Title: Micro Econ Ch. 8 Flashcards - Questions and Answers | Quizlet
Headings: Micro Econ Ch. 8
Micro Econ Ch. 8
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Terms in this set (15)
THIS SET IS OFTEN IN FOLDERS WITH...
Micro Econ Ch. 6
Micro Econ Ch. 7
Chapter 23: Pure Competition

Content: Will always earn an economic profit in the long run
Will always earn a profit in the short run
Will earn zero economic profit in the long run
May earn either an economic profit or a loss in the long run
C
Creative destruction is most often associated with: Technological advance
Government spending
Private consumption
International trade
A
In pure competition, if the market price of the product is initially higher than the minimum average cost of the firms, then: Other firms will enter the industry and the industry supply will decrease
Other firms will enter the industry and the industry supply will increase
Some firms will exit the industry and the industry supply will decrease
Some firms will exit the industry and the industry supply will increase
B
In a purely competitive industry, each firm: Determines its own price
Engages in various forms of nonprice competition
Can easily enter or exit the industry
Produces a differentiated product
C
In pure competition, each extra unit of output that a firm sells will yield a marginal revenue that is: Greater than the price
Equal to the price
Equal to the average cost
Less than the price
B
In which market model are the conditions of entry into the market easiest? Oligopoly
Pure monopoly
Monopolistic competition
Pure competition
D
A patent gives a firm the power to charge a price that: Is below equilibrium
Is higher than marginal cost
Increases the consumer surplus
Results in overproduction of a product
B
Which of the following is a reason why individual firms under pure competition would not find it gainful to advertise their product? Firms produce a homogeneous product
The quantity of the product demanded is very large
Firms do not make long-run profits
The market demand curve cannot be increased
A
A purely competitive firm does not try to sell more of its product by lowering its price below the market price because: It can sell all it wants to at the market price
Its competitors would not permit it
This would be considered unethical price chiseling
Its demand curve is inelastic, so total revenue will decline
A
A purely competitive firm currently producing 20 units of output earns marginal revenues of $12 from each extra unit of output it sells. If it sells 30 units, then its total revenues would be: