Microeconomics Chapter: Market Structures

<p>Monopolistic competition. (A)</p> Signup and view all the answers

<p>Oligopoly. (C)</p> Signup and view all the answers

<p>Firms are price takers. (D)</p> Signup and view all the answers

<p>Increase output to increase profits. (C)</p> Signup and view all the answers

<p>The homogeneity of products. (D)</p> Signup and view all the answers

<p>Freedom of entry and exit. (D)</p> Signup and view all the answers

<p>Marginal Cost (MC) equals Marginal Revenue (MR). (A)</p> Signup and view all the answers

<p>Reduce production to reduce marginal costs. (A)</p> Signup and view all the answers

<p>Decrease production to reduce costs. (C)</p> Signup and view all the answers

<p>Marginal revenue is above marginal cost. (A)</p> Signup and view all the answers

<p>Change in total revenue. (C)</p> Signup and view all the answers

<p>The company should reduce production to reduce total cost more than total revenue. (C)</p> Signup and view all the answers

<p>Marginal cost and marginal revenue are equal. (A)</p> Signup and view all the answers

<p>The quantities consumers are willing to purchase at different prices. (B)</p> Signup and view all the answers

<p>It must adjust price to sell different quantities. (A)</p> Signup and view all the answers

<p>The price in rupees (D)</p> Signup and view all the answers

<p>$p= 10 - 0.5q$ (B)</p> Signup and view all the answers

<p>8 (A)</p> Signup and view all the answers

<p>8.5 (C)</p> Signup and view all the answers

<p>Decreases from 9.5 to 8.5 (D)</p> Signup and view all the answers

<p>Quantity demanded decreases as price increases. (A)</p> Signup and view all the answers

<p>Less competitive markets lead to more competitive behavior among firms. (C)</p> Signup and view all the answers

<p>Monopolies face reduced competition due to the lack of rival firms. (A)</p> Signup and view all the answers

<p>Consumers are willing to purchase more at lower prices and less at higher prices. (C)</p> Signup and view all the answers

<p>A monopoly selling more is only possible at a lower price. (C)</p> Signup and view all the answers

<p>As the monopoly firm sells more, the price tends to fall. (A)</p> Signup and view all the answers

<p>The price that consumers are willing to pay at different quantities supplied. (C)</p> Signup and view all the answers

<p>The firm has perfect knowledge of the market demand curve. (B)</p> Signup and view all the answers

<p>The price will increase. (A)</p> Signup and view all the answers

<p>Because at this point, the price received by the firm equals MC, making further output increase unprofitable. (B)</p> Signup and view all the answers

<p>A larger quantity of the commodity is produced and the price is lower. (B)</p> Signup and view all the answers

<p>Monopoly firms are protected by barriers that prevent entry from other firms. (B)</p> Signup and view all the answers

<p>New firms will enter the market, increasing output and bringing prices down. (B)</p> Signup and view all the answers

<p>Increase output to increase profit. (B)</p> Signup and view all the answers

<p>New firms enter or exit the market based on profitability, which drives prices until profits are zero. (B)</p> Signup and view all the answers

<p>Because they tend to charge higher prices than competitive firms. (C)</p> Signup and view all the answers

<p>All products are substitutes for each other to some extent. (D)</p> Signup and view all the answers

<p>Market prices begin to fall. (C)</p> Signup and view all the answers

<p>The quantity supplied by the monopoly firm. (A)</p> Signup and view all the answers

<p>An inverted vertical parabola. (D)</p> Signup and view all the answers

<p>One seller with no substitutes. (B)</p> Signup and view all the answers

<p>It is detrimental to their own profits. (C)</p> Signup and view all the answers

<p>The slope of the line from the origin to the total revenue curve. (C)</p> Signup and view all the answers

<p>Balance between monopoly and perfect competition. (C)</p> Signup and view all the answers

<p>Entry by another firm is prevented. (C)</p> Signup and view all the answers

A market where only one firm exists and many buyers are present. The firm has a significant influence on market prices.

A market with a few large firms, each holding a substantial market share. These firms often engage in strategic interactions.

A market with many firms offering similar but not identical products. Each firm has some control over its price, but faces competition.

The assumption that firms can freely enter and exit a market. This can lead to a market with many firms.

The assumption that goods produced by different firms are indistinguishable from each other. This leads to a price-taking market.

The situation where firms have complete information about prices, output, and inputs. Allows for rational decision making.

A market structure characterized by many firms, homogeneous products, free entry and exit, and perfect information.

A market where some of the conditions of perfect competition are not met, leading to different market structures such as monopolies or oligopolies.

