Relative to a monopoly, the price that a perfectly competitive firm would charge, given identical costs, is higher than the monopoly the same as the monopoly lower than the monopoly not comparable to the monopoly True-False Questions 1. T F A perfectly competitive firm is a price maker. 2. T F The demand curve of a competitive firm is always downward-sloping. 3. T F New firms can enter a perfectly competitive market with ease. 4. T F A perfectly competitive firm changes a price that is higher than its marginal cost. 5. T F A perfectly competitive firm earns marginal revenues that exceed the price. 6. T F At the level of output where MR = MC, both the perfectly competitive firm as well as the monopolist maximize profits. 7. T F A perfectly competitive firm will shut down its production when it cannot recover of its variable costs. all 8. T F The supply curve of a perfectly competitive firm lies above the average variable cost. 9. T F In the long-run, a perfectly competitive firm cannot earn positive economic profits. 10. T F In the long run, a perfectly competitive firm may incur economic losses. 11. T F In the long run, a perfectly competitive firm behaves like a price maker. 12. T F In the long run, a perfectly competitive firm produces at the point where P = MR = minimum ATC. 13. T F A perfectly competitive market is characterized by homogeneous products. 14. T F Monopolists maximize profits by changing prices that equal marginal revenue. 15. T F In maximizing profits monopolists do not follow the MC = MR rule. 16. T F There are significant barriers to entry in monopoly markets. 17. T F In the long run, monopolies earn zero economic profits. 18. T F Monopolists always charge prices that exceed their average total cost. 19. T F Monopolies may result from economies of scale.
Relative to a monopoly, the price that a perfectly competitive firm would charge, given identical costs, is higher than the monopoly the same as the monopoly lower than the monopoly not comparable to the monopoly True-False Questions 1. T F A perfectly competitive firm is a price maker. 2. T F The demand curve of a competitive firm is always downward-sloping. 3. T F New firms can enter a perfectly competitive market with ease. 4. T F A perfectly competitive firm changes a price that is higher than its marginal cost. 5. T F A perfectly competitive firm earns marginal revenues that exceed the price. 6. T F At the level of output where MR = MC, both the perfectly competitive firm as well as the monopolist maximize profits. 7. T F A perfectly competitive firm will shut down its production when it cannot recover all of its variable costs. 8. T F The supply curve of a perfectly competitive firm lies above the average variable cost. 9. T F In the long-run, a perfectly competitive firm cannot earn positive economic profits. 10. T F In the long run, a perfectly competitive firm may incur economic losses. 11. T F In the long run, a perfectly competitive firm behaves like a price maker. 12. T F In the long run, a perfectly competitive firm produces at the point where P = MR = minimum ATC. 13. T F A perfectly competitive market is characterized by homogeneous products. 14. T F Monopolists maximize profits by changing prices that equal marginal revenue. 15. T F In maximizing profits monopolists do not follow the MC = MR rule. 16. T F There are significant barriers to entry in monopoly markets. 17. T F In the long run, monopolies earn zero economic profits. 18. T F Monopolists always charge prices that exceed their average total cost. 19. T F Monopolies may result from economies of scale.
Ch05_SGr.docx