
Tony runs Read Economic Reports. If Tony finds that the cost of completing an additional report is $100 and someone
offers him $125 to complete this additional report, Tony should:
complete the additional report.
 
If Annie has sold 40 apples in a perfectly competitive market and her total revenue is $80, when she sells her 41st apple,
her marginal revenue will be:
$2.
 
If firms are making positive economic profits in the short run, then in the long run:
firms will enter the industry.
 
The competitive model assumes all of the following except:
patents and copyrights
 
If there are no obstacles to new firms entering the pet-sitting industry, then we can say that this industry:
has free entry.
 
In the short run, if P < AVC, a perfectly competitive firm:
does not produce output and incurs an economic loss.
 
In a perfectly competitive industry, the market demand curve is usually:
downward sloping.
 
In order to engage in price discrimination a firm must be:
a price-setter, and it must be able to identify consumers whose elasticities differ.
 
Goods that are subject to network externalities tend to be ones:
For which the value of the good to an individual is higher when more people use it
 
Quantity competition or Cournot behavior is most likely when oligopolistic firms:
cannot increase their level of output quickly due to limits on their productive capacity.
 
In perfect competition:
each individual firm will have a small market share.
 
In perfect competition, the assumption of easy entry and exit implies that:
in the long run all firms in the industry will earn zero economic profits.
 
The optimal output rule for a price-taking firm is to:
produce at the point at which price is equal to marginal cost of the last unit produced.
 
In perfect competition, a change in fixed cost:
will encourage entry or exit in the long run so that price will change enough to leave firms earning zero profits.
 
Suppose that some firms in a perfectly competitive industry earn negative economic profits. In the long run:
the industry supply curve will shift to the left.
 
In contrast with perfect competition, a monopolist:
may have economic profits in the long run.
 
In a monopoly in the long run:
entry by other firms will not occur.
 
A downward-sloping demand curve will ensure that:
P > MR.
 
The pricing in monopoly prevents some mutually beneficial trades. The value of these unrealized mutually
beneficial trades is called:
a deadweight loss.
 
Which of the following is true?
If demand is downward sloping, P > MR.
 
If a change in fixed cost raises average total cost above the demand curve:
the monopoly will go out of business.