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microecon final

question
An unregulated, single-price monopoly is shown in the figure above. If fixed cost is $20, the monopoly's total costs when it is maximizing its profit will be
answer
$80
question
Based on the above figure of the costs at Barney's Bagel Bakery, at which level of output will diminishing marginal returns first occur?
answer
at 500 bagels
question
If marginal revenue exceeds marginal cost, to increase its profit the firm should
answer
Increase its output
question
Consider the perfectly competitive firm in the above figure. At the profit maximizing level of output, the firm is
answer
incurring an economic loss equal to $119.00
question
A monopoly's marginal revenue is equal to the market price of its product.
answer
false
question
The maximum total economic profit that can be made by colluding duopolists
answer
equals the economic profit made by a monopolist.
question
The main purpose of antitrust law is to
answer
prohibit monopoly practices such as restricting output.
question
All of the following are examples of price discrimination EXCEPT
answer
"buy now, pay later" payment options.
question
Fresh Taste, Inc. produces organic breakfast cereals. The market for breakfast cereals is monopolistically competitive. The figure above shows the demand curve that Fresh Taste faces ( D), the company's marginal revenue curve ( MR), its marginal cost curve ( MC), and its average total cost curve ( ATC). Fresh Taste's excess capacity is
answer
4,000 boxes per day
question
In the long run, monopolistically competitive firms can make an economic profit because of product differentiation.
answer
false
question
An attempt by a firm to create a monopoly and gain the economic profit from the monopoly is called
answer
rent seeking
question
A firm's average total cost is $80, its fixed cost is $1000, and its output is 100 units. Its average variable cost
answer
more than $60
question
Carol's Candies is producing 150 boxes of candy a day. Carol's marginal revenue and marginal cost curves are shown in the figure above. To increase her profit, Carol should
answer
decrease output
question
In the above figure, the monopolistically competitive firm makes an economic profit of
answer
$0
question
Attempts to create a monopoly by having favorable laws passed are examples of rent seeking.
answer
true
question
For a natural monopoly, if price is set equal to marginal cost then the firm incurs an economic loss.
answer
false
question
In the long run, a firm in a monopolistically competitive industry produces where its marginal cost
answer
idk
question
A monopoly that can perfectly price discriminate creates no deadweight loss.
answer
true
question
Use the data in the table above and suppose that labor is the only variable factor of production. If each worker is paid $42.00 per day, what is the average variable cost to Decent Donuts of producing 122 dozen donuts per day?
answer
$2.41
question
Natural oligopoly is a situation where
answer
the level of demand can support only a few firms.
question
In the figure, D is the demand curve for taxi rides in a town, and ATC is the average total cost curve of a taxi company.
answer
Natural Duopoly
question
Dell and Gateway must decide whether to lower their prices, based on the potential economic profits shown in the payoff matrix above. (The profits are in millions of dollars.) In the Nash equilibrium
answer
Both Dell and Gateway lower their costs
question
A market structure in which a small number of firms compete is called
answer
an oligopoly
question
In game theory, a Nash equilibrium is the equilibrium that always yields the best result.
answer
false
question
A firm's markup is the amount by which ________ exceeds ________.
answer
Price; Marginal Cost
question
A group of firms that has entered into a collusive agreement to restrict output and increase prices and profits is called
answer
a cartel
question
In monopolistic competition, barriers to entry give the firms the power to set their price.
answer
false
question
A firm in monopolistic competition can determine what price to charge for its product because of
answer
Product differentiation
question
A monopolistically competitive firm and a monopoly are alike because bothI.face downward sloping demand curves.II.have marginal revenue curves that lie beneath their demand curves.III.can make an economic profit in the long run.
answer
I and II only(Monopoly can make a profit in the long run; monopolistic competition can make a profit in the short-run)
question
A firm is said to have excess capacity when it produces the amount of output
answer
smaller than which minimizes average total cost
question
Firms in monopolistic competition can make an economic profit in the long run.
answer
false (only in short run)
question
Lee, J Brand, Joe's Jeans, Paper Denim & Cloth, Levi's, Wrangler, and many others are all producers of jeans. In what type of market does Lee operate?
answer
monopolistic competition
question
Economies of scale and limited demand can form a natural barrier to entry that can create a natural oligopoly.
