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

answer

the marginal cost of producing the 101st unit

question

A duopoly is a form of

answer

oligopoly

question

A firm that shuts down and produces no output incurs a loss equal to its

answer

total fixed costs

question

A key difference between a monopoly and a perfectly competitive firm is that the monopolist

answer

has a marginal revenue curve that lies below its demand curve

question

An example of a variable resource in the short run is

answer

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

answer

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 ________.

answer

rises; decreases

question

Average total costs are total costs divided by

answer

total output

question

Explicit costs are ________ and implicit costs are ________.

answer

paid in money; incurred when a firm gives up an alternate action

question

Game theory is a tool for studying ________.

answer

strategic behavior

question

High fixed costs are associated with

answer

economies of scale

question

If a duopoly has a collusive agreement that maximizes joint profit, then each duopolist has

answer

an incentive to cheat by lowering its price

question

if economic profits are equal to zero then

answer

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

answer

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

answer

decrease its output to increase its profit.

question

in perfect competition

answer

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

answer

40 units

question

In the above figure, if the price is P1, the firm is

answer

incurring an economic loss

question

In the figure above, curve B is the ________ curve.

answer

average total cost

question

In the figure above, the firm's profit is maximized when the firm produces

answer

170 units of output

question

In the long run, the economic profit of a firm in a perfectly competitive industry

answer

will equal zero

question

in the long-run, a monopolist will

answer

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

answer

shut down if P < AVC

question

Marginal cost is calculated as

answer

the increase in total cost divided by the increase in output.

question

One difference between oligopoly and monopolistic competition is that

answer

fewer firms compete in oligopoly than in monopolistic competition

question

Perfect competition is an industry with

answer

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 ________.

answer

an implicit cost; an explicit cost

question

Price wars can be the result of

answer

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

answer

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

answer

All of the above are true

question

the fundamental objective of a firm is

answer

maximizing profits

question

The long run is distinguished from the short run because only in the long run

answer

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 ________.

answer

economic profit made by a monopoly

question

The more perfectly a monopoly can price discriminate, the

answer

larger its output and the higher its profits

question

The profit maximizing condition for a perfectly competitive firm is

answer

P = MC

question

The short run is a period of time in which

answer

the quantity used of at least one resource is fixed

question

Total cost is the sum of fixed costs and

answer

variable costs

question

Total revenue equals

answer

market price multiplied by quantity sold

question

Total revenue minus the sum of implicit and explicit costs is equal to ________ profit.

answer

economic

question

Total variable cost is the sum of all

answer

costs that rise as output increases

question

When producers agree to restrict output, raise the price, and increase profits, the agreement is called ________.

answer

a collusive agreement

question

Which characteristic is associated with monopolistic competition?

answer

product differentiation

question

Which of the following groups lists the four factors (inputs) of production?

answer

labor, capital, land, entrepreneurship

question

Which of the following is part of the market structure for monopolistic competition?

answer

Both answers B and C are correct

question

Which of the following is true for BOTH monopoly and perfect competition?

answer

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?

answer

Whether to enter or exit an industry.

question

Which of the following statements is true?

answer

A perfectly competitive industry produces more output and charges a lower price than a single-price monopoly.

question

Which two auctions are strategically equivalent?

answer

1st price sealed-bid and descending

question

________ is a group of firms that have made a collusive agreement

answer

A cartel

question

Dr. Smith
Advertise Don't advertise
Advertise S: $80
J: $70 S: $60
J: $110
Dr. Jones
Don't advertise S: $120
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?

answer

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

answer

the marginal cost of producing the 101st unit

question

A duopoly is a form of

answer

oligopoly

question

A firm that shuts down and produces no output incurs a loss equal to its

answer

total fixed costs

question

A key difference between a monopoly and a perfectly competitive firm is that the monopolist

answer

has a marginal revenue curve that lies below its demand curve

question

An example of a variable resource in the short run is

answer

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

answer

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 ________.

answer

rises; decreases

question

Average total costs are total costs divided by

answer

total output

question

Explicit costs are ________ and implicit costs are ________.

answer

paid in money; incurred when a firm gives up an alternate action

question

Game theory is a tool for studying ________.

answer

strategic behavior

question

High fixed costs are associated with

answer

economies of scale

question

If a duopoly has a collusive agreement that maximizes joint profit, then each duopolist has

answer

an incentive to cheat by lowering its price

question

if economic profits are equal to zero then

answer

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

answer

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

answer

decrease its output to increase its profit.

question

in perfect competition

answer

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

answer

40 units

question

In the above figure, if the price is P1, the firm is

answer

incurring an economic loss

question

In the figure above, curve B is the ________ curve.

answer

average total cost

question

In the figure above, the firm's profit is maximized when the firm produces

answer

170 units of output

question

In the long run, the economic profit of a firm in a perfectly competitive industry

answer

will equal zero

question

in the long-run, a monopolist will

answer

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

answer

shut down if P < AVC

question

Marginal cost is calculated as

answer

the increase in total cost divided by the increase in output.

question

One difference between oligopoly and monopolistic competition is that

answer

fewer firms compete in oligopoly than in monopolistic competition

question

Perfect competition is an industry with

answer

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 ________.

answer

an implicit cost; an explicit cost

question

Price wars can be the result of

answer

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

answer

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

answer

All of the above are true

question

the fundamental objective of a firm is

answer

maximizing profits

question

The long run is distinguished from the short run because only in the long run

answer

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 ________.

answer

economic profit made by a monopoly

question

The more perfectly a monopoly can price discriminate, the

answer

larger its output and the higher its profits

question

The profit maximizing condition for a perfectly competitive firm is

answer

P = MC

question

The short run is a period of time in which

answer

the quantity used of at least one resource is fixed

question

Total cost is the sum of fixed costs and

answer

variable costs

question

Total revenue equals

answer

market price multiplied by quantity sold

question

Total revenue minus the sum of implicit and explicit costs is equal to ________ profit.

answer

economic

question

Total variable cost is the sum of all

answer

costs that rise as output increases

question

When producers agree to restrict output, raise the price, and increase profits, the agreement is called ________.

answer

a collusive agreement

question

Which characteristic is associated with monopolistic competition?

answer

product differentiation

question

Which of the following groups lists the four factors (inputs) of production?

answer

labor, capital, land, entrepreneurship

question

Which of the following is part of the market structure for monopolistic competition?

answer

Both answers B and C are correct

question

Which of the following is true for BOTH monopoly and perfect competition?

answer

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?

answer

Whether to enter or exit an industry.

question

Which of the following statements is true?

answer

A perfectly competitive industry produces more output and charges a lower price than a single-price monopoly.

question

Which two auctions are strategically equivalent?

answer

1st price sealed-bid and descending

question

________ is a group of firms that have made a collusive agreement

answer

A cartel

question

answer

Dr. Jones should advertise no matter what Dr. Smith does.

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Econ Chapters 6-10

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