If the costs are the same, a monopolistic firm will: a higher price and produce a larger output than a competitive firm. a lower price and produce a smaller output than a competitive firm. a higher price and produce a smaller output than a competitive firm. the same price and produce the same output as a competitive firm.

If the costs are the same, a monopolistic firm will: a higher price and produce a larger output than a competitive firm. a lower price and produce a smaller output than a competitive firm. a higher price and produce a smaller output than a competitive firm. the same price and produce the same output as a competitive firm.

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter9: Monopoly

Section: Chapter Questions

Problem 19SQ

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For each of the following characteristics, check which types of firm it describes: a monopoly firm, a monopolistically competitive firm, both, or neither. (Note: If the characteristic describes neither, leave the entire row unchecked.) Characteristic Monopoly Monopolistically Competitive Charges a price above marginal cost Equates marginal revenue and marginal cost Has marginal revenue that is the same as the price Faces the entry of new firms selling similar products Earns economic profit in the long run Produces the socially efficient quantity of output
A decrease in the number of competitors in a monopolistically competitive market causes an increase in the price elasticity of demand for the output of each of the remaining firms in the market.
Monopolistic competitive firms' profit maximization decisions are similar to those of a perfectly competitive firm. a monopoly firm. both monopoly and perfectly competitive firms. neither monopoly nor perfectly competitive firms.
A firm operating in monopolistic competition is maximizing its profit and earning negative economic profits. Which of the following must be true of its production? The price is equal to average total cost at the quantity where marginal revenue equals marginal cost. The price is less than average total cost at the quantity where marginal revenue equals marginal cost. The price is equal to average total cost, and marginal revenue is less than marginal cost. The price is greater than average total cost at the quantity where marginal revenue is equal to marginal cost. The price is greater than average total cost at the quantity where marginal revenue is less than marginal cost.
A monopolistically competitive firm is operating at a short-run level of output where price is $40, average total cost is $29, marginal cost is $32, and marginal revenue is $32. In the short run this firm should Multiple Choice reduce product price. increase the level of output. decrease the level of output. not change the level of output.
A supply curve that is parallel to the horizontal axis suggests that: the industry is organized monopolistically. the relationship between price and quantity supplied is inverse. a change in demand will change price in the same direction. a change in demand will change the equilibrium quantity but not price.
In a monopolistically competitive industry with zero profits, each firm will produce less than the amount that minimizes average costs. True False
The graph shows the short-run cost, revenue, and perceived demand curves for all firms in the convenience store market, which is a monopolistically competitive market. Price ($) Marginal cost Number of firms will remain the same. Number of firms will decrease to one firm. Number of firms will increase. Number of firms will decrease. Demand Quantity What will happen to the number of firms in the industry as it moves from the short run to the long run? Average cost Marginal revenue
A monopolistically competitive firm faces the following demand schedule for its product. In addition, the firm has total fixed costs equal to 20. Price Quantity $30 1 $26 $22 $18 4 $14 5 $10 $6 7 If the firm produces its profit-maximizing level of output and there is a constant marginal cost of $7 per unit, which of the following is incorrect? This firm earns $25 profit at the profit-maximizing level of output. This firm charges a price of $22 to maximize its profit. This firm is in a long-run equilibrium. This firm is not operating at its efficient scale. 3. O O O O
Firms under monopolistic competition earn zero profit because a) There is not enough demand. b) There is free entry and exit. c) Each firm faces a downward sloping demand curve. d) In equilibrium, marginal revenue equals marginal cost
In a long-run equilibrium, monopolistically competitive firms produce where: A). marginal cost is equal to price. B). marginal revenue is equal to price. C). average total cost is equal to price. D). marginal revenue is greater than marginal cost.
Price is: equal to marginal cost for both perfect and monopolistic competitors. greater than marginal cost for perfect competitors and equal to marginal cost for monopolistic competitors. equal to marginal cost for perfect competitors and greater than marginal cost for monopolistic competitors. greater than marginal cost for both perfect and monopolistic competitors.