Micro- Midterm 2 Word Scramble
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| Question | Answer |
| If a firm increases their inputs by 9% and outputs increase by 5%, the firm is experiencing | Decreasing returns to scale |
| What is true for a purely competitive firm in short-run equilibrium? | The firm's marginal revenue is equal to its marginal cost |
| A purely competitive firm will be willing to produce even at a loss in the short run, as long as: | The negative profits are smaller than its total fixed costs |
| If a purely competitive firm is currently facing a situation where the price of its product is lower than the AVC, but it believes that the market demand for its product will increase soon, then: | The firm will shut down in the short run, but stay in the industry in the long run if it expects the product price to rise high enough soon |
| In long-run equilibrium, a purely competitive firm will operate where price is: | Equal to MR, MC, and min ATC |
| What is true when a purely competitive market is at its long-run equilibrium? | Total surplus is maximized |
| One defining characteristic of pure monopoly is that: | The monopolist produces a product with no close substitutes |
| If a monopolist is producing at a level where marginal revenue is positive, the firm: | Is operating on the elastic portion of its demand curve |
| Which phrase would be most characteristic of a pure monopoly? | Sole seller |
| At the profit-maximizing level of output for a monopolist: | Price is greater than marginal cost |
| Many people believe that monopolies charge any price they want to without affecting sales. Instead, the output level for a profit maximizing monopoly is determined by: | Marginal cost= Marginal revenue |
| Allocative efficiency happens in a monopoly because at the profit-maximizing output level: | P>MC |
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joebouhadana
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