answer
true
question
Collusive agreements tend to break apart because the incentive to cheat is so great.
answer
true
question
Firms A and B can conduct research and development (R&D) or not conduct it. R&D is costly but can increase the quality of the product and increase sales. The payoff matrix is the economic profits of the two firms and is given above, where the numbers are millions of dollars. The Nash equilibrium occurs when
answer
Both conduct R&D
question
A single-price monopolist will find when it produces its profit-maximizing amount of output that
answer
price exceeds both marginal cost and revenue
question
In the short run
answer
no firm experiences economies of scale.
question
The figure above shows a monopoly firm's demand curve. If the price and quantity of haircuts move from point t to point u, the monopoly's
answer
total revenue will fall.
question
In the above figure, if D 2 is the original demand curve and the population falls, which price and quantity might result?
answer
point b, with price P1 and quantity Q1
question
Studying the determination of prices in individual markets is primarily a concern of
answer
microeconomics
question
Which of the following statements is TRUE for both a competitive market and a single-price monopoly?
answer
The firm maximizes profit by producing the quantity at which marginal revenue equals marginal cost.
question
If shoes rise in price, the demand curve for shoes ________ and the quantity of shoes demanded ________.
answer
does not shift; decreases
question
Electric utility companies have built larger and larger electric generating stations and, as a result, the long-run average cost of producing each kilowatt hour decreased. This is an example of
answer
economies of scale.
question
A monopolistically competitive firm is similar to
answer
a monopoly in the short run because it can make an economic profit in the short run and is similar to a perfectly competitive firm in the long run because it cannot make a positive economic profit.
question
The above table shows production points on Sweet-Tooth Land's production possibilities frontier. A movement from ________ represents the greatest opportunity cost of increasing cola production.
answer
point B to point A
question
Asian women lag far behind the West in their representation in management level positions. The report by the McKinsley consulting company suggests that there is an opportunity for companies to recruit under-utilized female talent and do well financially as a result. (Source: The Economist, July 7, 2012)The fact that Asian women are currently less likely to be hired as managers is a result of the allocation system using which of the following methods for hiring?
answer
Personal characteristics
question
For prices above the minimum average variable cost, a perfectly competitive firm's supply curve is
answer
same as its marginal curve cost
question
The marginal cost curve
answer
shows the minimum price sellers must receive to produce a unit of a good or service
question
Scarcity requires that people must
answer
make choices
question
Total cost is equal to the
answer
the sum of total fixed cost and total variable cost
question
Consider the straight-line demand curve illustrated in the figure above. At a price of $6, demand is
answer
elastic
question
The price elasticity of demand ________ in value when moving downward along a ________ line demand curve.
answer
falls; straight
question
The table above gives production information for Bob's Baseball Cap Company. Bob's total cost when zero caps are produced is $200 and workers cost $10 per hour. The total cost of producing 30 baseball hats per hour is
answer
$250
question
The table above displays the possible outcomes for Bob and Joe, who have been arrested for armed robbery and car theft. Which of the following is TRUE?
answer
If Bob confesses, Joe should confess
question
The difference between the market price of a new car used by a firm and the market price of the same car one year later is known as
answer
economic depreciation
question
Which area in the above figure equals the consumer surplus under perfect price discrimination?
answer
there is no consumer surplus
question
The income elasticity of demand is defined as the percentage change in
answer
the quantity demanded divided by the percentage change in income
question
Technological efficiency necessarily means producing
answer
without using more inputs than necessary.
question
The prisoners' dilemma has an equilibrium that is
answer
a Nash equilibrium and both players confess.
question
In the above figure, curve b shows the
answer
bottles of soda that people are willing to forgo to get another bicycle
question
The fact that people with higher incomes get to consume more goods and services addresses the ________ part of one of the two big economic questions.
answer
"for whom"
question
Given the budget line in the figure above, the combination of chips that is NOT affordable is
answer
c
question
In the above figure, at point b on the demand curve, a price cut of one dollar will
answer
increase total revenue.
question
Suppose the price of soda is $2 each and the price of a pizza slice is $4 each. Jean maximizes utility and buys only sodas and slices of pizza. If the price of a soda increases to $3 each, Jean's marginal utility per soda
answer
Both will decrease and she'll buy fewer sodas and will decrease and she'll buy more pizza are correct.
