ECON 1203 7-10 exam

question

TRUE

answer

IF ALL THE SAVINGS OF AN OWNER ARE INVESTED IN HIS CONSULTING COMPANY, AN INCREASE IN THE INTEREST RATE INCREASES HIS IMPLICIT COSTS.

question

IMPLICIT COSTS

answer

WHICH OF THE FOLLOWING WOULD NOT APPEAR ON A FIRM'S ACCOUNTING STATEMENT?

question

THE FIRM IS EXPERIENCING DISECONOMIES OF SCALE.

answer

IF GENERAL ELECTRIC FINDS THAT DOUBLING BOTH ITS PLANT SIZE AND THE AMOUNT OF ASSOCIATED INPUTS DOES NOT DOUBLE ITS OUTPUT LEVEL, THEN _____

question

AVERAGE FIXED COST PER UNIT.

answer

TOTAL FIXED COST DIVIDED BY THE LEVEL OF OUTPUT YIELDS THE _____

question

THE OPPORTUNITY COSTS OF THE CAPITAL OWNED AND USED BY THE FIRM

answer

WHICH OF THE FOLLOWING ARE IMPLICIT COSTS FOR A TYPICAL FIRM?

question

TOTAL REVENUE MINUS TOTAL COSTS.

answer

ECONOMIC PROFIT IS DEFINED AS _____

question

INCREASING AT AN INCREASING RATE.

answer

IN THE RANGE OF INCREASING MARGINAL RETURNS, TOTAL PRODUCT IS _____

question

FIRMS THAT DON'T EARN PROFITS WILL, OVER TIME, HAVE DIFFICULTY SECURING FINANCING TO SURVIVE.

answer

THE REASON ECONOMISTS ASSUME THAT FIRMS TRY TO MAXIMIZE ECONOMIC PROFIT IS THAT _____

question

EXPLICIT COSTS.

answer

CASH PAYMENTS FOR STEEL TO BE USED IN THE PRODUCTION PROCESS WOULD BE AN EXAMPLE OF _____

question

ECONOMIC PROFIT PLUS IMPLICIT COSTS.

answer

ACCOUNTING PROFIT EQUALS _____

question

ACCOUNTING PROFIT WILL RISE.

answer

JOHN MOVED HIS OFFICE FROM A BUILDING HE WAS RENTING DOWNTOWN TO THE CARRIAGE HOUSE HE OWNS BEHIND HIS HOUSE. HOW WILL HIS PROFIT CHANGE?

question

FALSE

answer

IF A FIRM IS PRODUCING AT ITS MINIMUM EFFICIENT SCALE, INCREASING ITS OUTPUT SLIGHTLY WILL ALWAYS LEAD TO DISECONOMIES OF SCALE.

question

$10

answer

A FIRM PRODUCES 5000 WATERPROOF CELLPHONE CASES, WHICH THEY SELL FOR $30 EACH. THEY HAVE $35,000 IN FIXED COSTS AND $85,000 IN TOTAL COSTS EVERY YEAR. WHAT IS THE AVERAGE VARIABLE COST?

question

TRUE

answer

IF A FIRM IS EXPERIENCING DIMINISHING MARGINAL RETURNS, ITS MARGINAL PRODUCT IS DECLINING.

question

FALSE

answer

IMPLICIT COSTS INVOLVE DIRECT CASH PAYMENTS FOR THE USE OF A RESOURCE.

question

TRUE

answer

IF A FIRM IS EXPERIENCING DISECONOMIES OF SCALE, ITS LONG-RUN AVERAGE COST CURVE IS UPWARD SLOPING.

question

IT IS POSITIVE AND DECREASING.

answer

WHICH OF THE FOLLOWING IS TRUE OF MARGINAL COST WHEN MARGINAL RETURNS ARE INCREASING?

question

$50,000

answer

HARVEY DEVELOPS GAMING APPS FROM HOME INSTEAD OF WORKING AS AN ENGINEER AND EARNING $50,000 A YEAR. HE HAS INVESTED $20,000 TO UPGRADE TO THE HARDWARE THAT HE NEEDS AND ESTIMATES HIS EXPENSES AT $17,000 A YEAR. DOWNLOADS GENERATED $130,000 IN REVENUE DURING THE FIRST YEAR. WHAT ARE HIS IMPLICIT COSTS?

question

EQUAL TO THE FIXED COST.

