Micro economics Final Exam

question

A firm's decision to leave a market

answer

Cannot be made in the short run

question

Which of the following will NOT shift the short-run supply curve for a
competitive firm?

answer

A change in the price of the good

question

Refer to the graph above. If Company B is currently producing 35,000 units of
output, its profit is approximately equal to

answer

$385,000

question

Magical Bunnies, Inc, sold 500 magical bunnies last quarter. It sold each of these magical bunnies for $200. What is the total revenue Magical Bunnies earned last

quarter?

answer

$100,000

question

A firm's per-unit profit is equal to its total profit when

answer

the quantity produced is equal to 1.

question

Which of the following products is most likely to experience the greatest competition within its industry?

answer

Bottled water

question

Refer to the graph above. What is the price of this firm's product?

answer

$20

question

A company that imports bananas faces a market price of $0.58 per pound of bananas. If the company's marginal cost per pound of bananas is $0.52.

answer

the firm should increase its output to maximize its profit.

question

Magical Bunnies, Inc, knows that its marginal cost curve intersects its average

total cost curve at $150. Which of the following is true?

answer

There is not enough information to determine the output Magical Bunnies will produce.

question

Refer to the graph above. Assume that Company A is in a perfectly competitive market. If the price for the good being produced by Company A is $80,

answer

Company A must take a loss in the short run.

question

High profits in a competitive industry

answer

All of these

question

Which of the following explains why profits tend toward zero in perfectly competitive markets?

answer

The presence of economic profits attracts new firms, who can quickly and easily enter the market and contribute to the market supply.

question

When a firm shuts down,

answer

it produces zero output and pays only its fixed costs.

question

What causes producers to produce efficiently and produce what consumers
want to buy?

answer

The profit motive

question

Which of the following is NOT true when new firms enter a market, ceteris

paribus?

answer

A lower price causes an increase in demand for the product.

question

In the context of competitive markets, the market mechanism

answer

conveys consumer desires about goods and services to producers and

opportunity costs of production to consumers.

question

When the price of a good is greater than the long-run ATC of the firms that produce it,

answer

All of these

question

A firm should shut down when

answer

profits cannot at least equal average variable costs.

question

Which of the following is true?

answer

The accounting profit of firms in perfectly competitive markets may be

positive.

question

Perfectly competitive firms maximize profit per unit.

answer

False

question

Suppose the long-run perfectly competitive equilibrium output in a product market would be 18,000 units per week. If that market were a monopoly, we would expect that

answer

the equilibrium output would be less than 18,000 units per week.

question

A monopolist maximizes profits by minimizing costs.

answer

False

question

If a monopolist's profit is equal to $1.5 million and its total costs equal $800,000, what is its total revenue equal to?

answer

$2.3 million

question

Suppose that when a monopolist charges $12 for its product, it sells 150,000 units per week, and when it charges $15, it sells 110,000 units per week. What is the price elasticity of demand in this market in the range of $12 to $15? (Use

the midpoint technique.)

answer

1.38

question

Which of the following is an example of price discrimination?

answer

An auto dealership negotiates a lower price with a potential customer who is

unwilling to pay the ticket price for a car.

question

In the graph above, at what point will the monopolist produce?

answer

question

A contestable market is one in which

answer

an imperfectly competitive market behaves like a more competitive market due to the threat of entry by potential competitors.

question

Which of the following can be a positive social result of a monopoly?

answer

A monopolist might have the means to develop new technologies that would

otherwise be too expensive to research.

question

A monopolist maximizes

answer

Total Profit

question

The equilibrium quantity of a product sold in a monopoly is determined by

answer

Supply and demand

question

In the short run, a monopolist makes a(n)____________________decision.

answer

Production

question

When an industry has significant barriers to entry

answer

it is less competitive than an industry with lower barriers to entry.

question

Which of the following could be a barrier to entry into a market?

answer

Government-enforced patents

question

When an industry is a monopoly, the market demand curve

answer

is equal to the demand curve faced by the monopolist.

question

In general, monopolists are able to capture more consumer surplus than producers in other markets.

answer

True

question

Total profit is equal to

answer

total revenue minus total cost

question

Given the information above, which of the following is true?

answer

At a price of $20, marginal revenue is equal to $9.31.

question

When economies of scale create such high barriers to entry that only one producer is present in a market, it's called

answer

A natural monopoly.

question

Which of the following is true

answer

A monopolist maximizes profits when it produces where marginal revenue equals marginal cost.

