ScienceEconomicsMicroeconomics: Chapter 10,11,12
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Microeconomics: Chapter 10,11,12

Ula Green avatar Ula Green
19 August 2023
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The number and relative size of firms in an industry is known as:
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Market Structure
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An industry comprised of a very large number of sellers producing a standardized product is known as:
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Pure competition
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A purely competitive seller is:
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A price taker
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The demand curve confronted by the individual purely competitive firm is:
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Perfectly elastic
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When is marginal revenue curve of a purely competitive firm horizontal:
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at the market price
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A perfectly elastic demand curve implies that the firm can sell:
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as much output as it chooses at the existing price
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Characteristics of perfect pure competition:
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-many firms with identical products -new firms can enter or exit the industry easily - information is available to everyone -zero profit in the long-run -are all "price taker' -have NO market power
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_______ is the market in which no buyer or seller has market power
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Pure Competition
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A competitive firm will maximize profits at that output at which:
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Total revenue exceeds total cost by the greatest amount. TR>TC
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A firm reaches a break-even point when:
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Total revenue and total cost are equal. TR=TC
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The MR = MC rule applies:
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to firms in all types of industries
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A purely competitive firm's short-run supply curve is:
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upsloping and equal to the portion of the marginal cost curve that lies above the average variable cost curve
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Suppose you find that the price of your product is less than minimum AVC. You should:
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close down because, by producing, your losses will exceed your total fixed costs.
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If a purely competitive firm shuts down in the short run:
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it will realize a loss equal to its total fixed costs.
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A purely competitive firm should produce in the short run if its total revenue is sufficient to cover its:
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total variable costs
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In the short run a purely competitive firm will always make an economic profit if:
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P > ATC
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If a firm is confronted with economic losses in the short run, it will decide whether or not to produce by comparing:
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price and minimum average variable cost
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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:
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profit-maximizing rule
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If a purely competitive firm is producing at the P = MC output and realizing an economic profit, at that output:
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marginal revenue exceeds ATC. MR>ATC
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If a profit-seeking competitive firm is producing its profit-maximizing output and its total fixed costs fall by 25 percent, the firm should:
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not change its output.
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A purely competitive seller should produce rather than shut down in the short run:
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if total revenue exceeds total cost (TR>TC) or if total cost exceeds total revenue(TC>TR) by some amount less than total fixed cost.
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In the short run, a purely or perfectly competitive firm will earn a normal profit when:
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P = ATC
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Marginal revenue is the change in:
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total revenue associated with the sale of one more unit of output.
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Total Revenue (TR) is the:
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price of a product multiplied by the quantity sold in a given time period
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If the marginal cost of a unit of output exceeds its marginal revenue the firm should:
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not produce that unit.
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A point where total revenue covers all cost, but there is no economic profit is know as:
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Break-Even Point
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The MC=MR rule applies only if:
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producing is preferable to shut down
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_________ exists when a single firm is the sole producer of for which there are no close substitute
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Monopoly
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_______ is the ability to alter the market price of a good/service
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Market Power
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Demand Curve for Monopolist is:
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downward-sloping
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_________ is the sale of an identical good at different prices to different consumers by a single seller
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Price Discrimination
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________is an industry in which one firm can achieve economies of scale over the entire range of market supply
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Natural Monopoly_
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_______ is an imperfectly competitive industry subject to potential entry if prices or profit increases
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Contestable Market