The relationship between the quantity a monopoly firm can sell and the price it can charge. The market demand curve shows the prices consumers are willing to pay for different quantities.

The monopoly firm's demand curve is synonymous with its average revenue curve because the firm's price represents both the average and the marginal revenue per unit sold.

A downward sloping curve representing the relationship between the quantity of a good demanded by consumers and its price. As price decreases, quantity demanded increases.

The total amount of money a firm receives from selling its goods. Calculated by multiplying the price per unit by the quantity sold.

The additional revenue generated by selling one more unit of a good. Calculated by dividing the change in total revenue by the change in quantity.

The additional cost incurred by producing one more unit of a good. Calculated by dividing the change in total cost by the change in quantity.

The profit-maximizing output level for a firm occurs where marginal revenue (MR) equals marginal cost (MC).

The difference between total revenue (TR) and total cost (TC). A firm's profit is maximized where marginal revenue (MR) equals marginal cost (MC) at the chosen output level.

The quantity a monopolist chooses to sell is determined by the demand curve. The monopolist can sell more only by lowering the price.

The demand curve for a monopolist's product shows the relationship between the price the firm sets and the quantity of goods consumers are willing to buy.

The total revenue (TR) a monopolist earns is calculated by multiplying the price (p) it charges by the quantity (q) it sells. So, TR = p * q.

The average revenue (AR) a monopolist earns is the total revenue (TR) divided by the quantity (q) sold. So, AR = TR / q, which also equals the price (p).

The marginal revenue (MR) a monopolist earns is the additional revenue earned by selling one more unit of output.

The demand function is a mathematical equation that expresses the relationship between the price (p) and the quantity demanded (q). For a monopolist, it helps understand how much people will buy at different prices.

A monopolist's demand curve slopes downward because they can only sell more if they lower the price. This means that the marginal revenue is always less than the price.

The monopolist faces a trade-off when deciding on quantity. Increasing quantity leads to more revenue per unit, but also a lower price and thus less revenue per unit. Finding the optimal quantity requires balancing these effects.

The change in a firm's profit is calculated as the change in total revenue (TR) minus the change in total cost (TC).

A firm will continue to increase its output if doing so will lead to higher profits. This is because the marginal revenue (MR) is greater than the marginal cost (MC).

The point where a firm's marginal revenue (MR) equals its marginal cost (MC). At this point, producing an additional unit of output would not increase profits.

If a firm is producing at a level of output where marginal cost (MC) exceeds marginal revenue (MR), the firm will be better off by reducing its output. Decreasing production lowers costs more than it lowers revenue.

The point where the average revenue (AR) curve intersects the marginal cost (MC) curve. Shows the output level where the firm's average revenue is equal to its average cost.

A firm's profit is maximized at the output level where marginal revenue (MR) equals marginal cost (MC) and the MC curve is rising.

The situation where firms continuously lower their prices to attract customers, leading to a price war.

The point where the price of a good falls to the level of the marginal cost of production. Firms will not supply at a price lower than this, as they would lose money.

The curve that shows the total revenue generated by a firm at different levels of output.

The revenue earned from selling one additional unit of a product.

The revenue earned per unit of a product sold.

A curve that shows the relationship between the total revenue of a firm and the quantity of output produced. In a market with a negatively sloping demand curve, the total revenue curve is an inverted parabola.

A situation where the marginal cost (MC) of producing an additional unit of output is lower than the price at which it can be sold. This creates an incentive for the firm to increase output. The firm increases production until the MC equals the price, maximizing profits.

The point at which the marginal cost (MC) curve intersects the demand curve, indicating the output level where the price received by the firm equals the cost of producing an additional unit. This is considered the equilibrium condition for a perfectly competitive firm.

The point at which the marginal cost curve intersects the demand curve in a perfectly competitive market. It represents the price and output level where the firm maximizes profits.

The output generated by a perfectly competitive firm at equilibrium, which is greater than the output produced under a monopoly.

The price of a good in a perfectly competitive market, which is lower than the price charged in a monopoly. This reflects the increased competition and the ability of consumers to purchase goods at a lower price.

The earnings of a perfectly competitive firm at equilibrium, which are smaller than the profits of a monopoly. This is due to the competitive nature of the market where firms have less control over pricing.

The long-term state of a perfectly competitive market where all firms earn zero economic profit due to free entry and exit. If firms are profitable, new firms would enter, decreasing profits; If firms are losing money, some would exit, raising prices and profits.

The condition where profits are positive due to barriers to entry. Even in the long run, a monopoly can maintain its market power and profits, unlike perfectly competitive firms.