question

The monopolist's marginal revenue curve

answer

lies below the demand curve

question

An oligopoly can only exist if a limited number of firms participate in the market.

answer

False

question

Given the payoff matrix below, what outcome is most likely when firm A reduces its price?

answer

Firm B loses $65,000

question

Which of the following is a major concern about imperfect competition?

answer

The economy may not be allocatively efficient.

question

When firms have market power, consumers may be better off than if firms had no market power.

answer

True

question

Which of the following products is most likely to not be produced in an oligopoly market structure?

answer

Blueberries

question

Oligopolists are likely to engage in nonprice competition because

answer

The most likely outcome of price competition is losses for all of the

oligopolists.

question

Which of the following is a reason why an oligopoly might occur?

answer

Patents for the most cost-efficient production processes are owned by a few large firms.

question

Which of the following is not true?

answer

Oligopolists have no control over the price at which their product is sold.

question

The demand curve faced by an oligopolist when competitors match its price changes is more inelastic with respect to price than the demand curve it faces when competitors don't match its price changes.

answer

True

question

In game theory, a typical payoff matrix shows

answer

behavior options for the relevant participants and their payoffs.

question

In an oligopoly, the market outcome for consumers is usually

answer

similar to the market outcome they would face under a monopoly.

question

Suppose that a major credit card company starts advertising that they offer a card with increased cashback rewards for shopping online. This is an

example of

answer

Nonprice competition

question

Compared to a situation in which a market is not contestable, an oligopoly that faces a contestable market

answer

Behaves more competitively

question

When the expected value of the payoff from a price cut is positive,

answer

The firm should reduce its price

question

The market share of a firm is best calculated using

answer

The revenues of the firm

question

Compared to a perfectly competitive market, an oligopoly exhibits

answer

All of these

question

Suppose that a climate-change protest results in a state government imposing stricter regulations on the producers of a product who operate

within their state. Which of the following is least likely to happen?

answer

Firms become more likely to compete with their rivals using price cuts.

question

Advertising helps an oligopolist increase its market share by

answer

increasing consumer awareness of product differentiation.

question

Consider the following scenario.

An oligopolist firm is considering whether to reduce the price of its product. It knows that if its rivals don't match its price cut, its profits will increase by $2.5 million. However, if its rivals do match its price cut, it will take a loss of $95,000. Based on past market outcomes and its limited knowledge of its rivals' pricing strategy, the firm believes that it's about 88% likely that its competitors will mätch its price cut.

What is this firm's expected payoff from reducing its price?

answer

$466,400

question

In the United States, it is legal for oligopolists to explicitly agree on what price they will charge for their products.

answer

False

question

In a monopolistically competitive market, when new firms enter the market,

answer

the demand curves faced by the firms shift left, while the market demand

curve stays the same.

question

In the graph above, what quantity of output maximizes the firm's profit?

answer

Idk(Q2)

question

Product differentiation

answer

All of these

question

Which of the following is a feature of BOTH perfect competition and monopolistic competition?

answer

There are many suppliers in the market

question

In monopolistic competition

answer

Outcomes are often not allocatively efficient

question

The firm depicted in the graph above

answer

Is earning positive economic profits

question

A firm in a monopolistically-competitive market

answer

faces a downward-sloping demand curve for its product.

question

Which of the following is a feature of NEITHER perfect competition and monopolistic competition?

answer

Highly-concentrated market power

question

Which of the following is least likely to be a monopolistically competitive market?

answer

The market for custom artificial-intelligence software for functional prosthetics.

question

Which of the following is least likely to affect the market share of a firm in a monopolistically competitive market?

answer

Strategic interdependence among producers in the market.

question

Which of the following is an example of market failure?

answer

A hurricane destroys oranges in south florida

question

What are the 4 factors of production?

answer

Labor, land, capital, entrepreneurship

question

One implication of the law of diminishing marginal return is?

answer

The eventually, short- run constraints will make hiring more units of labor less profitable.

question

Economic costs

answer

represents all costs of production even those that are not measured in currency

question

When a firm faces a downward-sloping individual demand..

answer

its marginal revenue curve lies below its demand curve

question

Ceteris Paribus, a change in price causes a change in supply

answer

True

question

If the price elasticity of demand is 1.8, this means

answer

The percent change in demand is 1.8 times greater than the percent change in the price

question

Which of the following is true about scarcity?

