Podcast
Questions and Answers
When demand for a product increases, which of the following is most directly impacted, as reflected by consumer surplus?
When demand for a product increases, which of the following is most directly impacted, as reflected by consumer surplus?
- The total cost of production
- The total benefit to consumers (correct)
- The total profits of producers
- The total revenue from sales
A firm is deciding whether to produce any output. According to the output rule, at what level should the firm produce?
A firm is deciding whether to produce any output. According to the output rule, at what level should the firm produce?
- Where price equals average cost
- Where total revenue equals total cost
- Where marginal revenue equals marginal cost (correct)
- Where demand equals supply
What typically occurs to firms' profits in a long-run competitive equilibrium?
What typically occurs to firms' profits in a long-run competitive equilibrium?
- Firms incur economic losses because of overproduction.
- Firms earn zero economic profits as a result of free entry and exit. (correct)
- Firms earn consistently increasing profits due to efficiency gains.
- Firms earn positive economic profits due to first-mover advantage.
Which characteristic is most indicative of a monopolistically competitive market structure?
Which characteristic is most indicative of a monopolistically competitive market structure?
In a constant-cost industry, what does the long-run supply curve typically look like?
In a constant-cost industry, what does the long-run supply curve typically look like?
How does an increase in competition typically affect the consumer surplus in a market, assuming all other factors remain constant?
How does an increase in competition typically affect the consumer surplus in a market, assuming all other factors remain constant?
If a firm's marginal revenue is consistently greater than its marginal cost for each unit produced, what adjustment should the firm make to maximize profit?
If a firm's marginal revenue is consistently greater than its marginal cost for each unit produced, what adjustment should the firm make to maximize profit?
In the long run, if firms in a competitive industry are experiencing economic losses, what market adjustment is most likely to occur?
In the long run, if firms in a competitive industry are experiencing economic losses, what market adjustment is most likely to occur?
In monopolistic competition, what is the primary trade-off firms face when deciding on the degree of product differentiation?
In monopolistic competition, what is the primary trade-off firms face when deciding on the degree of product differentiation?
What conditions are necessary for an industry to be considered a 'constant-cost industry'?
What conditions are necessary for an industry to be considered a 'constant-cost industry'?
Flashcards
What does consumer surplus measure?
What does consumer surplus measure?
The total benefit consumers receive beyond what they pay for a good or service.
Output Rule for a firm
Output Rule for a firm
Produce at the level where marginal revenue equals marginal cost.
Long-run competitive equilibrium profits
Long-run competitive equilibrium profits
Firms earn zero profits in a long-run competitive equilibrium.
Monopolistic competition
Monopolistic competition
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Long-run supply curve for a constant-cost industry
Long-run supply curve for a constant-cost industry
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Study Notes
- Multiple-choice questions provided by Smallpdf.com
Consumer Surplus
- It measures the total benefit to all consumers
Output Rule for a Firm
- Firms produce at the level where marginal revenue equals marginal cost
Long-Run Competitive Equilibrium
- Firms earn zero profits
Monopolistic Competition
- Many firms sell products that are similar but not identical
Long-Run Supply Curve
- The curve of a constant-cost industry is horizontal
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