A) market price will rise.
B) the output of existing firms will rise.
C) profits of existing firms will fall.
D) market demand will rise.
E) the profits of existing firms will rise.
G) A) and B)
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A) it is part of a group of firms that has formally agreed to control the price and the output of a product.
B) its primary goal is to reap monopoly profits by replacing competition with cooperation.
C) producing homogenous output is more expensive than producing differentiated output.
D) producing differentiated output is more expensive than producing homogenous output.
E) it has a monopoly, but potential entrants exist in the form of contestable markets.
G) B) and D)
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A) 0 (zero) units per day.
B) 200 units per day.
C) 400 units per day.
D) 600 units per day.
E) 800 units per day.
G) All of the above
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A) There is little price or quality competition.
B) The firms compete using quality, location, and style.
C) Firms do not compete using advertising.
D) There is little competition between firms.
E) There are a few firms that collude to set the highest price.
G) A) and E)
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B
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A) 0 (zero) units per week.
B) 50 units per week.
C) 60 units per week.
D) 85 units per week.
E) 90 units per week.
G) C) and D)
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A) keep price and output the same.
B) raise price and decrease output.
C) lower price and increase output.
D) raise price and raise output.
E) lower price and lower output.
G) B) and E)
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A) The market for Grade A sorghum (milo) , which is characterized by many firms producing a homogeneous product
B) The restaurant industry, which is characterized by many firms producing differentiated products in an industry with free entry and exit
C) A cable television service, where a licensed supplier competes with firms offering satellite service
D) The market for jumbo aircraft, where one major domestic firm competes with one major foreign firm
E) The tobacco market, which is characterized by a few firms producing a differentiated product with difficult entry
G) B) and E)
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A) new casket firms will want to enter.
B) this producer is losing $1,000 a week.
C) this producer is making an economic profit of $500.
D) this producer is setting marginal revenue = marginal cost.
E) this producer should increase production.
G) B) and C)
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A) higher than normal economic profit.
B) zero economic profit.
C) less than normal profits.
D) significant economic losses.
E) praise from the government for achieving allocative efficiency.
G) A) and C)
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A) firms are in a monopoly but they compete.
B) firms are in perfect competition but they collude similar to monopolies.
C) firms differentiate their output, which makes them price-makers, but barriers to entry are low or non-existent.
D) oligopoly firms collude until they become monopolies.
E) firms have downward-sloping demand.
G) A) and D)
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A) firms earn positive economic profits.
B) the firms' marginal costs and marginal revenues are not equal.
C) price is not equal to the minimum average total cost.
D) entry is difficult.
E) the price is equal to the minimum average total cost.
G) B) and D)
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A) monopolistically competitive firms produce less than the cost-minimizing level of output.
B) monopolistically competitive firms produce more than the cost-minimizing level of output.
C) monopolistically competitive firms produce exactly the cost-minimizing level of output, but the monopolistically competitive industry produces more than that amount.
D) monopolistically competitive firms could produce less if they wanted to, so they produce over the optimal capacity.
E) perfectly competitive firms produce less than the cost-minimizing level of output, so they have excess capacity but monopolistically competitive firms do not.
G) B) and E)
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A) reduce their costs.
B) charge higher prices.
C) make demand more inelastic.
D) leave the industry.
E) begin to collude illegally.
G) A) and B)
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A) the industry is probably perfectly competitive.
B) the industry is probably monopolistically competitive.
C) the industry is probably a differentiated monopsony.
D) economic profit might be sustainable.
E) the situation cannot exist.
G) B) and C)
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A) They are always equal.
B) They are equal only when there are relatively few firms in the industry.
C) Price is below marginal revenue, as a general rule, regardless of the number of firms in the monopolistically competitive industry.
D) Price is above marginal revenue, as a general rule, regardless of the number of firms in the monopolistically competitive industry.
E) At low levels of output, price is above marginal revenue. At high levels of output, price is below marginal revenue as long as the number of firms is not too many because, if it is too large, the monopolistically competitive industry will become perfectly competitive.
G) A) and B)
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A) identical products
B) economic profits in the short run
C) demand curve that lies below the marginal revenue curve
D) demand curves that become more inelastic as new entry occurs
E) product differentiation
G) B) and D)
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A) all firms in any industry can earn short-run but not necessarily long-run positive economic profit.
B) all firms in any industry can earn long-run but not necessarily short-run positive economic profit.
C) all firms in any industry can earn both short-run and long-run positive economic profit.
D) no firm in any industry can earn long-run positive economic profit because all price changes made by any firm will be followed by all of the other firms.
E) all firms in any industry can earn short-run positive profit if economies of scale exist.
G) B) and C)
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A
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A) The firm's demand curve shifts leftward.
B) The firm's average total cost curve shifts upward.
C) Profit is $1,200 per day.
D) Profit is $1,500 per day.
E) The firm's average total cost curve shifts downward, while the marginal cost curve shifts upward.
G) B) and C)
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A) many small sellers selling a differentiated product.
B) a single seller of a unique product that has few or no substitutes.
C) very high barriers to entry.
D) many small sellers selling an identical product.
E) a few firms producing either differentiated or identical products.
G) C) and D)
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Joe's demand and marginal revenue would shift left and downward, reducing his profits (perhaps to zero), or he might incur losses. Losses might force Joe's or one of the other competitors from the industry. Joe's output would fall because the intersection of marginal revenue and marginal cost would be shifted to the left.
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