In the Long Run

question 201

Multiple Choice

In the long run,

• A)both monopolists and perfectly competitive firms produce at minimum long-run average total cost.
• B)a monopolist will exit the industry if he is earning zero economic profit.
• C)a monopolist will always charge a higher price than he charges in the short run.
• D)consumer surplus is smaller if an industry is a monopoly than if it is perfectly competitive.

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Definitions:

Barriers to Entry

Factors that make it difficult for new firms to enter a market, such as high startup costs, regulatory requirements, and established competitors.

Market Power

The ability of a firm to influence or control the price and quantity of goods or services in a market.

Marginal Revenue

The additional income obtained from selling one more unit of a product or service.

Demand Schedule

A table that shows the quantity of a good or service that consumers wish to buy at each price level.