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48 Matching questions

  1. Mergers will generally not invite government scruntiy or opposition if they :
  2. Monopolistic competition is costly to consumers.
  3. A ____________ would not advertise quality or price, because each from produces the same product as every other and each sells at the same market price.
  4. In _______ firms earh zero economic profit in the long run.
  5. The individual monopolist competitor behaves very much ike a monopoly. ITs goal is to maximize profit by producing where _________.
  6. In a monopoly no significant barriers to entry that keep out newcomers.
  7. ___________ usually benefit from product differentiation.
  8. Product differences can also be entirely subjective.
  9. What is imperfect competition?
  10. Any action a firm takes to shift the demand curve for its output to the right is called ___________.
  11. A market can have very many firms ad still be considered an oligopoly market, as long as the opt few firms _____________________.
  12. In the long run, a monopolistic competitor always produce on the downward sloping portion of its ATC curve and therefore never produces at minimum average cost.
  13. In _____________, sellers offer a standardized product.
  14. Because it produces a differentiated product, a monopolistic competitor faces a downward curve:
  15. What happens when a monopoly looses some of its service to new entrants?
  16. What role does the "many buyers and sellers" in terms of monopolistic competition play in the market?
  17. What barriers to entry keep out new competitors?
  18. A monopolistically competitive market has three fundamental characteristics:
  19. What is an oligopoly?
  20. ____________ markets have more than one firm, (so they are not monopolies), but they violate one or more of the requirements of perfect competition.
  21. The key difference is this:
  22. Under ______________-- in which there are no barriers to entry and exit, the firm will not eon its profit for long.
  23. In the long run, competitive firms earn _____________.
  24. This type of competition is another reason why monopolistic competitors earn zero economic profit in the long run.
  25. In monopolistic competition, however, out assumption about easy entry extends to business practices as well:
  26. In monopolistic competition, nonprice competition can temporarily increase demand for a firm's product and create economic profit in the short run.
  27. What is a natural oligopoly?
  28. When a monopolistic competitor raises its price, its customers have on additional option:
  29. In the long run a monopolistic competitor's output levee is always _________ to minimize cost per unit. THe firm operates with excess capacity.
  30. If the typical firm is suffering an economic loss firms that remain in the market will gain customers, so their demand curve will shift __________. Exit will cease only when the typical firm is earning zero economic profit.
  31. Under monopolistic competition, firms can earn positive, negative, or zero economic profit in the short run.
  32. What can economies of scale create?
  33. The market for wireless phone service falls somewhere between the extremes of _________ and ____________.
  34. HHI is most useful when firms are ______________.
  35. Economists measure the market in two ways:
  36. What is the Herfindakl-Hirshman Index (HHI)?
  37. Under perfect competition, ____________ in the long run equilibrium.
  38. What is the concentration ratio?
  39. Under monopolistic competition, ___________ in the long run.
  40. A monopolistic competitor faces a ___________ sloping demand curve, so it has market power. In this sense it is more like a monopolist than a perfect competitor.
  41. What is strategic interaction and the likelihood of collusion greatest?
  42. Because a monopolistic competitor faces a downward-sloping demand curve the firm________. Like a monopoly, it is a _________.
  43. WHta is monopolistic competition?
  44. Even if nonoprice competition leads to profits for early adopters in the short run, we can identify two forces that shrink profit back to zero in the long run:
  45. In the short run, the result may be economic profit, economic loss, or zero economic profit.
  46. The HHI is used by two government agencies--- the Federal Trade Commission and the Department of Justice-- in deciding...
  47. When the demand curve shifts left.
  48. In the long run, a monopolistic competitor will operate with excess capacity-- that is, it will...
  1. a But in the long run, free entry and exit ensure that each firm earns zero economic profit, just as under perfect competition.
  2. b :)
  3. c 1. Economies of scale
    2. Reputation as a barrier
    3. Strategic barriers
    4. Legal Barriers
  4. d Demand curve will shift leftward.
  5. e Concentration ratios and the Herfindahl-Hirschman Index.
  6. f Yep.
  7. g perfectly competitive firm
  8. h A market structure in which there is more of the requirements of perfect competition is violated.
  9. i Imperfectly competitive
  10. j Too small
  11. k :(
  12. l A measure of market concentration obtained by summing the squares of each firm's market share. It gives more weight to the presence of the larges firms. To calculate the index, we first convert the percentage market share of each forum in the industry into a whole number, then square it, then sum the squared numbers. The fewer the number of firms in the market, the larger the HHI will be.
  13. m not of equal size.
  14. n Monopolistic competition
  15. o It can sell more by charging less, or raise its price without losing its customers.
  16. p 1. Imitation by others reverses the initial rightward shift in demand
    2. the costs of nonprime competitor shift the ATC curve upward, in the end each from will once again earn zero economic profit, with its demand curve tangent to the new, higher ATC curve.
  17. q A natural monopoly if a firm's imimumum efficient scale occurs when it produces for the entire market. Or it can create a natural oligopoly if the MES occurs when a firm produces for a large faction of the market. Since small firms can't comet, only a few large firms survive, and the market becomes an oligopoly.
  18. r Even when two products are identical, if people think they are different, then as far as the market is concerned, they are different (Clorox Bleach is a differentiated product).
  19. s perfect competition
  20. t Non-price competition
  21. u Zero economic profit
  22. v The percentage of total output or sales by a given number of the largest firms in the market.
  23. w monopolistic competition
  24. x But in the long run, entry and emulation bu other firms, as well as the cost of non price competition inetself, ensure zero economic profit in the long run.
  25. y monopoly and perfect competition
  26. z Any firm can copy the successful practices of other firms.
  27. aa Consumers
  28. ab downward
  29. ac Good, point.
  30. ad 1. differentiated products
    2. Many buys and sellers
    3. Easy entry and exit
  31. ae It rules out strategic interaction among firms in the market. That is, when a firm under monopolistic competition makes a decision about price, advertising, product guarantees, they might respond. There are simply too many other firms, each supplying such a small part of the market for any one of them to have much impact on the others.
  32. af chooses its price, Price setter
  33. ag While a monopoly is the only seller in its market, a monopolistic competition is one of many sellers when a monopoly raises its price, its customers myst pay up or buy less of the product.
  34. ah not sell enough output to achieve minimum cost per unit.
  35. ai 1. increase the HHI by less 100
    2. Keep the HHI under 1,500
  36. aj MR=MC
  37. ak The marginal revenue curve shifts left as well.
  38. al P>minimum ATC
  39. am P= minimum ATC
  40. an non-price competition.
  41. ao A market that tends naturally toward oligopoly because the minimum efficient scale of the typical firm is a large fraction of the market.
  42. ap THey can buy a close substitute from some other firm. Thens all else equal, the demand curve facing a firm will be more elastic under monopolistic competition than under monopoly.
  43. aq Rightward
  44. ar sell a large share of the output in the market.
  45. as An oligopoly is a market dominated by a small number of strategically interacting firms.
  46. at A market structure in which there are many firms selling products that are differentiated, and in which there is easy entry and exit.
  47. au In deciding whether to approve or block mergers
  48. av When a market is highly concentrated. (i.e. a large share of market production is concentrated among the top few firms). Therefore, its useful to have some measure of market concentration.