answer

IF A FIRM SHUTS DOWN IN THE SHORT RUN AND PRODUCES NO OUTPUT, ITS TOTAL COST WILL BE _____

question

WHEN ECONOMIC PROFIT EQUALS IMPLICIT COSTS.

answer

A FIRM EARNS NORMAL PROFIT _____

question

FALSE

answer

FIRMS IN A PERFECTLY COMPETITIVE MARKET ACHIEVE BOTH ALLOCATIVE AND PRODUCTIVE EFFICIENCY IN THE SHORT RUN.

question

A FARM THAT GROWS SOYBEANS

answer

WHICH OF THE FOLLOWING FIRMS IS MOST LIKELY TO BE A PERFECTLY COMPETITIVE FIRM?

question

PRODUCE THE OUTPUT CONSUMERS VALUE MOST.

answer

TO ACHIEVE ALLOCATIVE EFFICIENCY, FIRMS _____

question

LOWEST POINT ON THE AVERAGE VARIABLE COST CURVE.

answer

THE PRICE THAT REPRESENTS THE SHUTDOWN POINT FOR A PERFECTLY COMPETITIVE FIRM CORRESPONDS TO THE _____

question

ITS PROFIT IS ZERO.

answer

IF A FIRM IS PRODUCING AT AN OUTPUT LEVEL WHERE THE TOTAL REVENUE CURVE INTERSECTS THE TOTAL COST CURVE, WHICH OF THE FOLLOWING IS TRUE OF THE FIRM?

question

CONSTANT COSTS.

answer

A HORIZONTAL LONG-RUN INDUSTRY SUPPLY CURVE OCCURS UNDER CONDITIONS OF _____

question

SUNK COST.

answer

IRRESPECTIVE OF WHETHER A FIRM PRODUCES OR SHUTS DOWN IN THE SHORT RUN, FIXED COST IS EQUAL TO ITS _____

question

THE MARGINAL BENEFIT THAT CONSUMERS ATTACH TO THE LAST UNIT PURCHASED EQUALS THE OPPORTUNITY COST OF THE RESOURCES EMPLOYED TO PRODUCE THAT UNIT.

answer

ALLOCATIVE EFFICIENCY OCCURS IN MARKETS WHEN _____

question

EQUAL TO FIXED COST.

answer

PEGGY'S KEGS SELLS KEGS IN A PERFECTLY COMPETITIVE MARKET. IF THE FIRM DECIDES TO SHUT DOWN BECAUSE OF ECONOMIC LOSSES IN THE SHORT RUN, ITS CURRENT LOSS IS _____

question

THE PRICE AT WHICH THELMA SELLS HER OUTPUT IS UNAFFECTED.

answer

SUPPOSE THELMA AND LOUISE BOTH SELL TOMATOES IN A PERFECTLY COMPETITIVE MARKET. IF LOUISE INCREASES THE AMOUNT OF TOMATOES THAT SHE SELLS IN THE MARKET, _____

question

MARGINAL COST EQUALS PRICE.

answer

FOR A PERFECTLY COMPETITIVE FIRM OPERATING AT THE PROFIT-MAXIMIZING OUTPUT LEVEL IN THE SHORT RUN, _____

question

TRUE

answer

FOR A PERFECTLY COMPETITIVE FIRM, PRICE IS IDENTICAL TO MARGINAL REVENUE AT EVERY QUANTITY.

question

THERE ARE NUMEROUS SELLERS IN THE MARKET

answer

IF EVERY FIRM IN A MARKET IS A PRICE TAKER, THEN WHICH OF THE FOLLOWING IS TRUE?

question

TRUE

answer

AN INDUSTRY CONSISTS OF ALL FIRMS THAT SUPPLY OUTPUT TO A PARTICULAR MARKET.

question

FALSE

answer

CONSUMER SURPLUS IS THE AREA ABOVE THE SUPPLY CURVE AND BELOW THE MARKET-CLEARING PRICE.

question

TRUE

answer

AN INCREASING-COST INDUSTRY IS ONE IN WHICH THE PER-UNIT COST INCREASES AS OUTPUT EXPANDS IN THE LONG RUN.

question

THE FIRM CANNOT CHANGE THE MARKET PRICE.

answer

IN A PERFECTLY COMPETITIVE MARKET, WHAT CAN ONE FARMER DO TO CHANGE THE MARKET PRICE?

question

MARGINAL REVENUE.

answer

THE SLOPE OF THE TOTAL REVENUE CURVE FOR A PERFECTLY COMPETITIVE FIRM EQUALS _____

question

GAINS FROM VOLUNTARY EXCHANGE.

answer

THE COMBINATION OF PRODUCER AND CONSUMER SURPLUS SHOWS THE _____

question

THE ENTRY OF NEW FIRMS AND THE EXPANSION OF EXISTING FIRMS STOP.

answer

WHEN AN INDUSTRY SUPPLY CURVE SHIFTS RIGHTWARD SO THAT ECONOMIC PROFIT IS ERASED, _____

question

FALSE

answer

A NATURAL MONOPOLY EMERGES FROM LEGAL RESTRICTIONS IMPOSED BY A GOVERNMENT.

question

CHARGES A DIFFERENT PRICE FOR DIFFERENT UNITS SOLD.

answer

A MONOPOLIST THAT ENGAGES IN PERFECT PRICE DISCRIMINATION _____

question

RAISING PRICE AND DECREASING OUTPUT.

answer

IF THE MARGINAL COST CURVE SHIFTS UPWARD, A PROFIT-MAXIMIZING MONOPOLIST THAT DOES NOT PRACTICE PRICE DISCRIMINATION IS LIKELY TO RESPOND IN THE SHORT RUN BY _____

question

A DECREASE IN PRICE DECREASES TOTAL REVENUE.

answer

FOR A MONOPOLIST PRODUCING A LEVEL OF OUTPUT AT WHICH MARKET DEMAND IS INELASTIC, _____

question

WHEN THE MONOPOLIST DEVOTES RESOURCES TO SECURING AND MAINTAINING A MONOPOLY POSITION

answer

WHEN WOULD THE DEADWEIGHT LOSS BE HIGHER?

question

IS THE SAME AS ITS AVERAGE REVENUE CURVE.

answer

THE DEMAND CURVE FACING A NON-DISCRIMINATING MONOPOLIST _____

question

LIES TO THE RIGHT OF ITS MARGINAL REVENUE CURVE.

answer

A NON-PRICE DISCRIMINATING MONOPOLIST'S DEMAND CURVE _____

question

AVERAGE REVENUE WOULD DECREASE.

answer

CHINA IS A MONOPOLY SUPPLIER OF PANDAS TO THE WORLD'S ZOOS AND RENTS OUT A PAIR OF PANDAS FOR $1 MILLION A YEAR. SUPPOSE CHINA LOWERS THE PRICE AND RENTS OUT MORE PAIRS OF PANDAS. WHAT WOULD HAPPEN TO AVERAGE REVENUE?

question

INELASTIC PORTION OF THE DEMAND CURVE, BECAUSE MARGINAL REVENUE IS NEGATIVE THERE.

answer

A PROFIT-MAXIMIZING MONOPOLIST NEVER PRODUCES ALONG THE _____

question

RESTRICT OUTPUT TO EXTRACT A HIGHER PRICE FROM CUSTOMERS.

answer

IF THE MARGINAL COST OF PRODUCTION FOR A PROFIT-MAXIMIZING MONOPOLIST INCREASES SUDDENLY IN THE SHORT RUN, IT WILL _____

question

THE SLOPE OF THE DEMAND CURVE FACED BY THE FIRM

answer

WHICH OF THE FOLLOWING WOULD DISTINGUISH A COMPETITIVE FIRM FROM A MONOPOLIST?

question

FALSE

answer

A MONOPOLIST MAXIMIZES PROFIT AT THE OUTPUT RATE WHERE ITS TOTAL REVENUE EQUALS TOTAL COST.

question

LESS THAN $140.

answer

FOR A MONOPOLIST THAT DOES NOT PRICE DISCRIMINATE, ECONOMIC PROFIT IS MAXIMIZED IN THE SHORT RUN AT A PRICE OF $140. MARGINAL REVENUE AT THAT OUTPUT LEVEL IS _____

question

FALSE

answer

A PROFIT-MAXIMIZING MONOPOLY WILL ALWAYS PRODUCE AT THE MINIMUM POINT OF ITS AVERAGE TOTAL COST (ATC) CURVE.

question

TRUE

answer

AVERAGE REVENUE, DEMAND, AND PRICE ARE ALL DEPICTED BY THE SAME CURVE FOR A MONOPOLY.

question

FALSE

answer

TOTAL DEADWEIGHT LOSS IN SOCIETY IS REDUCED THROUGH RENT SEEKING BY MONOPOLISTS.

question

BY GIVING INVENTORS AN INCENTIVE TO INCUR THE UP-FRONT COSTS OF DEVELOPING NEW PRODUCTS.

answer

PATENTS STIMULATE INVESTMENT _____

question

IT FACES A DOWNWARD-SLOPING DEMAND CURVE.

answer

A MONOPOLIST IS SAID TO HAVE MARKET POWER BECAUSE _____

question

MORE THAN MARGINAL REVENUE AT ALL OUTPUT LEVELS.

answer

FOR A MONOPOLIST, AVERAGE REVENUE IS _____

question

A MUNICIPAL WATER COMPANY

answer

WHICH OF THE FOLLOWING IS MOST LIKELY TO BE CONSIDERED A NATURAL MONOPOLY?

question

FALSE

answer

A GROUP OF FIRMS THAT AGREE TO COORDINATE THEIR PRODUCTION AND PRICING DECISIONS TO REAP MONOPOLY PROFIT IS CALLED AN OLIGOPOLY.

question

A CARTEL.

answer

A GROUP OF FIRMS THAT AGREE TO COORDINATE THEIR PRODUCTION AND PRICING DECISIONS TO REAP MONOPOLY PROFIT IS CALLED _____

question

FALSE

answer

A MONOPOLISTICALLY COMPETITIVE FIRM PRODUCES WHERE DEMAND IS INELASTIC.

question

COLLUSION

answer

AN AGREEMENT AMONG FIRMS IN THE INDUSTRY TO DIVIDE THE MARKET AND FIX THE PRICE IS CALLED _____

question

MEAN THAT CONSUMERS PAY LOWER PRICES.

answer

COLLUDING FIRMS, COMPARED WITH COMPETING FIRMS, USUALLY _____

question

FALSE

answer

FIRMS IN A MONOPOLISTICALLY COMPETITIVE MARKET THAT EARN ECONOMIC PROFIT IN THE SHORT RUN WILL CONTINUE TO EARN PROFIT IN THE LONG RUN.

question

TRUE

answer

GAME THEORY PROVIDES US WITH A GENERAL APPROACH TO UNDERSTANDING THE BEHAVIOR OF FIRMS WHEN THEIR CHOICES ARE INTERDEPENDENT.

question

THE PRICE-LEADERSHIP MODEL OF OLIGOPOLY.

answer

HISTORICALLY, THE U.S. STEEL INDUSTRY HAS BEEN A GOOD EXAMPLE OF _____

question

SHIFTS TO THE RIGHT.

answer

IF FORD RAISES THE PRICE OF ITS AUTOMOBILES, THE DEMAND CURVE FOR GM AUTOMOBILES _____

question

ALONG THE DOWNWARD-SLOPING PORTION OF ITS LONG-RUN AVERAGE COST CURVE (LAC).

answer

IN LONG-RUN EQUILIBRIUM, A MONOPOLISTICALLY COMPETITIVE FIRM WILL PRODUCE _____

question

IS TANGENT TO THE FIRM'S AVERAGE TOTAL COST CURVE.

answer

IN THE LONG RUN, THE DEMAND CURVE FACING A MONOPOLISTICALLY COMPETITIVE FIRM _____

question

NOT GUARANTEED ANY LEVEL OF ECONOMIC PROFIT.

answer

IN THE SHORT RUN, A MONOPOLISTICALLY COMPETITIVE FIRM IS _____

question

BY OFFERING A VARIETY OF PRODUCTS

answer

IN WHICH OF THE FOLLOWING WAYS DO OLIGOPOLIES COMPETE WITH EXISTING RIVALS AND BLOCK NEW ENTRIES?

question

PRICE IS GREATER THAN MARGINAL COST.

answer

MONOPOLISTICALLY COMPETITIVE FIRMS DO NOT ACHIEVE ALLOCATIVE EFFICIENCY IN THE LONG RUN BECAUSE _____

question

COMPETITION IN THE INDUSTRY IS LIKELY TO INCREASE.

answer

NEW FIRMS LIKELY TO ENTER AN INDUSTRY WHEN ___

question

FALSE

answer

THE OUTCOME IN THE PRISONER'S DILEMMA IS REFERRED TO AS THE PROFIT-MAXIMIZING EQUILIBRIUM.

question

IDENTICAL

answer

TO MAXIMIZE CARTEL PROFIT, MEMBERS MUST ALLOCATE OUTPUT SO THAT THE MARGINAL COST FOR THE FINAL UNIT PRODUCED BY EACH FIRM IS _____

question

STEEL

answer

WHICH OF THE FOLLOWING INDUSTRIES BEST ILLUSTRATES AN UNDIFFERENTIATED OLIGOPOLY?

question

ADVERTISING OF PRODUCT DIFFERENCES IN THE INDUSTRY

answer

WHICH OF THE FOLLOWING IS INCONSISTENT WITH THE MODEL OF PERFECT COMPETITION?

question

PERFECT PRICE DISCRIMINATION

answer

WHICH OF THE FOLLOWING IS NOT CONSIDERED A BARRIER TO ENTRY?

1 of 80

question

TRUE

answer

IF ALL THE SAVINGS OF AN OWNER ARE INVESTED IN HIS CONSULTING COMPANY, AN INCREASE IN THE INTEREST RATE INCREASES HIS IMPLICIT COSTS.

question

IMPLICIT COSTS

answer

WHICH OF THE FOLLOWING WOULD NOT APPEAR ON A FIRM'S ACCOUNTING STATEMENT?

question

THE FIRM IS EXPERIENCING DISECONOMIES OF SCALE.

answer

IF GENERAL ELECTRIC FINDS THAT DOUBLING BOTH ITS PLANT SIZE AND THE AMOUNT OF ASSOCIATED INPUTS DOES NOT DOUBLE ITS OUTPUT LEVEL, THEN _____

question

AVERAGE FIXED COST PER UNIT.

answer

TOTAL FIXED COST DIVIDED BY THE LEVEL OF OUTPUT YIELDS THE _____

question

THE OPPORTUNITY COSTS OF THE CAPITAL OWNED AND USED BY THE FIRM

answer

WHICH OF THE FOLLOWING ARE IMPLICIT COSTS FOR A TYPICAL FIRM?

question

TOTAL REVENUE MINUS TOTAL COSTS.

answer

ECONOMIC PROFIT IS DEFINED AS _____

question

INCREASING AT AN INCREASING RATE.

answer

IN THE RANGE OF INCREASING MARGINAL RETURNS, TOTAL PRODUCT IS _____

question

FIRMS THAT DON'T EARN PROFITS WILL, OVER TIME, HAVE DIFFICULTY SECURING FINANCING TO SURVIVE.

answer

THE REASON ECONOMISTS ASSUME THAT FIRMS TRY TO MAXIMIZE ECONOMIC PROFIT IS THAT _____

question

EXPLICIT COSTS.

answer

CASH PAYMENTS FOR STEEL TO BE USED IN THE PRODUCTION PROCESS WOULD BE AN EXAMPLE OF _____

question

ECONOMIC PROFIT PLUS IMPLICIT COSTS.

answer

ACCOUNTING PROFIT EQUALS _____

question

ACCOUNTING PROFIT WILL RISE.

answer

JOHN MOVED HIS OFFICE FROM A BUILDING HE WAS RENTING DOWNTOWN TO THE CARRIAGE HOUSE HE OWNS BEHIND HIS HOUSE. HOW WILL HIS PROFIT CHANGE?

question

FALSE

answer

IF A FIRM IS PRODUCING AT ITS MINIMUM EFFICIENT SCALE, INCREASING ITS OUTPUT SLIGHTLY WILL ALWAYS LEAD TO DISECONOMIES OF SCALE.

question

$10

answer

A FIRM PRODUCES 5000 WATERPROOF CELLPHONE CASES, WHICH THEY SELL FOR $30 EACH. THEY HAVE $35,000 IN FIXED COSTS AND $85,000 IN TOTAL COSTS EVERY YEAR. WHAT IS THE AVERAGE VARIABLE COST?

question

TRUE

answer

IF A FIRM IS EXPERIENCING DIMINISHING MARGINAL RETURNS, ITS MARGINAL PRODUCT IS DECLINING.

question

FALSE

answer

IMPLICIT COSTS INVOLVE DIRECT CASH PAYMENTS FOR THE USE OF A RESOURCE.

question

TRUE

answer

IF A FIRM IS EXPERIENCING DISECONOMIES OF SCALE, ITS LONG-RUN AVERAGE COST CURVE IS UPWARD SLOPING.

question

IT IS POSITIVE AND DECREASING.

answer

WHICH OF THE FOLLOWING IS TRUE OF MARGINAL COST WHEN MARGINAL RETURNS ARE INCREASING?

question

$50,000

answer

question

EQUAL TO THE FIXED COST.

answer

IF A FIRM SHUTS DOWN IN THE SHORT RUN AND PRODUCES NO OUTPUT, ITS TOTAL COST WILL BE _____

question

WHEN ECONOMIC PROFIT EQUALS IMPLICIT COSTS.

answer

A FIRM EARNS NORMAL PROFIT _____

question

FALSE

answer

FIRMS IN A PERFECTLY COMPETITIVE MARKET ACHIEVE BOTH ALLOCATIVE AND PRODUCTIVE EFFICIENCY IN THE SHORT RUN.

question

A FARM THAT GROWS SOYBEANS

answer

WHICH OF THE FOLLOWING FIRMS IS MOST LIKELY TO BE A PERFECTLY COMPETITIVE FIRM?

question

PRODUCE THE OUTPUT CONSUMERS VALUE MOST.

answer

TO ACHIEVE ALLOCATIVE EFFICIENCY, FIRMS _____

question

LOWEST POINT ON THE AVERAGE VARIABLE COST CURVE.

answer

THE PRICE THAT REPRESENTS THE SHUTDOWN POINT FOR A PERFECTLY COMPETITIVE FIRM CORRESPONDS TO THE _____

question

ITS PROFIT IS ZERO.

answer

IF A FIRM IS PRODUCING AT AN OUTPUT LEVEL WHERE THE TOTAL REVENUE CURVE INTERSECTS THE TOTAL COST CURVE, WHICH OF THE FOLLOWING IS TRUE OF THE FIRM?

question

CONSTANT COSTS.

answer

A HORIZONTAL LONG-RUN INDUSTRY SUPPLY CURVE OCCURS UNDER CONDITIONS OF _____

question

SUNK COST.

answer

IRRESPECTIVE OF WHETHER A FIRM PRODUCES OR SHUTS DOWN IN THE SHORT RUN, FIXED COST IS EQUAL TO ITS _____

question

THE MARGINAL BENEFIT THAT CONSUMERS ATTACH TO THE LAST UNIT PURCHASED EQUALS THE OPPORTUNITY COST OF THE RESOURCES EMPLOYED TO PRODUCE THAT UNIT.

answer

ALLOCATIVE EFFICIENCY OCCURS IN MARKETS WHEN _____

question

EQUAL TO FIXED COST.

answer

PEGGY'S KEGS SELLS KEGS IN A PERFECTLY COMPETITIVE MARKET. IF THE FIRM DECIDES TO SHUT DOWN BECAUSE OF ECONOMIC LOSSES IN THE SHORT RUN, ITS CURRENT LOSS IS _____

question

THE PRICE AT WHICH THELMA SELLS HER OUTPUT IS UNAFFECTED.

answer

SUPPOSE THELMA AND LOUISE BOTH SELL TOMATOES IN A PERFECTLY COMPETITIVE MARKET. IF LOUISE INCREASES THE AMOUNT OF TOMATOES THAT SHE SELLS IN THE MARKET, _____

question

MARGINAL COST EQUALS PRICE.

answer

FOR A PERFECTLY COMPETITIVE FIRM OPERATING AT THE PROFIT-MAXIMIZING OUTPUT LEVEL IN THE SHORT RUN, _____

question

TRUE

answer

FOR A PERFECTLY COMPETITIVE FIRM, PRICE IS IDENTICAL TO MARGINAL REVENUE AT EVERY QUANTITY.

question

THERE ARE NUMEROUS SELLERS IN THE MARKET

answer

IF EVERY FIRM IN A MARKET IS A PRICE TAKER, THEN WHICH OF THE FOLLOWING IS TRUE?

question

TRUE

answer

AN INDUSTRY CONSISTS OF ALL FIRMS THAT SUPPLY OUTPUT TO A PARTICULAR MARKET.

question

FALSE

answer

CONSUMER SURPLUS IS THE AREA ABOVE THE SUPPLY CURVE AND BELOW THE MARKET-CLEARING PRICE.

question

TRUE

answer

AN INCREASING-COST INDUSTRY IS ONE IN WHICH THE PER-UNIT COST INCREASES AS OUTPUT EXPANDS IN THE LONG RUN.

question

THE FIRM CANNOT CHANGE THE MARKET PRICE.

answer

IN A PERFECTLY COMPETITIVE MARKET, WHAT CAN ONE FARMER DO TO CHANGE THE MARKET PRICE?

question

MARGINAL REVENUE.

answer

THE SLOPE OF THE TOTAL REVENUE CURVE FOR A PERFECTLY COMPETITIVE FIRM EQUALS _____

question

GAINS FROM VOLUNTARY EXCHANGE.

