AP Micro Monopolistic Competition Mini Flashcard

Front

Which is true for both a monopolistically competitive firm and a perfectly competitive firm in long-run profit-maximizing equilibrium?

Back

Economic profits equal zero, and marginal revenue equals marginal cost.

Front

Which relationship between marginal revenue and price under monopolistic competition and perfect competition is correct?

Back

B

Front

Which is true of a monopolistically competitive firm in long-run equilibrium? Options: Price equals marginal cost and average total cost. Price equals average total cost but is greater than marginal cost. Price equals marginal cost and is greater than average total cost. The firm makes no attempt to differentiate its products. The firm earns positive economic profits by producing at minimum average cost.

Back

Price equals average total cost but is greater than marginal cost.

Front

Which of the following is true of a monopolistically competitive firm in long-run equilibrium? The firm produces the allocatively efficient level of output. The firm is allocatively inefficient, because it produces an output level at which price is greater than marginal cost. The firm produces an output level that minimizes average total cost. The firm produces in the inelastic range of its demand curve. The firm earns positive economic profits but zero accounting profits.

Back

The firm is allocatively inefficient, because it produces an output level at which price is greater than marginal cost.

Front

All of the statements below characterize both perfectly competitive and monopolistically competitive markets EXCEPT: Price is equal to average revenue. Individual firms produce output where marginal cost equals marginal revenue. Firms can affect the selling price of their product. The market has a large number of firms. Firms can easily enter or exit the market.

Back

Firms can affect the selling price of their product.