Exam 2 True False Flashcards
(20 cards)
The monopolists demand curve is more elastic than the industry’s
False
The demand curve for a firm in a monopolistically competitive industry is perfectly elastic
False
Collusion occurs when firms act in a manner to fix prices, divide a market, or otherwise restrict competition
True
The perfectly competitive firm’s short run supply curve is the portion of its MC curve that lies above its AVC curve
True
Perfect information is necessary for monopolistic competition
False
Given that fixed costs are constant, average fixed costs are also constant
False
High startup costs can be barriers to entry
True
Price discrimination occurs when the seller charges different prices for the product that are not due to differences in product costs
True
Game theory is the study of strategic interaction between rivals
True
To maximize profits, a firm should expand production as long as it is making profits
False
When marginal costs are increasing, average costs have to be less than marginal costs
False
If a purely competitive firm is producing output greater than its profit-maximizing output, marginal cost is greater than marginal revenue
False
A firm should shut down if the price per unit is greater than the variable cost per unit
False
For non-perfectly competitive firms marginal revenue is always less than price
True
An oligopolist producing where MR > MC should lower its price and increase output to maximize profits
True
In the long run, firms that are monopolistically competitive earn economic profits
False
Monopolistic competitors have some control over price due to brand loyalty and preferences
True
Natural monopolies arise from economies of scale
True
Product differentiation is used by an oligopolist in an effort to gain market share
True
If a firm is earning an economic profit it is necessarily earning an accounting profit as well
True
