econ test unit 4

Q: which of the following is true? a. a monopoly is a price maker b. MR=P if the demand curve is downward sloping c. MR=MC is a profit maximizing rule for firms in perfect competition only d. monopolies tend to charge lower prices than perfectly competitive firms e. a monopoly firm cannot earn long-run profits due to barriers to entry

a monopoly firm is a price maker

Q: the monopoly firm's profit-maximizing price is:

given by the point on the demand curve for the profit maximizing quantity

Q: if a monopolists knows, at the firm's current level of output, that its price elasticity of demand is greater than one, then a

decrease in price will increase total revenue

Q: a natural monopoly is one that

has increasing returns to scale over the entire relevant range of output.

Q: roduce too much and charge too little which of the following is true regarding monopolies? a. monopolies produce too much and charge too much from the standpoint of efficiency b. monopolies usually are economically efficient because they have economic profits with which to work c. monopolies produce too little and charge too much from the standpoint of efficiency d. monopolies create an efficiency problem but are not associated with an equity problem e. monopolies p

monopolies produce too little and charge too much

Q: a natural monopoly exists when

economies of scale provide large cost advantages to having one firm produce the industry's output.

Q: price discrimination is the practice of

charging different prices to buyers of the same good

Q: firms will seek a price structure that offers customers with a ___ demand a ___ price and offers customers with a ___ demand a ___ price

less elastic; higher; more elastic; lower

Q: to practice effective price discrimination, a monopolist must be able to

prevent the resale of goods among buyers

question

after the first unit is sold, the marginal revenue a monopolist receives from selling one more unit of a good is less than the price at which that unit is sold because of:

answer

a downward-sloping demand cure

question

suppose a monopoly is producing the level of output where marginal revenue equals marginal cost. if the monopolist reduces output, it:

answer

can charge a higher price

question

a monopoly responds to a decrease in marginal cost by ___ price and ___ output

answer

decreasing; increasing

question

if a change in fixed cost raises average total cost above the demand curve:

answer

price and output will remain unchanged in the short run

question

in the short run, a monopoly will stop producing if:

answer

P<AVC

question

in a monopoly in the long run

answer

entry will not occur

question

which of the following is true?
a. a monopoly is a price maker
b. MR=P if the demand curve is downward sloping
c. MR=MC is a profit maximizing rule for firms in perfect competition only
d. monopolies tend to charge lower prices than perfectly competitive firms
e. a monopoly firm cannot earn long-run profits due to barriers to entry

answer

a monopoly firm is a price maker

question

the monopoly firm's profit-maximizing price is:

answer

given by the point on the demand curve for the profit maximizing quantity

question

if a monopolists knows, at the firm's current level of output, that its price elasticity of demand is greater than one, then a

answer

decrease in price will increase total revenue

question

a natural monopoly is one that

answer

has increasing returns to scale over the entire relevant range of output.

question

roduce too much and charge too little which of the following is true regarding monopolies?
a. monopolies produce too much and charge too much from the standpoint of efficiency
b. monopolies usually are economically efficient because they have economic profits with which to work
c. monopolies produce too little and charge too much from the standpoint of efficiency
d. monopolies create an efficiency problem but are not associated with an equity problem
e. monopolies p

answer

monopolies produce too little and charge too much

question

if fixed costs result in ATC falling as output increases, this industry is referred to as a

answer

natural monopoly

question

a natural monopoly exists when

answer

economies of scale provide large cost advantages to having one firm produce the industry's output.

question

price discrimination is the practice of

answer

charging different prices to buyers of the same good

question

the practice of selling the same product at different prices in different markets, without corresponding differents in costs is:

answer

price discrimination

question

firms will seek a price structure that offers customers with a ___ demand a ___ price and offers customers with a ___ demand a ___ price

answer

less elastic; higher; more elastic; lower

question

the municipal swimming pool charges lower entrance fees to local residents that to nonresidents. assuming that this pricing strategy increases the profits of the pool, we can conclude that nonresidents much have ___ for swimming at the pool than residents

answer

less elastic demand

question

If a firm wants to charge different customers different prices, it must be:

answer

a price setter

question

to practice effective price discrimination, a monopolist must be able to

answer

prevent the resale of goods among buyers

question

___ is the practice of selling ___ at different prices in different markets, without corresponding differences in costs

answer

price discrimination; the same product

question

if a monopolists can engage in perfect price discrimination, thenm

answer

it produces at the socially efficient level

question

when firms price discriminate, people with___ price elasticity of demand will pay ____ prices relative to those individuals purchasing the same product who have relatively ___ price elasticity of demand

