Oligopolists will maximize total profits for all of the firms in the market at the rate of output where
A. TR = TC for the total market.
B. MR = MC for the marginal firm.
C. A monopoly firm would produce if it was maximizing profits.
D. AR = AC for each firm.
Answer: C
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The function of money that enables money to be used for future purchases is called:
A) medium of exchange. B) store of value. C) unit of account. D) measure of power.
If bargaining is costless and an externality exists:
a. an efficient outcome may be reached depending on which party is assigned property rights. b. an efficient outcome will be reached regardless of which party is assigned property rights. c. an efficient outcome will not be reached without government intervention. d. an efficient outcome can never be reached.
When firms have an incentive to exit a competitive price-taker market, their exit will
a. lower market price. b. necessarily raise the costs of firms that remain in the market. c. raise profits for firms that remain in the market. d. reduce demand for the product.
There are 1,000 identical firms in a price-taker industry. In the short run, total revenues of each firm exceed total costs. What will happen in the long run?
a. Nothing, because each firm is already maximizing its profits. b. Many firms will enter the market and each firm will eventually operate at a loss. c. Additional firms will enter the market, and price will be driven down to where each firm will be making just enough to stay in business. d. Additional firms will enter the market, but the price will remain the same because the existing firms will not allow price to decrease.