Econ Exam 3 Chapter 12

Econ exam 3 chapter 12

28 cards   |   Total Attempts: 182
  

Cards In This Set

Front Back
Are most monopolistic competitive firms able to earn economic profits in the long run?
No
Monopolistic competition
A market structure in which barriers to entry are low and many firms compete by selling similar but not identical products
Average revenue=
TR / Q
Average revenue is always equal to
Price
Two effects of price cut to sell more of an item
Output effect- good thing: sell one more item
price effect-bad thing: receive less money
Only ________ markets have MR curves the same as demand curves
Perfectly competitive
A monopolistic competitve firm produces where
P > MC
When the demand curve is tangent to the ATC curve in the long run
The firm is breaking even
If more options
Long run demand curve more elastic
Do monopolistically competitive firms experience economic profits or losses in the long run?
Neither
In the long-run equilibrium, both perfect and monopolistic competition
earn zero economic profits
Two differences between long-run equilibrium of perfect and monopolistic
Monopolistic firms charge a price greater than marginal cost
monopolistic firms do not produce at minimum average total cost
Excess capacity
If it increased its output it could produce at a lower average cost
Are productive efficiency and allocative efficiency achieved in both perfect and monopolistic competition?
Perfect- both
monopolistic- neither
Why is the demand curve sloped downward in monopolistic competition
Because the good or service the firm is selling is differentiated from the goods or services being sold by competing firms