question
A consumer has maximized his or her utility by consuming
answer
so that the ratio of marginal utility to price is the same for all goods consumed
question
Which of the following is CORRECT? Factors of production are
answer
the inputs used to produce goods and services.
question
Natural monopolies occur when there are
answer
large economies of scale
question
In the above figure, in order for the equilibrium price to remain constant while the equilibrium quantity increases, the
answer
supply and demand curves both would have to shift rightward.
question
To help pay for the cost of sport related injuries, the government imposes a tax on sellers of all sports equipment. Using the above figure, the area that equals the lost consumer surplus from this tax on sports equipment is
answer
P1P2cd.
question
Ernie's Earmuffs produces 200 earmuffs per year at a total cost of $2,000 and $400 of this cost is fixed. If he increases output to 220 earmuffs, his total cost increases to $2100, and his fixed cost remains $400. What is Ernie's marginal cost per earmuff?
answer
$5
question
A price discriminating monopolist
answer
produces more output than that produced by a single-price monopolist.
question
In the above figure, the marginal cost of the second ton of wheat is
answer
$75.
question
A $10 per-unit tax on cell phones raises the equilibrium price paid by consumers by $5. Before the tax, 5,000 cell phones were sold per year. The revenue from the tax is
answer
positive but less than $50,000 per year
question
Sue owns a baking company. The company's total revenue for a month is $4000. The monthly costs of resources bought in the market and of resources owned by the firm are $2000 and monthly costs of resources supplied by the owner are $1000. Sue's economic profit for the month is equal to
answer
$1000.
question
In perfect competition, each individual firm faces ________ demand curve.
answer
a perfectly elastic
question
If a market is NOT in equilibrium, then which of the following is likely to occur?
answer
The price will adjust to bring the market to equilibrium.
question
Samara's income is $30 a month and she spends all of it on music downloads and gasoline. The price of a music download is $3 and the price of a gallon of gasoline is $3. At Samara's best affordable point, her marginal rate of substitution is ________ gallon of gasoline per music download.
answer
1
question
A deadweight loss occurs whenever
answer
the marginal social benefit of a good does not equal its marginal social cost.
question
Which of the following statements regarding the long-term equilibrium is TRUE?
answer
Entry and exit stop when firms make zero economic profit.
question
Which of the following results in a movement along the supply curve of spinach but does NOT shift the supply curve of spinach?
answer
a rise in the price of spinach
question
Which of the following shifts the demand curve for movie downloads rightward?
answer
a 10 percent increase in people's income if movie downloads are a normal good
question
A perfectly competitive firm's short-run supply curve is
answer
its marginal cost curve above the shutdown point.
question
If an indifference curve is a straight line it will NOT show which of the following?
answer
diminishing marginal rate of substitution
question
Which factor of production earns profit?
answer
entrepreneurship
question
Consumers expect that the price of a gallon of gasoline will rise next week. As a result
answer
today's demand for gasoline increases.
question
Using the data in the above table, if the firm employs 3 workers, total product (measured in units per day) and average product and marginal product of the third worker (measured in units per worker) are
answer
19, 6 1/3, and 7 respectively.
question
A decrease in the expected future price of cars
answer
decreases the current demand for cars, that is, there is a leftward shift of the demand curve for cars
question
The table above shows Tom's total utility from milkshakes and sodas. Tom's total budget for milkshakes and sodas is $20.00 per week. Milkshakes cost $2.00 each and sodas cost $.50 each. What quantity of sodas does Tom purchase at his consumer equilibrium?
answer
eight
question
If the income elasticity for chocolate chip cookies is 1.84, then chocolate chip cookies are
answer
a normal good and income elastic.
question
Of the following market structures, which has the fewest number of firms competing against each other?
answer
oligopoly
question
In the figure above, the single-price, unregulated monopoly sets a price of
answer
$60 per unit
question
For the monopoly shown in the figure above, the economic profit is
answer
$40.
question
In general, increasing marginal returns occur
answer
as output expands at low levels of production
question
Toothpaste and toothbrushes are complements, so the ________ elasticity of demand is ________.
answer
cross; negative
question
Consider the budget line in the above figure. If the consumer's income is $240, then the price of a movie is
answer
$10 per movie.
