will realize an economic profit if price exceeds ATC at the profit-maximizing/loss-minimizing level of output.
question
Confronted with the same unit cost data, a monopolistic producer will charge:
answer
a higher price and produce a smaller output than a competitive firm.
question
An important economic problem associated with pure monopoly is that, at the profit-maximizing outputs, resources are:
answer
underallocated because price exceeds marginal cost.
question
The restaurant, legal assistance, and clothing industries are each illustrations of:
answer
monopolistic competition.
question
A monopolistically competitive industry combines elements of both competition and monopoly. The monopoly element results from:
answer
product differentiation.
question
The demand curve of a monopolistically competitive producer is:
answer
more elastic than that of a pure monopolist, but less elastic than that of a pure competitor.
question
When a monopolistically competitive firm is in long-run equilibrium:
answer
MR = MC and P > minimum ATC.
question
Which of the following statements is correct?
answer
In the long run, purely competitive firms and monopolistically competitive firms earn zero economic profits, while pure monopolies may or may not earn economic profits.
question
In monopolistically competitive markets, resources are:
answer
underallocated because long-run equilibrium occurs where price exceeds marginal cost.
question
Concentration ratios:
answer
may understate the degree of competition because they ignore imported products.
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