answer

lower; higher; higher

question

A Japanese steel firm sells steel in the United States and in Japan. Since the United States buys steel from a number of different sources the US demand for Japanese steel is more price elastic than the Japanese demand for Japanese steel at the Japanese steel firm wishes to maximize its profits it should

answer

charge a lower price in the United States and a higher price in Japan

question

all of the following are examples of price discrimination except
a. discounts for senior citizens at the movies
b. discounts for families with young children at motels
c. generally lower prices at Walmart then at target
d. cheaper airfare is if the trailer stays over a Saturday
e. discounts for customers who buy products in large bulk quantities

answer

generally lower prices at Walmart then at target

question

Oligopoly is a market structure characterized by

answer

strategic behavior between rival firms.

question

The market structure that is characterized by only a small number of producers is referred to as

answer

oligopoly

question

An industry with two firms producing is generally called:

answer

duopoly

question

An extreme case of oligopoly in which firms collude to raise joint profits is known as a:

answer

cartel

question

Collusive agreements are typically difficult for cartels to maintain because each firm can increase profits by:

answer

producing more output than the quantity that maximizes joint cartel profits.

question

A cartel is an example of

answer

overt collusion

question

Overt collusion

answer

When firms openly agree on price, output, and other decisions aimed at achieving monopoly profits.

question

tactic collusion

answer

When firms charge the same price without any formal agreement

question

An action is a dominant strategy when it is a player's best action:

answer

regardless of the actions by other players

question

An analytical framework used in the analysis of strategic choices is

answer

game theory

question

By practicing ______, firms openly agree on price and output, and other decisions in order to achieve monopoly profits.

answer

overt collusion

question

if the only two firms in an industry openly agreed to fix a price at a given level then this is an example of

answer

over collision

question

Microsoft sets prices for their new line of computers and rivals such as Dell and HP fallout. This practice is known as

answer

Price leadership

question

price leadership

answer

one firm sets its price first, and other firms then follow

question

Two rival firms vigorously compete by spending millions of dollars on product improvements and advertising to remote those improvements. This is an example of firms engaging in

answer

Nonprice competition

question

nonprice competition

answer

a way to attract customers through style, service, or location, but not a lower price

question

Cournot competition

answer

each firm competes in quantity

question

if rival gas stations in Reno limit production and ___ prices in a way that increases their profits without meaning with One another in a formal way this is known as ____ collusion

answer

raise; tacit

question

Gary's gas and Franks fuel are the only two providers of gasoline in small town Gary summarizes his pricing strategies as I'll do Frank what Frank did to me last time this is an example of

answer

tit for tat strategy

question

suppose a monopolistically competitive firm is producing the profit maximizing level of output and his earning an economic profit in the short run then

answer

marginal revenue equals marginal cost

question

Suppose a monopolistically competitive firm is making a profit but it can increase its profits by increasing output then it must be the case that at the current level of output

answer

marginal revenue is greater than marginal cost

question

The profit maximizing ruyle MC = MR is followed by firms nder

answer

both monopolistic competition and perfect competition

question

Assume that a firm under monopolistic competition is producing a quantity that generates MC = MR. In this case we can assume that profit

answer

Is maximized

question

firm x is a typical firm in a market characterized by the model of monopolistic competition. If the market is in long run equilibrium then the price firm x charges for its services would

answer

equals average total cost

question

In the long run perfect competitors and monopolistic competitors are similar in that they

answer

Produce an output level at which P = ATC

question

Defenders of advertising argue that it:

answer

provides education and information about products.

1 of 50

question

after the first unit is sold, the marginal revenue a monopolist receives from selling one more unit of a good is less than the price at which that unit is sold because of:

answer

a downward-sloping demand cure

question

suppose a monopoly is producing the level of output where marginal revenue equals marginal cost. if the monopolist reduces output, it:

answer

can charge a higher price

question

a monopoly responds to a decrease in marginal cost by ___ price and ___ output

answer

decreasing; increasing

question

if a change in fixed cost raises average total cost above the demand curve:

answer

price and output will remain unchanged in the short run

question

in the short run, a monopoly will stop producing if:

answer

P<AVC

question

in a monopoly in the long run

answer

entry will not occur

question

answer

a monopoly firm is a price maker

question

the monopoly firm's profit-maximizing price is:

answer

given by the point on the demand curve for the profit maximizing quantity

question

if a monopolists knows, at the firm's current level of output, that its price elasticity of demand is greater than one, then a

answer

decrease in price will increase total revenue

question

a natural monopoly is one that

answer

has increasing returns to scale over the entire relevant range of output.

