Econ Chapter 16

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  1. In a monopolistic competition, firms set price
    above marginal cost since each firm is a price setter
  2. Monopolistic competition differs from perfect competition because in a monopolistic competition markets each of the sellers offers a
    somewhat different product
  3. Free entry and exit of firms in monopolistic competition market guarantees that both
    economic profits and economic losses disappear in the long run
  4. In the long run, monopolistic competition firms produces a quantity that's
    less efficient scale
  5. Monopolistic competition firms have excess capacity. To maximize profits firms will
    maintain the excess capacity
  6. Advertising that uses celebrity endoresements is most likely intended to
    provide a signal of product quality
  7. If a firm in a monopolistic competitive market successfully uses advertising to decrease elasticity of demand for its product
    the firm will be able to increase its mark up over marginal cost
  8. When does a firm earn zero economic profit
    Price  = Average Total Cost
  9. Loss Bearing Firm
    ATC is ABOVE the demand curve (price to ATC then make a box)
  10. Profit Bearing Firm
    ATC is BELOW the demand curve (price to ATC then make a box)
Card Set:
Econ Chapter 16
2014-05-05 01:48:13
final shah economy chapter 16

economy shah final
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