Monopoly, oligopoly, monopolistic competition

[#1]

Industries with large fixed costs and small, constant marginal costs will generally

A. have many small firms

B. have one or a few large firms

C. be highly competitive

D. be allowed to set prices at whatever they want

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A monopoly maximizes profit by choosing the quantity at which marginal revenue equals marginal cost. To find the price that goes with that quantity they use

A. ATC at that quantity

B. Willingness to pay at that quantity

C. Marginal Cost at that quantity

D. where ATC = Demand

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Monopolies usually generate deadweight loss. However, if they are allowed to price discriminate, deadweight loss can be reduced. That deadweight loss:

A. becomes consumer surplus.

B. simply disappears.

C. becomes profit for the monopoly.

D. goes to the government.

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With price discrimination, a monopolist ____ its economic profit and ____ its output.

A. decreases; decreases

B. increases; increases

C. increases; decreases

D. decreases; increases

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Monopolistic competition and perfect competition are similar in the following ways EXCEPT:

A. it is easy to enter and exit the market

B. firms earn zero economic profit in the long run

C. firms offer differentiated products

D. there are many firms in the market

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If firms in a monopolistically competitive industry are experiencing economic losses in the short run, some firms will ________ the industry, ______________ the demand to each firm in the market until each firm earns a normal profit.

A. exit, increasing

B. exit, decreasing

C. enter, increasing

D. enter, decreasing

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The firms in a cartel often do not act in their joint interest because of which of the following?

A. It is not in each firm’s self-interest to cooperate.

B. They do not realize the benefit of cooperation.

C. They strive to minimize their opponents’ profits.

D. They do not understand the game and its payoffs.