question

answer

monopolies produce too little and charge too much

question

if fixed costs result in ATC falling as output increases, this industry is referred to as a

answer

natural monopoly

question

a natural monopoly exists when

answer

economies of scale provide large cost advantages to having one firm produce the industry's output.

question

price discrimination is the practice of

answer

charging different prices to buyers of the same good

question

the practice of selling the same product at different prices in different markets, without corresponding differents in costs is:

answer

price discrimination

question

firms will seek a price structure that offers customers with a ___ demand a ___ price and offers customers with a ___ demand a ___ price

answer

less elastic; higher; more elastic; lower

question

answer

less elastic demand

question

If a firm wants to charge different customers different prices, it must be:

answer

a price setter

question

to practice effective price discrimination, a monopolist must be able to

answer

prevent the resale of goods among buyers

question

___ is the practice of selling ___ at different prices in different markets, without corresponding differences in costs

answer

price discrimination; the same product

question

if a monopolists can engage in perfect price discrimination, thenm

answer

it produces at the socially efficient level

question

answer

lower; higher; higher

question

answer

charge a lower price in the United States and a higher price in Japan

question

answer

generally lower prices at Walmart then at target

question

Oligopoly is a market structure characterized by

answer

strategic behavior between rival firms.

question

The market structure that is characterized by only a small number of producers is referred to as

answer

oligopoly

question

An industry with two firms producing is generally called:

answer

duopoly

question

An extreme case of oligopoly in which firms collude to raise joint profits is known as a:

answer

cartel

question

Collusive agreements are typically difficult for cartels to maintain because each firm can increase profits by:

answer

producing more output than the quantity that maximizes joint cartel profits.

question

A cartel is an example of

answer

overt collusion

question

Overt collusion

answer

When firms openly agree on price, output, and other decisions aimed at achieving monopoly profits.

question

tactic collusion

answer

When firms charge the same price without any formal agreement

question

An action is a dominant strategy when it is a player's best action:

answer

regardless of the actions by other players

question

An analytical framework used in the analysis of strategic choices is

answer

game theory

question

By practicing ______, firms openly agree on price and output, and other decisions in order to achieve monopoly profits.

answer

overt collusion

question

if the only two firms in an industry openly agreed to fix a price at a given level then this is an example of

answer

over collision

question

Microsoft sets prices for their new line of computers and rivals such as Dell and HP fallout. This practice is known as

answer

Price leadership

question

price leadership

answer

one firm sets its price first, and other firms then follow

question

Two rival firms vigorously compete by spending millions of dollars on product improvements and advertising to remote those improvements. This is an example of firms engaging in

answer

Nonprice competition

question

nonprice competition

answer

a way to attract customers through style, service, or location, but not a lower price

question

Cournot competition

answer

each firm competes in quantity

question

if rival gas stations in Reno limit production and ___ prices in a way that increases their profits without meaning with One another in a formal way this is known as ____ collusion

answer

raise; tacit

question

Gary's gas and Franks fuel are the only two providers of gasoline in small town Gary summarizes his pricing strategies as I'll do Frank what Frank did to me last time this is an example of

answer

tit for tat strategy

question

suppose a monopolistically competitive firm is producing the profit maximizing level of output and his earning an economic profit in the short run then

answer

marginal revenue equals marginal cost

question

Suppose a monopolistically competitive firm is making a profit but it can increase its profits by increasing output then it must be the case that at the current level of output

answer

marginal revenue is greater than marginal cost

question

The profit maximizing ruyle MC = MR is followed by firms nder

answer

both monopolistic competition and perfect competition

question

Assume that a firm under monopolistic competition is producing a quantity that generates MC = MR. In this case we can assume that profit

answer

Is maximized

question

firm x is a typical firm in a market characterized by the model of monopolistic competition. If the market is in long run equilibrium then the price firm x charges for its services would

answer

equals average total cost

question

In the long run perfect competitors and monopolistic competitors are similar in that they

answer

Produce an output level at which P = ATC

question

Defenders of advertising argue that it:

answer

provides education and information about products.

Continue to order Get a quote

econ test unit 4

Recent Posts

Recent Comments

Calculate the price of your order

Our guarantees

Money-back guarantee

Zero-plagiarism guarantee

Free-revision policy

Privacy policy

Fair-cooperation guarantee