Question

In: Economics

15. Which of the following is a true statement about the difference between a price-taker firm...

15. Which of the following is a true statement about the difference between a price-taker firm and a competitive price-searcher firm in the long run (more than one answer is correct)? a. Both will sell their products at a price equal to average total cost, but only the price-searcher will produce at minimum average total cost. b. Both will sell their products at a price equal to marginal cost, and only the competitive price searcher will produce at minimum average total cost. c. Only the price-taker will sell its product at a price equal to marginal cost. d. Only the competitive price searcher will sell its product at a price equal to marginal cost. e. Both will sell their products at a price equal to average total cost, but only the price-taker will produce at minimum average total cost.

16. In some industries where firms experience declining average total costs over the full range of output that consumers are willing to buy (more than one answer is correct): a. a larger firm will very likely have lower per-unit costs. b. many rival firms will tend to emerge from the competitive process. c. a single large firm will likely develop, and it will have cost advantages that may protect it from potential rivals. d. a single large firm will develop and it will buy out any smaller rival firms because the small firms can produce at a lower per-unit cost. e. smaller firms will likely have per-unit costs that are similar to large firms.

17. In sparsely populated areas of the western United States, physicians often have some local monopoly power since the nearest doctor may be a hundred miles (or more) away. Physicians confronting this circumstance may be able to practice price discrimination, for example, by charging richer families more than poorer ones for the same services. If one such physician is willing to stay in the area only if he or she can earn at least $150,000 per year, and if price discrimination permits him or her do so, then economic reasoning suggests that such price discrimination would most likely (more than one answer is correct): a. make residents of the area worse off with regard to the purchase of physician services. b. make residents of the area better off with regard to the purchase of physician services. c. increase the number of physicians practicing in such sparsely populated areas. d. increase the options available to both the rich and poor families in the community.

19. Given that the short-run cost and demand conditions shown above for a competitive price-searcher firm are representative for all firms in the industry, which statements accurately describe this firm and industry (more than one answer is correct)? a. The firm’s Price will exceed ATC and it will be able to make short-run economic profits. b. The firms will face competition from new entrants into the industry, causing this firm's demand to decline until zero economic profits are restored. c. The firms will face competition from new entrants into the industry, causing this firm's demand to increase until it earns positive economic profits. d. The firm will see some of its competitors exit from the industry, causing this firm's demand to increase until zero economic profits are restored. e. The firm’s Total Revenue (TR) will exceed its Total Costs (TC) in the short-run.

20. If the government grants a single firm the patent right (monopoly) for the production of a good, such as a new cancer drug, then compared to the competitive outcome for such a good: a. the price of the cancer drug will be higher, less of the cancer drug will be produced, and the firm will earn positive profits. b. the price of the cancer drug will be lower, less of the cancer drug will be produced, and the firm may be able to earn positive economic profits. c. the price of the cancer drug will be higher, more of the cancer drug will be produced, and the firm may be able to earn positive economic profits. d. the price of the cancer drug will be higher, less of the cancer drug will be produced, and the firm will earn zero economic profits. e. none of the above

21. Assuming that firms maximize profits, how will the price and output policy of an unregulated monopolist compare with ideal market efficiency? (More than one answer is correct.) a. The output of the monopolist will be too small and the price too high, compared to ideal market efficiency. b. The output of the monopolist will be too large and the price too high, compared to ideal market efficiency. c. The output of the monopolist will be too small and the price too low, compared to ideal market efficiency. d. The monopolist’s price will be too high, but the impact of monopoly on output is indeterminate. e. The unregulated monopolist will be in a position to charge a price greater than its ATC of production in the long-run.

Solutions

Expert Solution



Related Solutions

A firm in a competitive market is a price taker (recall that this is true for...
A firm in a competitive market is a price taker (recall that this is true for every firm and every customer in a perfectly competitive market). For this example, the market equilibrium price is $6. The firm’s total cost (TC) function is made up of Fixed Cost (FC, which does not vary with quantity) and Variable Cost (VC, which does vary with quantity). The TC function for this firm is: TC = 10 + 2Q – 0.2Q2 + 0.01Q3 a)...
Which of the following statement is TRUE? a) A perfectly competitive firm is a price SETTER,...
Which of the following statement is TRUE? a) A perfectly competitive firm is a price SETTER, while a monopoly is a price TAKER b) A perfectly competitive firm faces market demand, while a monopoly faces a perfectly elastic demand c) Both monopoly and perfectly competitive firm faces market demand d) Both monopoly and perfectly competitive firm should produce at output level where marginal revenue = marginal cost
Question. Which of the following is true in a purely competitive, price-taker market with low barriers...
Question. Which of the following is true in a purely competitive, price-taker market with low barriers to entry? Multiple Choice A. In the long run, firms will produce the quantity of output that minimizes per unit costs (ATC) of production. B. If economic profits are present in the short run, new firms will enter the industry, driving down prices until the industry returns to zero economic profits. C. Firms produce identical products. D. All of the above statements are true.
1. A single firm in a perfectly competitive market is a price taker? True or False....
1. A single firm in a perfectly competitive market is a price taker? True or False. Explain with examples. 2. What is the supply curve of a perfectly competitive firm? Is it different from that of the market supply curve? Explain. 3.If a firm makes a loss in the short run, then it would shut down? If no, discuss. If yes, discuss.Offer examples 4. Does the monopolist have a supply curve? Discuss
what it means by price taker firm
what it means by price taker firm
Which of the following is a true statement? Which of the following is a true statement?...
Which of the following is a true statement? Which of the following is a true statement? a. The electric potential energy depends on both the electric field and the amount of charge moving through that field. b. The electric potential depends on both the electric field and the amount of charge moving through that field. c. The electric potential energy and the electric potential depend on both the electric field and the amount of charge moving through that field. d....
Which of the following is a true statement about virtual images?
Part A Which of the following is a true statement about virtual images?You cannot see a virtual image. A virtual image must be larger than the object A virtual image is formed at the position from which the rays appear to have originated A virtual image must be upside down Part B If an object is placed a great distance away from and in front of a converging lens such as the one shown in the video, where will its image be formed? It will be a...
Which of the following is not a true statement about a 403(b)?
Which of the following is not a true statement about a 403(b)?A 403(b) can only be established by a non-profit organization, like a hospital or a school.A 403(b) only involves the employer making contributions.A 403(b) could be enabled for plan loans.A 403(b) is not available to independent contractors who work for the non-profit organization.Which of the following statements correctly describes a SEP plan?The plan can exclude employees who are aged 25 or younger.The allocation formula cannot be integrated with Social...
Which of the following is a TRUE statement regarding the treatment of scrap by a​ firm?...
Which of the following is a TRUE statement regarding the treatment of scrap by a​ firm? A. Revenue received from the sale of scrap on a job lowers the total costs for that job. B. Scrap is always allocated to a specific job. C. Scrap is separated between normal and abnormal scrap. D. There are costs assigned to scrap.
A monopolist is a: Price taker Price maker Efficient firm Firm with high consumer welfare
A monopolist is a: Price taker Price maker Efficient firm Firm with high consumer welfare
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT