Econ Chapters 6-10 - Custom Scholars
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# Econ Chapters 6-10

question
A company could produce 100 units of a good for \$320 or produce 101 units of the same good for \$324. The \$4 difference in costs is
the marginal cost of producing the 101st unit
question
A duopoly is a form of
oligopoly
question
A firm that shuts down and produces no output incurs a loss equal to its
total fixed costs
question
A key difference between a monopoly and a perfectly competitive firm is that the monopolist
has a marginal revenue curve that lies below its demand curve
question
An example of a variable resource in the short run is
an employee
question
An industry in which one firm can supply the entire market at a lower price than can two or more firms is called a
natural monopoly
question
As perfectly competitive firms leave an industry because they are incurring an economic loss, the price of the good ________ and the economic loss of each remaining firm ________.
rises; decreases
question
Average total costs are total costs divided by
total output
question
Explicit costs are ________ and implicit costs are ________.
paid in money; incurred when a firm gives up an alternate action
question
Game theory is a tool for studying ________.
strategic behavior
question
High fixed costs are associated with
economies of scale
question
If a duopoly has a collusive agreement that maximizes joint profit, then each duopolist has
an incentive to cheat by lowering its price
question
if economic profits are equal to zero then
accounting profits are being earned and they are equal to implicit costs.
question
If firms in a monopolistically competitive industry are earning a positive economic profit, then
new firms will enter the industry
question
In a perfectly competitive market, if a firm finds it is producing an amount of output such that its marginal cost exceeds its price, it will
decrease its output to increase its profit.
question
in perfect competition
all firms in the market sell their product at the same price
question
In the above figure, if the firm is in monopolistic competition, it will produce
40 units
question
In the above figure, if the price is P1, the firm is
incurring an economic loss
question
In the figure above, curve B is the ________ curve.
average total cost
question
In the figure above, the firm's profit is maximized when the firm produces
170 units of output
question
In the long run, the economic profit of a firm in a perfectly competitive industry
will equal zero
question
in the long-run, a monopolist will
be able to continue to earn economic profits as long as the market remains a monopoly
question
In the short run a perfectly competitive firm will
shut down if P < AVC
question
Marginal cost is calculated as
the increase in total cost divided by the increase in output.
question
One difference between oligopoly and monopolistic competition is that
fewer firms compete in oligopoly than in monopolistic competition
question
Perfect competition is an industry with
many firms producing identical goods
question
Pippi owns a pizza parlor. If Pippi owns a pizza oven, for its use she incurs ________. If she instead rents a pizza oven from someone else, she incurs ________.
an implicit cost; an explicit cost
question
Price wars can be the result of
new firms entering the industry and all firms then finding themselves in a prisoners' dilemma situation
question
Revenue Equivalence Theorem suggests that different auction designs will
Both B and C
question
The figure above shows the marginal revenue and costs of a perfectly competitive firm. When 170 units are produced, the
All of the above are true
question
the fundamental objective of a firm is
maximizing profits
question
The long run is distinguished from the short run because only in the long run
the quantities of all resources can be varied
question
The maximum economic profit that can be made by a duopoly that colludes is equal to the ________.
economic profit made by a monopoly
question
The more perfectly a monopoly can price discriminate, the
larger its output and the higher its profits
question
The profit maximizing condition for a perfectly competitive firm is
P = MC
question
The short run is a period of time in which
the quantity used of at least one resource is fixed
question
Total cost is the sum of fixed costs and
variable costs
question
Total revenue equals
market price multiplied by quantity sold
question
Total revenue minus the sum of implicit and explicit costs is equal to ________ profit.
economic
question
Total variable cost is the sum of all
costs that rise as output increases
question
When producers agree to restrict output, raise the price, and increase profits, the agreement is called ________.
a collusive agreement
question
Which characteristic is associated with monopolistic competition?
product differentiation
question
Which of the following groups lists the four factors (inputs) of production?
labor, capital, land, entrepreneurship
question
Which of the following is part of the market structure for monopolistic competition?
Both answers B and C are correct
question
Which of the following is true for BOTH monopoly and perfect competition?
Profits are maximized by producing at the level of output where marginal revenue is equal to marginal cost
question
Which of the following is NOT a decision firms must make in the short run?
Whether to enter or exit an industry.
question
Which of the following statements is true?
A perfectly competitive industry produces more output and charges a lower price than a single-price monopoly.
question
Which two auctions are strategically equivalent?
1st price sealed-bid and descending
question
________ is a group of firms that have made a collusive agreement
A cartel
question
Dr. Smith
J: \$70 S: \$60
J: \$110
Dr. Jones
J: \$60 S: \$100
J: \$90

Libertyville has two optometrists, Dr. Smith and Dr. Jones. Each optometrist can choose to advertise his service or not. The incomes of each optometrist, in thousands of dollars, are given in the payoff matrix above. Which of the following statements correctly describes Dr. Jones' strategy given what Dr. Smith may do?
Dr. Jones should advertise no matter what Dr. Smith does.
1 of 50
question
A company could produce 100 units of a good for \$320 or produce 101 units of the same good for \$324. The \$4 difference in costs is
the marginal cost of producing the 101st unit
question
A duopoly is a form of
oligopoly
question
A firm that shuts down and produces no output incurs a loss equal to its
total fixed costs
question
A key difference between a monopoly and a perfectly competitive firm is that the monopolist
has a marginal revenue curve that lies below its demand curve
question
An example of a variable resource in the short run is
an employee
question
An industry in which one firm can supply the entire market at a lower price than can two or more firms is called a
natural monopoly
question
As perfectly competitive firms leave an industry because they are incurring an economic loss, the price of the good ________ and the economic loss of each remaining firm ________.
rises; decreases
question
Average total costs are total costs divided by
total output
question
Explicit costs are ________ and implicit costs are ________.
paid in money; incurred when a firm gives up an alternate action
question
Game theory is a tool for studying ________.
strategic behavior
question
High fixed costs are associated with
economies of scale
question
If a duopoly has a collusive agreement that maximizes joint profit, then each duopolist has
an incentive to cheat by lowering its price
question
if economic profits are equal to zero then
accounting profits are being earned and they are equal to implicit costs.
question
If firms in a monopolistically competitive industry are earning a positive economic profit, then
new firms will enter the industry
question
In a perfectly competitive market, if a firm finds it is producing an amount of output such that its marginal cost exceeds its price, it will
decrease its output to increase its profit.
question
in perfect competition
all firms in the market sell their product at the same price
question
In the above figure, if the firm is in monopolistic competition, it will produce
40 units
question
In the above figure, if the price is P1, the firm is
incurring an economic loss
question
In the figure above, curve B is the ________ curve.
average total cost
question
In the figure above, the firm's profit is maximized when the firm produces
170 units of output
question
In the long run, the economic profit of a firm in a perfectly competitive industry
will equal zero
question
in the long-run, a monopolist will
be able to continue to earn economic profits as long as the market remains a monopoly
question
In the short run a perfectly competitive firm will
shut down if P < AVC
question
Marginal cost is calculated as
the increase in total cost divided by the increase in output.
question
One difference between oligopoly and monopolistic competition is that
fewer firms compete in oligopoly than in monopolistic competition
question
Perfect competition is an industry with
many firms producing identical goods
question
Pippi owns a pizza parlor. If Pippi owns a pizza oven, for its use she incurs ________. If she instead rents a pizza oven from someone else, she incurs ________.
an implicit cost; an explicit cost
question
Price wars can be the result of
new firms entering the industry and all firms then finding themselves in a prisoners' dilemma situation
question
Revenue Equivalence Theorem suggests that different auction designs will
Both B and C
question
The figure above shows the marginal revenue and costs of a perfectly competitive firm. When 170 units are produced, the
All of the above are true
question
the fundamental objective of a firm is
maximizing profits
question
The long run is distinguished from the short run because only in the long run
the quantities of all resources can be varied
question
The maximum economic profit that can be made by a duopoly that colludes is equal to the ________.
economic profit made by a monopoly
question
The more perfectly a monopoly can price discriminate, the
larger its output and the higher its profits
question
The profit maximizing condition for a perfectly competitive firm is
P = MC
question
The short run is a period of time in which
the quantity used of at least one resource is fixed
question
Total cost is the sum of fixed costs and
variable costs
question
Total revenue equals
market price multiplied by quantity sold
question
Total revenue minus the sum of implicit and explicit costs is equal to ________ profit.
economic
question
Total variable cost is the sum of all
costs that rise as output increases
question
When producers agree to restrict output, raise the price, and increase profits, the agreement is called ________.
a collusive agreement
question
Which characteristic is associated with monopolistic competition?
product differentiation
question
Which of the following groups lists the four factors (inputs) of production?
labor, capital, land, entrepreneurship
question
Which of the following is part of the market structure for monopolistic competition?
Both answers B and C are correct
question
Which of the following is true for BOTH monopoly and perfect competition?
Profits are maximized by producing at the level of output where marginal revenue is equal to marginal cost
question
Which of the following is NOT a decision firms must make in the short run?
Whether to enter or exit an industry.
question
Which of the following statements is true?
A perfectly competitive industry produces more output and charges a lower price than a single-price monopoly.
question
Which two auctions are strategically equivalent?
1st price sealed-bid and descending
question
________ is a group of firms that have made a collusive agreement
A cartel
question
Dr. Smith
J: \$70 S: \$60
J: \$110
Dr. Jones
J: \$60 S: \$100
J: \$90

Libertyville has two optometrists, Dr. Smith and Dr. Jones. Each optometrist can choose to advertise his service or not. The incomes of each optometrist, in thousands of dollars, are given in the payoff matrix above. Which of the following statements correctly describes Dr. Jones' strategy given what Dr. Smith may do?
Dr. Jones should advertise no matter what Dr. Smith does.

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