1 of 95
question
An unregulated, single-price monopoly is shown in the figure above. If fixed cost is $20, the monopoly's total costs when it is maximizing its profit will be
answer
$80
question
Based on the above figure of the costs at Barney's Bagel Bakery, at which level of output will diminishing marginal returns first occur?
answer
at 500 bagels
question
If marginal revenue exceeds marginal cost, to increase its profit the firm should
answer
Increase its output
question
Consider the perfectly competitive firm in the above figure. At the profit maximizing level of output, the firm is
answer
incurring an economic loss equal to $119.00
question
A monopoly's marginal revenue is equal to the market price of its product.
answer
false
question
The maximum total economic profit that can be made by colluding duopolists
answer
equals the economic profit made by a monopolist.
question
The main purpose of antitrust law is to
answer
prohibit monopoly practices such as restricting output.
question
All of the following are examples of price discrimination EXCEPT
answer
"buy now, pay later" payment options.
question
Fresh Taste, Inc. produces organic breakfast cereals. The market for breakfast cereals is monopolistically competitive. The figure above shows the demand curve that Fresh Taste faces ( D), the company's marginal revenue curve ( MR), its marginal cost curve ( MC), and its average total cost curve ( ATC). Fresh Taste's excess capacity is
answer
4,000 boxes per day
question
In the long run, monopolistically competitive firms can make an economic profit because of product differentiation.
answer
false
question
An attempt by a firm to create a monopoly and gain the economic profit from the monopoly is called
answer
rent seeking
question
A firm's average total cost is $80, its fixed cost is $1000, and its output is 100 units. Its average variable cost
answer
more than $60
question
Carol's Candies is producing 150 boxes of candy a day. Carol's marginal revenue and marginal cost curves are shown in the figure above. To increase her profit, Carol should
answer
decrease output
question
In the above figure, the monopolistically competitive firm makes an economic profit of
answer
$0
question
Attempts to create a monopoly by having favorable laws passed are examples of rent seeking.
answer
true
question
For a natural monopoly, if price is set equal to marginal cost then the firm incurs an economic loss.
answer
false
question
In the long run, a firm in a monopolistically competitive industry produces where its marginal cost
answer
idk
question
A monopoly that can perfectly price discriminate creates no deadweight loss.
answer
true
question
Use the data in the table above and suppose that labor is the only variable factor of production. If each worker is paid $42.00 per day, what is the average variable cost to Decent Donuts of producing 122 dozen donuts per day?
answer
$2.41
question
Natural oligopoly is a situation where
answer
the level of demand can support only a few firms.
question
In the figure, D is the demand curve for taxi rides in a town, and ATC is the average total cost curve of a taxi company.
answer
Natural Duopoly
question
Dell and Gateway must decide whether to lower their prices, based on the potential economic profits shown in the payoff matrix above. (The profits are in millions of dollars.) In the Nash equilibrium
answer
Both Dell and Gateway lower their costs
question
A market structure in which a small number of firms compete is called
answer
an oligopoly
question
In game theory, a Nash equilibrium is the equilibrium that always yields the best result.
answer
false
question
A firm's markup is the amount by which ________ exceeds ________.
answer
Price; Marginal Cost
question
A group of firms that has entered into a collusive agreement to restrict output and increase prices and profits is called
answer
a cartel
question
In monopolistic competition, barriers to entry give the firms the power to set their price.
answer
false
question
A firm in monopolistic competition can determine what price to charge for its product because of
answer
Product differentiation
question
A monopolistically competitive firm and a monopoly are alike because bothI.face downward sloping demand curves.II.have marginal revenue curves that lie beneath their demand curves.III.can make an economic profit in the long run.
answer
I and II only(Monopoly can make a profit in the long run; monopolistic competition can make a profit in the short-run)
question
A firm is said to have excess capacity when it produces the amount of output
answer
smaller than which minimizes average total cost
question
Firms in monopolistic competition can make an economic profit in the long run.
answer
false (only in short run)
question
Lee, J Brand, Joe's Jeans, Paper Denim & Cloth, Levi's, Wrangler, and many others are all producers of jeans. In what type of market does Lee operate?
answer
monopolistic competition
question
Economies of scale and limited demand can form a natural barrier to entry that can create a natural oligopoly.
