Micro Exam 3

question

In a perfectly competitive market, the price of the good or service is determined by

answer

market supply and market demand

question

A firm operates in a perfectly competitive industry. At the current level of output, the marginal cost is $26 and the average cost is $23. If the firm can sell its product for $25, the

answer

Firm should decrease its output

question

Based on the table, what is the profit-maximizing output for John's Tricycle Company?

answer

8 Units

question

Based on the table, what is total revenue for John's Tricycle Company if it produces at its profit maximizing output?

answer

12,000

question

Given the information from the figure, if price equals $0.40, the firm should

answer

Shut down in the short run because it will minimize its loss

question

The profit-maximizing output for this firm is _____ units

answer

question

The firm's marginal revenue is

answer

question

The marginal cost of producing the fifty-seventh unit

answer

question

A firm will stop all production when the market price falls below

answer

Average variable cost curve

question

In the short run, a perfectly competitive firm will continue to produce even though it might experience an economic loss if

answer

The market price exceeds the average variable cost

question

Market power means the ability to

answer

Have some control over price

question

In the United States, patents are usually granted for what amount of time?

answer

20 years

question

A natural monopoly could possibly arise when

answer

there are large economies of scale relative to the industry's demand

question

Which of these is NOT true about the demand curve of a monopolist?

answer

The demand curve is perfectly elastic

question

Based on the graph, what is the equilibrium price for this monopolist?

answer

$30

question

For both the monopolist and the perfectly competitive firm, profit is maximized at the level of output where

answer

MR = MC

question

Ticketmaster's flexible pricing model allows it to charge a higher or lower price for tickets based on

answer

Shifts in demand

question

If Coconut Joe's offers lower drink prices to women on Ladies Night, it is engaging in ____ price discrimination

answer

Third-Degree

question

Which of these is the BEST example of a natural monopoly?

answer

A residential gas utility company

question

The principle measure of concentration used by the Justice Department to evaluate mergers and judge market power is the

answer

Herfindahl-Hirschman Index

question

A Nash Equilibrium

answer

assumes that each player chooses his or her best strategy

question

In the payoff matrix, two possible pricing strategies for one 12-pack of Coke and one of Pepsi are shown. The profit payoffs to each firm are also shown, where the top value in each outcome is the profit for Coke. What is the Nash equilibrium?

answer

Both firms charge $4 per 12-pack

question

If an oligopolistic firm decreases its price

answer

total revenue will decrease

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Assume that a monopolistically competitive firm faces the following situation: P = $14; output = 9,000 units; MC = $11; ATC = $10; AVC = $7; and MR = $11. Which statement is correct regarding profit maximization?

answer

The firm is maximizing profit

question

Based on the graph, under monopolistic competition, the price for this good or service will be

answer

question

If a monopolistically competitive firm is earning a normal profit, it

answer

Can expect to see about the same amount of competition in the future

question

Which characteristic does monopolistic competition NOT have in common with perfect competition?

answer

Products of individual firms are differentiated

question

In a kinked demand curve model, competitors _____ by a rival firm.

answer

Ignore any price increase and match any price decrease

question

When firms in a market offer to "match any lower price offered by any competitor" but do not match price increases, then

answer

This indicates that firms in this market may face kinked demand curves.

question

Game theory is commonly used to explain firm pricing decisions in a(n)

answer

Oligopoly

1 of 30

question

In a perfectly competitive market, the price of the good or service is determined by

answer

market supply and market demand

question

A firm operates in a perfectly competitive industry. At the current level of output, the marginal cost is $26 and the average cost is $23. If the firm can sell its product for $25, the

answer

Firm should decrease its output

question

Based on the table, what is the profit-maximizing output for John's Tricycle Company?

answer

8 Units

question

Based on the table, what is total revenue for John's Tricycle Company if it produces at its profit maximizing output?

answer

12,000

question

Given the information from the figure, if price equals $0.40, the firm should

answer

Shut down in the short run because it will minimize its loss

question

The profit-maximizing output for this firm is _____ units

answer

question

The firm's marginal revenue is

answer

question

The marginal cost of producing the fifty-seventh unit

answer

question

A firm will stop all production when the market price falls below

answer

Average variable cost curve

question

In the short run, a perfectly competitive firm will continue to produce even though it might experience an economic loss if

answer

The market price exceeds the average variable cost

question

Market power means the ability to

answer

Have some control over price

question

In the United States, patents are usually granted for what amount of time?

answer

20 years

question

A natural monopoly could possibly arise when

answer

there are large economies of scale relative to the industry's demand

question

Which of these is NOT true about the demand curve of a monopolist?

answer

The demand curve is perfectly elastic

question

Based on the graph, what is the equilibrium price for this monopolist?

answer

$30

question

For both the monopolist and the perfectly competitive firm, profit is maximized at the level of output where

answer

MR = MC

question

Ticketmaster's flexible pricing model allows it to charge a higher or lower price for tickets based on

answer

Shifts in demand

question

If Coconut Joe's offers lower drink prices to women on Ladies Night, it is engaging in ____ price discrimination

answer

Third-Degree

question

Which of these is the BEST example of a natural monopoly?

answer

A residential gas utility company

question

The principle measure of concentration used by the Justice Department to evaluate mergers and judge market power is the

answer

Herfindahl-Hirschman Index

question

A Nash Equilibrium

answer

assumes that each player chooses his or her best strategy

question

answer

Both firms charge $4 per 12-pack

question

If an oligopolistic firm decreases its price

answer

total revenue will decrease

question

answer

The firm is maximizing profit

question

Based on the graph, under monopolistic competition, the price for this good or service will be

answer

question

If a monopolistically competitive firm is earning a normal profit, it

answer

Can expect to see about the same amount of competition in the future

question

Which characteristic does monopolistic competition NOT have in common with perfect competition?

answer

Products of individual firms are differentiated

question

In a kinked demand curve model, competitors _____ by a rival firm.

answer

Ignore any price increase and match any price decrease

question

When firms in a market offer to "match any lower price offered by any competitor" but do not match price increases, then

answer

This indicates that firms in this market may face kinked demand curves.

question

Game theory is commonly used to explain firm pricing decisions in a(n)

answer

Oligopoly

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Micro Exam 3

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