Reading Guide: Section 12 Module 67

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1. What is the difference between oligopoly and monopolistic competition? *

2. Why should we assume that the barriers to entry in monopolisitic competition are insignificant? *

3. What is the difference between the D & MR curves in (a) versus (b) above? (CHECK ALL CORRECT STATEMENTS) *

1 point

a's D & MR curve are further to the right than b's

a's D & MR curve are further to the left than b's

The ATC is at the same height in both a & b

a's firm is profitable because at the MR=MC output the P>ATC

b's firm is loss minimizing because at the MR=MC output the P<ATC

Both firms are productively efficient (P=minimum ATC)

Both firms are allocatively efficient (P=MC)

Required

4. If the barriers to entry are insignificant, what should we assume will happen in the LONG RUN if the firm is profitable or loss minimizing? Explain. *

5. Persistent profits earned by the existing firms will lead to the entry of additional producers...the industry will only be in long run equilibrium when? *

6. When the industry is profitable in the short run, what will happen to DEMAND and MARGINAL REVENUE in the long run? Why? *

7. When the industry is loss minimizing in the short run, what will happen to DEMAND and MARGINAL REVENUE in the long run? Why? *

8. The demand curve must be tangent to ________ curve at the firm's profit maximizing output to be in long run equilibrium. *

1 point

ATC

AVC

9. When LONG RUN equilibrium is achieved is the firm productively efficient? *

1 point

Yes

10. When LONG RUN equilibrium is achieved is the firm allocatively efficient (Socially optimal)? *

1 point

Yes

11. Is there deadweight loss in monopolisitic competition? *

1 point

Yes

Maybe

12. List at least 4 differences between perfect competition and monopolisitic competition. *

13. Since firms are not big enough to take maximum advantage of available cost savings they are characterized as having _________.

1 point

Economies of Scale

Productive Efficiency

Allocative Efficiency

Excess Capacity

HIgh Yield Reference Modeling

Clear selection

14. As a consumer, how do you think monopolistically competitive firms compare to perfect competition and oligopoly? EXPLAIN *

There is NO GOOD reason for you to skip this...

What was J. Cliff's dramatic replay? *

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