A. Monopolies face downward sloping demand curves while perfectly competitive firms face horizontal demand curves.
B. Monopolies charge a price higher than marginal cost while perfectly competitive firms charge a price equal to marginal cost.
C. Monopolies can earn profits in the long run while perfectly competitive firms break even.
D. Monopolies choose to produce the quantity at which marginal revenue equals marginal cost while perfectly competitive firms do not.
40. Which of the following statements is not correct?
A. Both monopolies and monopolistically competitive firms can earn economic profits in the long run.
B. Both monopolistically competitive and perfectly competitive firms can earn economic profits in the short run.
C. Only competitive firms produce the welfare-maximizing level of output.
D. Firms in perfect competition, monopolistic competition, and monopoly maximize profits by producing where marginal revenue equals marginal cost.
43. A monopolistically competitive firm is currently producing 20 units of output. At this level of output the firm is charging a price equal to $20, has marginal revenue equal to $12, has marginal cost equal to $12, and has average total cost equal to $18. From this information we can infer that
A. the profits of the firm are negative.
B. firms are likely to leave this market in the long run.
to both perfectly competitive firms and monopolies
only to monopolies
only to perfectly competitive firms
only to firms that can employ discriminatory pricing strategies
2. If a monopolist or a perfectly competitive firm is producing at a break-even point, then: ( I put II, IV) i. average revenue is equal to average variable cost ii. average revenue is equal to the o average total cost iii. total revenue is equal to total variable cost iv. total revenue is equal to the total cost
I and iii
ii and iv
3. What do economies of scale, the exclusive ownership of essential raw materials used in the production process, and patents have in common? (I put A)
they are all barriers to entry
they all help explain why a monopolists demand and marginal revenue curves are identical
they must all be present before a monopolist may practice price discrimination
they all help explain why a firm's short-run average total cost curve is U-shaped