PERFECT COMPETITION AND MONOPOLY

Which of the following could attract new firm to join an industry?

• Normal profits

• Economic losses

• Economic profits

• Accounting profits

A firm operating in a perfectly competitive market will shut down when price is below the minimum of a(n) ____________.

• marginal cost curve

• average total cost curve

• average fixed cost curve

• average variable cost curve

A perfect competitive firm charges a price that is ____________.

• different to other firms

• higher than other firms

• lower than other firms

• similar to other firms

A firm faces a perfectly elastic demand curve, if _____________.

• MC = MR

• MR = AR

• AR = MC

• ATC = AVC

This monopoly will maximize profits at what price?

• A
• B
• C
• R

Economic profits for this monopoly are represented by area:

• 0CGE
• 0AJE
• AJHB
• BAJN

Total costs for this monopoly are represented by area:

• BKL0
• CGE0
• AJE0
• BHE0

Which of the following describes a monopoly firm?

• Single seller

• Many sellers

• Many substitutes

• No barrier to entry

If a monopoly firm practices price discrimination the firm will _____________.

• earn smaller profit

• produce lower quantity than before price discrimination

• charge a higher price when demand is inelastic and a lower price when demand is elastic

• charge a higher price when demand is elastic and a lower price when demand is inelastic

Identify the profit maximizing level of output for this monopoly firm.