answer

Scarcity forces people to make economic decisions

question

If the cross-price elasticity of demand of two goods is negative, this means

answer

the goods are substitutes

question

If a firm minimizes its costs, its the same as maximizing profits.

answer

False

question

The market share of a firm is best calculated using

answer

The revenues of a firm

question

The equilibrium wage

answer

is determined by labor supply and labor demand

1 of 82

question

A firm's decision to leave a market

answer

Cannot be made in the short run

question

Which of the following will NOT shift the short-run supply curve for a
competitive firm?

answer

A change in the price of the good

question

Refer to the graph above. If Company B is currently producing 35,000 units of
output, its profit is approximately equal to

answer

$385,000

question

Magical Bunnies, Inc, sold 500 magical bunnies last quarter. It sold each of these magical bunnies for $200. What is the total revenue Magical Bunnies earned last

quarter?

answer

$100,000

question

A firm's per-unit profit is equal to its total profit when

answer

the quantity produced is equal to 1.

question

Which of the following products is most likely to experience the greatest competition within its industry?

answer

Bottled water

question

Refer to the graph above. What is the price of this firm's product?

answer

$20

question

A company that imports bananas faces a market price of $0.58 per pound of bananas. If the company's marginal cost per pound of bananas is $0.52.

answer

the firm should increase its output to maximize its profit.

question

Magical Bunnies, Inc, knows that its marginal cost curve intersects its average

total cost curve at $150. Which of the following is true?

answer

There is not enough information to determine the output Magical Bunnies will produce.

question

Refer to the graph above. Assume that Company A is in a perfectly competitive market. If the price for the good being produced by Company A is $80,

answer

Company A must take a loss in the short run.

question

High profits in a competitive industry

answer

All of these

question

Which of the following explains why profits tend toward zero in perfectly competitive markets?

answer

The presence of economic profits attracts new firms, who can quickly and easily enter the market and contribute to the market supply.

question

When a firm shuts down,

answer

it produces zero output and pays only its fixed costs.

question

What causes producers to produce efficiently and produce what consumers
want to buy?

answer

The profit motive

question

Which of the following is NOT true when new firms enter a market, ceteris

paribus?

answer

A lower price causes an increase in demand for the product.

question

In the context of competitive markets, the market mechanism

answer

conveys consumer desires about goods and services to producers and

opportunity costs of production to consumers.

question

When the price of a good is greater than the long-run ATC of the firms that produce it,

answer

All of these

question

A firm should shut down when

answer

profits cannot at least equal average variable costs.

question

Which of the following is true?

answer

The accounting profit of firms in perfectly competitive markets may be

positive.

question

Perfectly competitive firms maximize profit per unit.

answer

False

question

Suppose the long-run perfectly competitive equilibrium output in a product market would be 18,000 units per week. If that market were a monopoly, we would expect that

answer

the equilibrium output would be less than 18,000 units per week.

question

A monopolist maximizes profits by minimizing costs.

answer

False

question

If a monopolist's profit is equal to $1.5 million and its total costs equal $800,000, what is its total revenue equal to?

answer

$2.3 million

question

the midpoint technique.)

answer

1.38

question

Which of the following is an example of price discrimination?

answer

An auto dealership negotiates a lower price with a potential customer who is

unwilling to pay the ticket price for a car.

question

In the graph above, at what point will the monopolist produce?

answer

question

A contestable market is one in which

answer

an imperfectly competitive market behaves like a more competitive market due to the threat of entry by potential competitors.

question

Which of the following can be a positive social result of a monopoly?

answer

A monopolist might have the means to develop new technologies that would

otherwise be too expensive to research.

question

A monopolist maximizes

answer

Total Profit

question

The equilibrium quantity of a product sold in a monopoly is determined by

answer

Supply and demand

question

In the short run, a monopolist makes a(n)____________________decision.

answer

Production

question

When an industry has significant barriers to entry

answer

it is less competitive than an industry with lower barriers to entry.

question

Which of the following could be a barrier to entry into a market?

answer

Government-enforced patents

question

When an industry is a monopoly, the market demand curve

answer

is equal to the demand curve faced by the monopolist.

question

In general, monopolists are able to capture more consumer surplus than producers in other markets.

answer

True

question

Total profit is equal to

answer

total revenue minus total cost

question

Given the information above, which of the following is true?

answer

At a price of $20, marginal revenue is equal to $9.31.

question

When economies of scale create such high barriers to entry that only one producer is present in a market, it's called

answer

A natural monopoly.

