WEEK 8

Question 1

optimality condition

Answer 1

MC=MR

Question 2

total cost equation

Answer 2

total cost = fixed cost + variable cost

Question 3

average total cost equation

Answer 3

average total cost = average fixed cost + average variable cost

Question 4

average cost equation

Answer 4

Question 5

fixed cost

Answer 5

cost that is independent of production decisions

Question 6

cost curve for a perfectly competitive market

Answer 6

n.b. total revenue = total cost + profit

Question 7

imperfectly competitive market

Answer 7

industry in which individual firms have some control over the price of their output

Question 8

market power

Answer 8

imperfectly competitive firm’s ability to raise price without losing all Q_D for its product

Question 9

types of imperfectly competitive markets

Answer 9

• Monopoly
• Oligopoly
• Monopolistic competition

Question 10

monopoly

Answer 10

industry with a single firm in which the entry of new firms is blocked

Question 11

oligopoly

Answer 11

industry in which there is a small number of firms, each large enough so that its presence affects prices

Question 12

monopolistic competitors

Answer 12

firms that differentiate their products in industries with many producers and free entry

Question 13

pure monopoly

Answer 13

industry with a single firm that produces a product for which there are no close substitutes and in which significant barriers to entry prevent other firms from entering the industry and competing for profit