answer
true
question
Collusive agreements tend to break apart because the incentive to cheat is so great.
answer
true
question
Firms A and B can conduct research and development (R&D) or not conduct it. R&D is costly but can increase the quality of the product and increase sales. The payoff matrix is the economic profits of the two firms and is given above, where the numbers are millions of dollars. The Nash equilibrium occurs when
answer
Both conduct R&D
question
A single-price monopolist will find when it produces its profit-maximizing amount of output that
answer
price exceeds both marginal cost and revenue
question
In the short run
answer
no firm experiences economies of scale.
question
The figure above shows a monopoly firm's demand curve. If the price and quantity of haircuts move from point t to point u, the monopoly's
answer
total revenue will fall.
question
In the above figure, if D 2 is the original demand curve and the population falls, which price and quantity might result?
answer
point b, with price P1 and quantity Q1
question
Studying the determination of prices in individual markets is primarily a concern of
answer
microeconomics
question
Which of the following statements is TRUE for both a competitive market and a single-price monopoly?
answer
The firm maximizes profit by producing the quantity at which marginal revenue equals marginal cost.
question
If shoes rise in price, the demand curve for shoes ________ and the quantity of shoes demanded ________.
answer
does not shift; decreases
question
Electric utility companies have built larger and larger electric generating stations and, as a result, the long-run average cost of producing each kilowatt hour decreased. This is an example of
answer
economies of scale.
question
A monopolistically competitive firm is similar to
answer
a monopoly in the short run because it can make an economic profit in the short run and is similar to a perfectly competitive firm in the long run because it cannot make a positive economic profit.
question
The above table shows production points on Sweet-Tooth Land's production possibilities frontier. A movement from ________ represents the greatest opportunity cost of increasing cola production.
answer
point B to point A
question
Asian women lag far behind the West in their representation in management level positions. The report by the McKinsley consulting company suggests that there is an opportunity for companies to recruit under-utilized female talent and do well financially as a result. (Source: The Economist, July 7, 2012)The fact that Asian women are currently less likely to be hired as managers is a result of the allocation system using which of the following methods for hiring?
answer
Personal characteristics
question
For prices above the minimum average variable cost, a perfectly competitive firm's supply curve is
answer
same as its marginal curve cost
question
The marginal cost curve
answer
shows the minimum price sellers must receive to produce a unit of a good or service
question
Scarcity requires that people must
answer
make choices
question
Total cost is equal to the
answer
the sum of total fixed cost and total variable cost
question
Consider the straight-line demand curve illustrated in the figure above. At a price of $6, demand is
answer
elastic
question
The price elasticity of demand ________ in value when moving downward along a ________ line demand curve.
answer
falls; straight
question
The table above gives production information for Bob's Baseball Cap Company. Bob's total cost when zero caps are produced is $200 and workers cost $10 per hour. The total cost of producing 30 baseball hats per hour is
answer
$250
question
The table above displays the possible outcomes for Bob and Joe, who have been arrested for armed robbery and car theft. Which of the following is TRUE?
answer
If Bob confesses, Joe should confess
question
The difference between the market price of a new car used by a firm and the market price of the same car one year later is known as
answer
economic depreciation
question
Which area in the above figure equals the consumer surplus under perfect price discrimination?
answer
there is no consumer surplus
question
The income elasticity of demand is defined as the percentage change in
answer
the quantity demanded divided by the percentage change in income
question
Technological efficiency necessarily means producing
answer
without using more inputs than necessary.
question
The prisoners' dilemma has an equilibrium that is
answer
a Nash equilibrium and both players confess.
question
In the above figure, curve b shows the
answer
bottles of soda that people are willing to forgo to get another bicycle
question
The fact that people with higher incomes get to consume more goods and services addresses the ________ part of one of the two big economic questions.
answer
"for whom"
question
Given the budget line in the figure above, the combination of chips that is NOT affordable is
answer
c
question
In the above figure, at point b on the demand curve, a price cut of one dollar will
answer
increase total revenue.
question
Suppose the price of soda is $2 each and the price of a pizza slice is $4 each. Jean maximizes utility and buys only sodas and slices of pizza. If the price of a soda increases to $3 each, Jean's marginal utility per soda
answer
Both will decrease and she'll buy fewer sodas and will decrease and she'll buy more pizza are correct.