question

Which of the following is true

answer

A monopolist maximizes profits when it produces where marginal revenue equals marginal cost.

question

The monopolist's marginal revenue curve

answer

lies below the demand curve

question

An oligopoly can only exist if a limited number of firms participate in the market.

answer

False

question

Given the payoff matrix below, what outcome is most likely when firm A reduces its price?

answer

Firm B loses $65,000

question

Which of the following is a major concern about imperfect competition?

answer

The economy may not be allocatively efficient.

question

When firms have market power, consumers may be better off than if firms had no market power.

answer

True

question

Which of the following products is most likely to not be produced in an oligopoly market structure?

answer

Blueberries

question

Oligopolists are likely to engage in nonprice competition because

answer

The most likely outcome of price competition is losses for all of the

oligopolists.

question

Which of the following is a reason why an oligopoly might occur?

answer

Patents for the most cost-efficient production processes are owned by a few large firms.

question

Which of the following is not true?

answer

Oligopolists have no control over the price at which their product is sold.

question

answer

True

question

In game theory, a typical payoff matrix shows

answer

behavior options for the relevant participants and their payoffs.

question

In an oligopoly, the market outcome for consumers is usually

answer

similar to the market outcome they would face under a monopoly.

question

Suppose that a major credit card company starts advertising that they offer a card with increased cashback rewards for shopping online. This is an

example of

answer

Nonprice competition

question

Compared to a situation in which a market is not contestable, an oligopoly that faces a contestable market

answer

Behaves more competitively

question

When the expected value of the payoff from a price cut is positive,

answer

The firm should reduce its price

question

The market share of a firm is best calculated using

answer

The revenues of the firm

question

Compared to a perfectly competitive market, an oligopoly exhibits

answer

All of these

question

Suppose that a climate-change protest results in a state government imposing stricter regulations on the producers of a product who operate

within their state. Which of the following is least likely to happen?

answer

Firms become more likely to compete with their rivals using price cuts.

question

Advertising helps an oligopolist increase its market share by

answer

increasing consumer awareness of product differentiation.

question

Consider the following scenario.

What is this firm's expected payoff from reducing its price?

answer

$466,400

question

In the United States, it is legal for oligopolists to explicitly agree on what price they will charge for their products.

answer

False

question

In a monopolistically competitive market, when new firms enter the market,

answer

the demand curves faced by the firms shift left, while the market demand

curve stays the same.

question

In the graph above, what quantity of output maximizes the firm's profit?

answer

Idk(Q2)

question

Product differentiation

answer

All of these

question

Which of the following is a feature of BOTH perfect competition and monopolistic competition?

answer

There are many suppliers in the market

question

In monopolistic competition

answer

Outcomes are often not allocatively efficient

question

The firm depicted in the graph above

answer

Is earning positive economic profits

question

A firm in a monopolistically-competitive market

answer

faces a downward-sloping demand curve for its product.

question

Which of the following is a feature of NEITHER perfect competition and monopolistic competition?

answer

Highly-concentrated market power

question

Which of the following is least likely to be a monopolistically competitive market?

answer

The market for custom artificial-intelligence software for functional prosthetics.

question

Which of the following is least likely to affect the market share of a firm in a monopolistically competitive market?

answer

Strategic interdependence among producers in the market.

question

Which of the following is an example of market failure?

answer

A hurricane destroys oranges in south florida

question

What are the 4 factors of production?

answer

Labor, land, capital, entrepreneurship

question

One implication of the law of diminishing marginal return is?

answer

The eventually, short- run constraints will make hiring more units of labor less profitable.

question

Economic costs

answer

represents all costs of production even those that are not measured in currency

question

When a firm faces a downward-sloping individual demand..

answer

its marginal revenue curve lies below its demand curve

question

Ceteris Paribus, a change in price causes a change in supply

answer

True

question

If the price elasticity of demand is 1.8, this means

answer

The percent change in demand is 1.8 times greater than the percent change in the price

question

Which of the following is true about scarcity?

answer

Scarcity forces people to make economic decisions

question

If the cross-price elasticity of demand of two goods is negative, this means

answer

the goods are substitutes

question

If a firm minimizes its costs, its the same as maximizing profits.

answer

False

question

The market share of a firm is best calculated using

answer

The revenues of a firm

question

The equilibrium wage

answer

is determined by labor supply and labor demand

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Micro economics Final Exam

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