answer

THE COMBINATION OF PRODUCER AND CONSUMER SURPLUS SHOWS THE _____

question

THE ENTRY OF NEW FIRMS AND THE EXPANSION OF EXISTING FIRMS STOP.

answer

WHEN AN INDUSTRY SUPPLY CURVE SHIFTS RIGHTWARD SO THAT ECONOMIC PROFIT IS ERASED, _____

question

FALSE

answer

A NATURAL MONOPOLY EMERGES FROM LEGAL RESTRICTIONS IMPOSED BY A GOVERNMENT.

question

CHARGES A DIFFERENT PRICE FOR DIFFERENT UNITS SOLD.

answer

A MONOPOLIST THAT ENGAGES IN PERFECT PRICE DISCRIMINATION _____

question

RAISING PRICE AND DECREASING OUTPUT.

answer

IF THE MARGINAL COST CURVE SHIFTS UPWARD, A PROFIT-MAXIMIZING MONOPOLIST THAT DOES NOT PRACTICE PRICE DISCRIMINATION IS LIKELY TO RESPOND IN THE SHORT RUN BY _____

question

A DECREASE IN PRICE DECREASES TOTAL REVENUE.

answer

FOR A MONOPOLIST PRODUCING A LEVEL OF OUTPUT AT WHICH MARKET DEMAND IS INELASTIC, _____

question

WHEN THE MONOPOLIST DEVOTES RESOURCES TO SECURING AND MAINTAINING A MONOPOLY POSITION

answer

WHEN WOULD THE DEADWEIGHT LOSS BE HIGHER?

question

IS THE SAME AS ITS AVERAGE REVENUE CURVE.

answer

THE DEMAND CURVE FACING A NON-DISCRIMINATING MONOPOLIST _____

question

LIES TO THE RIGHT OF ITS MARGINAL REVENUE CURVE.

answer

A NON-PRICE DISCRIMINATING MONOPOLIST'S DEMAND CURVE _____

question

AVERAGE REVENUE WOULD DECREASE.

answer

question

INELASTIC PORTION OF THE DEMAND CURVE, BECAUSE MARGINAL REVENUE IS NEGATIVE THERE.

answer

A PROFIT-MAXIMIZING MONOPOLIST NEVER PRODUCES ALONG THE _____

question

RESTRICT OUTPUT TO EXTRACT A HIGHER PRICE FROM CUSTOMERS.

answer

IF THE MARGINAL COST OF PRODUCTION FOR A PROFIT-MAXIMIZING MONOPOLIST INCREASES SUDDENLY IN THE SHORT RUN, IT WILL _____

question

THE SLOPE OF THE DEMAND CURVE FACED BY THE FIRM

answer

WHICH OF THE FOLLOWING WOULD DISTINGUISH A COMPETITIVE FIRM FROM A MONOPOLIST?

question

FALSE

answer

A MONOPOLIST MAXIMIZES PROFIT AT THE OUTPUT RATE WHERE ITS TOTAL REVENUE EQUALS TOTAL COST.

question

LESS THAN $140.

answer

FOR A MONOPOLIST THAT DOES NOT PRICE DISCRIMINATE, ECONOMIC PROFIT IS MAXIMIZED IN THE SHORT RUN AT A PRICE OF $140. MARGINAL REVENUE AT THAT OUTPUT LEVEL IS _____

question

FALSE

answer

A PROFIT-MAXIMIZING MONOPOLY WILL ALWAYS PRODUCE AT THE MINIMUM POINT OF ITS AVERAGE TOTAL COST (ATC) CURVE.

question

TRUE

answer

AVERAGE REVENUE, DEMAND, AND PRICE ARE ALL DEPICTED BY THE SAME CURVE FOR A MONOPOLY.

question

FALSE

answer

TOTAL DEADWEIGHT LOSS IN SOCIETY IS REDUCED THROUGH RENT SEEKING BY MONOPOLISTS.

question

BY GIVING INVENTORS AN INCENTIVE TO INCUR THE UP-FRONT COSTS OF DEVELOPING NEW PRODUCTS.

answer

PATENTS STIMULATE INVESTMENT _____

question

IT FACES A DOWNWARD-SLOPING DEMAND CURVE.

answer

A MONOPOLIST IS SAID TO HAVE MARKET POWER BECAUSE _____

question

MORE THAN MARGINAL REVENUE AT ALL OUTPUT LEVELS.

answer

FOR A MONOPOLIST, AVERAGE REVENUE IS _____

question

A MUNICIPAL WATER COMPANY

answer

WHICH OF THE FOLLOWING IS MOST LIKELY TO BE CONSIDERED A NATURAL MONOPOLY?

