Flashcard Set Preview
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| 1 |
are most monopolistic competitive firms able to earn economic profits in the long run?
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no
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| 2 |
monopolistic competition
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a market structure in which barriers to entry are low and many firms compete by selling similar...
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| 3 |
average revenue=
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TR / Q
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| 4 |
average revenue is always equal to
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price
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| 5 |
two effects of price cut to sell more of an item
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output effect- good thing: sell one more itemprice effect-bad thing: receive less money
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| 6 |
only ________ markets have MR curves the same as demand curves
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perfectly competitive
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| 7 |
a monopolistic competitve firm produces where
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P > MC
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| 8 |
when the demand curve is tangent to the ATC curve in the long run
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the firm is breaking even
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| 9 |
if more options
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long run demand curve more elastic
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| 10 |
do monopolistically competitive firms experience economic profits or losses in the long run?
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neither
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| 11 |
in the long-run equilibrium, both perfect and monopolistic competition
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earn zero economic profits
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| 12 |
two differences between long-run equilibrium of perfect and monopolistic
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monopolistic firms charge a price greater than marginal costmonopolistic firms do not produce...
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| 13 |
excess capacity
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if it increased its output it could produce at a lower average cost
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| 14 |
Are productive efficiency and allocative efficiency achieved in both perfect and monopolistic...
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perfect- bothmonopolistic- neither
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| 15 |
why is the demand curve sloped downward in monopolistic competition
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because the good or service the firm is selling is differentiated from the goods or services...
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| 16 |
the slope of _________ is twice as much as _______
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MRDemand
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| 17 |
decision rule for monopolistic competition
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Q*: MR=MC
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| 18 |
if MR is negative=
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inelastic
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| 19 |
P < ATC
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profit < 0
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| 20 |
P= ATC
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profit = 0
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| 21 |
P > ATC
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profit > 0
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| 22 |
long run... profit > 0
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induce entry
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| 23 |
long run... profit < 0
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induce exit
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| 24 |
long run.. profit = 0
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nothing happens
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| 25 |
if firms exit
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more inelastic
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| 26 |
which has profit = 0 in the LR
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perfect and monopolistic
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| 27 |
when profit = 0
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P = ATC
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| 28 |
most consumers like
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differentiated goods
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