question
A consumer has maximized his or her utility by consuming
answer
so that the ratio of marginal utility to price is the same for all goods consumed
question
Which of the following is CORRECT? Factors of production are
answer
the inputs used to produce goods and services.
question
Natural monopolies occur when there are
answer
large economies of scale
question
In the above figure, in order for the equilibrium price to remain constant while the equilibrium quantity increases, the
answer
supply and demand curves both would have to shift rightward.
question
To help pay for the cost of sport related injuries, the government imposes a tax on sellers of all sports equipment. Using the above figure, the area that equals the lost consumer surplus from this tax on sports equipment is
answer
P1P2cd.
question
Ernie's Earmuffs produces 200 earmuffs per year at a total cost of $2,000 and $400 of this cost is fixed. If he increases output to 220 earmuffs, his total cost increases to $2100, and his fixed cost remains $400. What is Ernie's marginal cost per earmuff?
answer
$5
question
A price discriminating monopolist
answer
produces more output than that produced by a single-price monopolist.
question
In the above figure, the marginal cost of the second ton of wheat is
answer
$75.
question
A $10 per-unit tax on cell phones raises the equilibrium price paid by consumers by $5. Before the tax, 5,000 cell phones were sold per year. The revenue from the tax is
answer
positive but less than $50,000 per year
question
Sue owns a baking company. The company's total revenue for a month is $4000. The monthly costs of resources bought in the market and of resources owned by the firm are $2000 and monthly costs of resources supplied by the owner are $1000. Sue's economic profit for the month is equal to
answer
$1000.
question
In perfect competition, each individual firm faces ________ demand curve.
answer
a perfectly elastic
question
If a market is NOT in equilibrium, then which of the following is likely to occur?
answer
The price will adjust to bring the market to equilibrium.
question
Samara's income is $30 a month and she spends all of it on music downloads and gasoline. The price of a music download is $3 and the price of a gallon of gasoline is $3. At Samara's best affordable point, her marginal rate of substitution is ________ gallon of gasoline per music download.
answer
1
question
A deadweight loss occurs whenever
answer
the marginal social benefit of a good does not equal its marginal social cost.
question
Which of the following statements regarding the long-term equilibrium is TRUE?
answer
Entry and exit stop when firms make zero economic profit.
question
Which of the following results in a movement along the supply curve of spinach but does NOT shift the supply curve of spinach?
answer
a rise in the price of spinach
question
Which of the following shifts the demand curve for movie downloads rightward?
answer
a 10 percent increase in people's income if movie downloads are a normal good
question
A perfectly competitive firm's short-run supply curve is
answer
its marginal cost curve above the shutdown point.
question
If an indifference curve is a straight line it will NOT show which of the following?
answer
diminishing marginal rate of substitution
question
Which factor of production earns profit?
answer
entrepreneurship
question
Consumers expect that the price of a gallon of gasoline will rise next week. As a result
answer
today's demand for gasoline increases.
question
Using the data in the above table, if the firm employs 3 workers, total product (measured in units per day) and average product and marginal product of the third worker (measured in units per worker) are
answer
19, 6 1/3, and 7 respectively.
question
A decrease in the expected future price of cars
answer
decreases the current demand for cars, that is, there is a leftward shift of the demand curve for cars
question
The table above shows Tom's total utility from milkshakes and sodas. Tom's total budget for milkshakes and sodas is $20.00 per week. Milkshakes cost $2.00 each and sodas cost $.50 each. What quantity of sodas does Tom purchase at his consumer equilibrium?
answer
eight
question
If the income elasticity for chocolate chip cookies is 1.84, then chocolate chip cookies are
answer
a normal good and income elastic.
question
Of the following market structures, which has the fewest number of firms competing against each other?
answer
oligopoly
question
In the figure above, the single-price, unregulated monopoly sets a price of
answer
$60 per unit
question
For the monopoly shown in the figure above, the economic profit is
answer
$40.
question
In general, increasing marginal returns occur
answer
as output expands at low levels of production
question
Toothpaste and toothbrushes are complements, so the ________ elasticity of demand is ________.
answer
cross; negative
question
Consider the budget line in the above figure. If the consumer's income is $240, then the price of a movie is
answer
$10 per movie.

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