question

FALSE

answer

A GROUP OF FIRMS THAT AGREE TO COORDINATE THEIR PRODUCTION AND PRICING DECISIONS TO REAP MONOPOLY PROFIT IS CALLED AN OLIGOPOLY.

question

A CARTEL.

answer

A GROUP OF FIRMS THAT AGREE TO COORDINATE THEIR PRODUCTION AND PRICING DECISIONS TO REAP MONOPOLY PROFIT IS CALLED _____

question

FALSE

answer

A MONOPOLISTICALLY COMPETITIVE FIRM PRODUCES WHERE DEMAND IS INELASTIC.

question

COLLUSION

answer

AN AGREEMENT AMONG FIRMS IN THE INDUSTRY TO DIVIDE THE MARKET AND FIX THE PRICE IS CALLED _____

question

MEAN THAT CONSUMERS PAY LOWER PRICES.

answer

COLLUDING FIRMS, COMPARED WITH COMPETING FIRMS, USUALLY _____

question

FALSE

answer

FIRMS IN A MONOPOLISTICALLY COMPETITIVE MARKET THAT EARN ECONOMIC PROFIT IN THE SHORT RUN WILL CONTINUE TO EARN PROFIT IN THE LONG RUN.

question

TRUE

answer

GAME THEORY PROVIDES US WITH A GENERAL APPROACH TO UNDERSTANDING THE BEHAVIOR OF FIRMS WHEN THEIR CHOICES ARE INTERDEPENDENT.

question

THE PRICE-LEADERSHIP MODEL OF OLIGOPOLY.

answer

HISTORICALLY, THE U.S. STEEL INDUSTRY HAS BEEN A GOOD EXAMPLE OF _____

question

SHIFTS TO THE RIGHT.

answer

IF FORD RAISES THE PRICE OF ITS AUTOMOBILES, THE DEMAND CURVE FOR GM AUTOMOBILES _____

question

ALONG THE DOWNWARD-SLOPING PORTION OF ITS LONG-RUN AVERAGE COST CURVE (LAC).

answer

IN LONG-RUN EQUILIBRIUM, A MONOPOLISTICALLY COMPETITIVE FIRM WILL PRODUCE _____

question

IS TANGENT TO THE FIRM'S AVERAGE TOTAL COST CURVE.

answer

IN THE LONG RUN, THE DEMAND CURVE FACING A MONOPOLISTICALLY COMPETITIVE FIRM _____

question

NOT GUARANTEED ANY LEVEL OF ECONOMIC PROFIT.

answer

IN THE SHORT RUN, A MONOPOLISTICALLY COMPETITIVE FIRM IS _____

question

BY OFFERING A VARIETY OF PRODUCTS

answer

IN WHICH OF THE FOLLOWING WAYS DO OLIGOPOLIES COMPETE WITH EXISTING RIVALS AND BLOCK NEW ENTRIES?

question

PRICE IS GREATER THAN MARGINAL COST.

answer

MONOPOLISTICALLY COMPETITIVE FIRMS DO NOT ACHIEVE ALLOCATIVE EFFICIENCY IN THE LONG RUN BECAUSE _____

question

COMPETITION IN THE INDUSTRY IS LIKELY TO INCREASE.

answer

NEW FIRMS LIKELY TO ENTER AN INDUSTRY WHEN ___

question

FALSE

answer

THE OUTCOME IN THE PRISONER'S DILEMMA IS REFERRED TO AS THE PROFIT-MAXIMIZING EQUILIBRIUM.

question

IDENTICAL

answer

TO MAXIMIZE CARTEL PROFIT, MEMBERS MUST ALLOCATE OUTPUT SO THAT THE MARGINAL COST FOR THE FINAL UNIT PRODUCED BY EACH FIRM IS _____

question

STEEL

answer

WHICH OF THE FOLLOWING INDUSTRIES BEST ILLUSTRATES AN UNDIFFERENTIATED OLIGOPOLY?

question

ADVERTISING OF PRODUCT DIFFERENCES IN THE INDUSTRY

answer

WHICH OF THE FOLLOWING IS INCONSISTENT WITH THE MODEL OF PERFECT COMPETITION?

question

PERFECT PRICE DISCRIMINATION

answer

WHICH OF THE FOLLOWING IS NOT CONSIDERED A BARRIER TO ENTRY?

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ECON 1203 7-10 exam

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