Chapter 10 Economics

In which of the following market structures is there clear-cut mutual interdependence with respect to price-output policies?

Oligopoly

Economists use the term "imperfect competition" to describe:

those markets that are not purely competitive

In which of the following industry structures is the entry of new firms the most difficult?

pure monopoly

An industry comprised of a very large number of sellers producing a standardized product is known as:

pure competition

An industry comprised of a small number of firms, each of which considers the potential reactions of its rivals in making price-output decisions is called:

oligopoly

A purely competitive seller is:

a price taker

Which of the following is characteristic of a purely competitive seller’s demand curve?

Price and marginal revenue are equal at all levels of output

For a purely competitive seller, price equals:

average revenue, marginal revenue, total revenue divided by output

the marginal revenue curve of a purely competitive firm:

is horizontal at the market price

The demand curve in a purely competitive industry is ____, while the demand curve to a dingle firm in that industry is _____.

down-sloping; perfectly elastic

(Refer to Number 11, saved in camera roll) Which pertains to a purely competitive firm? Curve C represents:

average revenue and marginal revenue

Marginal revenue is the:

Change in total revenue associated with the sale of one more unit of output

Firms seek to maximize:

total profit

In the short run, a purely competitive firm that seeks to maximize profit will produce:

where total revenue exceeds total cost by the maximum amount

(refer to number 15) The profit-maximizing output for this firm is:

320 units

A firm reaches a break-even point (normal profit position) where:

total revenue and total cost are equal

The MR=MC rule applies:

to firms in all types of industries

In the short run, the individual competitive firm’s supply curve is that segment of the:

marginal cost curve lying about he average variable cost curve

Assume the XYZ Corporation is producing 2o units of output. It is selling the output in a purely competitive market at $10 per unit. Its total fixed costs are $100 and its average variable cost is $3 and 20 units of output. This corporation:

is realizing an economic profit of $40

A purely competitive firm’s short-run supply curve is:

up-sloping and equal to the portion of the marginal cost curve that lies about the average variable cost curve

A purely competitive firm should produce in the short run if its total revenue is sufficient to cover its:

total variable costs

In the short run, a purely competitive firm will always make an economic profit if:

P>ATC

In the short run, a purely competitive seller will shut down if:

price is less than average variable cost at all outputs

The principle that a firm should produce up to the point where the marginal revenue from the sale of an extra unit of output is equal to the marginal cost of producing it is known as the:

profit-maximizing rule

(refer to number 25) The firm will realize an economic profit if price is:

P4