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Practice Test: Units IV & V

question
!!!The combination where Firm A advertises and Firm B does not advertise is Nash equilibrium because
answer
it is best for each firm given what the other firm has chosen
question
!!!A company recently added 5 additional workers to their labor force, and total output for the company increased from 40 to 45 units. What was the marginal product for those 5 workers hired?
answer
1 unit
question
!!!Identify the quantity of labor hired if TreeMart operated in a competitive labor market.
answer
200
question
!!!Which of the following statements is true?
answer
Breadbasket has a dominant strategy of choosing the low price.
question
!!!Assuming the firms do not cooperate on setting prices, what will be the profit for Breadbasket and Quicklunch, respectively?
answer
$120 for Breadbasket and $80 for Quicklunch
question
!!!If the firms do not cooperate, which of the following represents the payoff North Springs and South Springs receive in the Nash equilibrium?
answer
($27, $28)
question
!!!Fill in the blanks: As marginal product in a labor market __________, marginal revenue product __________.
answer
decreases, decreases
question
!!!The government regulated the natural monopoly above to produce the output resulting in zero economic profit, then the output would be
answer
Q4
question
!!!Compared with a perfectly competitive market, a single-price monopoly with the same market demand and cost curves will
answer
decrease output and increase price
question
!!!Assume the profit-maximizing monopolist is unregulated. Using the letters on the graph, identify the area of deadweight loss.
answer
acf
question
!!!Assume the profit-maximizing monopolist is unregulated. Using the letters on the graph, identify the firm's area of economic profit.
answer
P3P1ac
question
!!!Now assume that the monopolist can perfectly price discriminate. Identify the quantity produced by the firm.
answer
Q3
question
!!!An individual firm hiring from a perfectly competitive factor market will NOT hire a laborer if which of the following is true?
answer
MFC > MRP
question
!!!The firm show in the diagram above qualifies as a natural monopoly because
answer
the average total cost is decreasing in the relevant range of market demand
question
!!!The table below shows the productivity of both labor (L) and capital (K) used by a firm. Assume each additional unit of labor is hired for $8 per hour and the cost of each unit of capital is $4 per hour. If the firm has a budget of $44 to spend on labor and capital per hour, then what is the cost-minimizing combination of these factors?
answer
3 units of labor and 5 units of capital
question
!!!Game theory is used to explain
answer
strategic behavior of firms in oligopoly
question
!!!If the price of the product in the chart shown above is $5, then what is the marginal revenue product (MRP) of the 1st unit of labor hired?
answer
$60
question
!!!Based on the chart above, what is the marginal factor cost (MFC) of hiring the third unit of labor?
answer
$20
question
!!!If the same wage (MFC) is paid to each additional unit of labor hired, then which of the following is true?
answer
supply is perfectly elastic
question
!!1If the firm in the graph above is profit-maximizing, then the firm's total revenue is equal to
answer
area 0P3JQ1
question
!!!Which of the following is likely to shift the industry labor supply curve to the left in a perfectly competitive factor market?
answer
an increase in the preference for leisure
question
!!!Which of the following conditions does NOT accurately describe a monopoly?
answer
creates allocative efficiency by producing the output at which P=MC
question
!!!If the price of the product in the chart shown above is $2, then what is the marginal revenue product (MRP) of the 3rd unit of capital purchased?
answer
$20
question
!!!Based on the payoff matrix, which of the following is correct?
answer
Firm A's dominant strategy is to advertise.
question
!!!Based on the graph above, which of the following is true?
answer
The firm must continue to pay each additional worker a higher wage rate (MFC) in order to hire more employees.
question
!!!Assume that a monopolistically competitive firm is currently maximizing profit with an output of 100 units and a price of $50. Which of the following is true?
answer
Marginal cost is greater than marginal revenue when the firm produces 150 units of output.
question
!!!Which of the following would NOT cause the labor supply curve to shift leftward in a market?
answer
decrease in required educational attainment for laborers
question
!!!Fill in the blanks: As the wage in a market __________, marginal factor cost ________.
answer
-increases, increases
question
!!!Identify the wage rate TreeMart would pay if it operated in a competitive labor market.
answer
$15
question
!!!One difference between oligopolies and monopolistically competitive markets is that
answer
there are fewer firms in oligopolistic markets than in monopolistically competitive ones
question
!!!Which of the following characteristics is prevalent in oligopolies?
answer
consideration of rivals' reactions
question
!!!Which of the following must be true if a profit-maximizing monopolistically competitive firm continues to operate in the short run while incurring a loss?
answer
Marginal revenue equal marginal cost and price is greater than average variable cost.
question
!!!Which of the following is true of a monopolistically competitive firm in long-run equilibrium?
answer
It produces where marginal cost equals marginal revenue, and the price is equal to average total cost.
question
!!!Identify the profit-maximizing quantity of labor for British Industrial.
answer
3
question
!!!Which of the following changes in a factor market would cause the demand to increase?
answer
increase in demand for the good produced by the factor
question
!!!Which of the following would NOT cause the labor demand curve to shift rightward in a market?
answer
decrease in the price of the good produced by labor
question
!!!Assume the firm above currently has two units of capital and is using three units of labor. Calculate the firm's average total cost for its current level of production.
answer
$10
question
!!!In monopolistic competition, a goal of advertising is to
answer
make a firm's demand curve less elastic
question
!!!If the price of the product in the chart shown above is $10, then what is the marginal revenue product (MRP) of the 5th unit of capital purchased?
answer
$40
question
!!!If the firm in the graph above is profit-maximizing, then the firm's economic profit is equal to
answer
area P2P3JK
question
Monopolistically competitive product markets are inefficient because
answer
price is greater than marginal cost
question
!!!Which of the following items are true about a monopsonistic market?
answer
III only
question
!!!Which of the following is true about marginal product and average product?
answer
All of the options provided are true
question
!!!Assume the firm above currently has two units of capital and is using three units of labor. If the firm's output is sold in a perfectly competitive product market, then what is the lowest output price at which the third unit of labor would be hired?
answer
$8
question
!!!An increase in educational attainment required for a particular job would have which of the following impacts on the equilibrium in the labor market?
answer
decrease in quantity, increase in wage
question
!!!Which of the following items are true about an individual firm hiring from a perfectly competitive labor market?
answer
I and II
question
!!!If the price of the product in the chart shown above is $3, then what is the marginal revenue product (MRP) of the 4th unit of labor hired?
answer
$18
question
!!!Which of the following is true about the market above?
answer
The firm can continue to pay a consistent wage rate (MFC) in order to hire more employees.
question
!!!Antitrust policies are put in place to limit which of the following?
answer
monopolistic power
question
!!!Identify the profit-maximizing quantity of labor for TreeMart.
answer
100
question
!!!Which of the following is true of an oligopoly?
answer
firms are interdependent
question
!!!The supply curve for an individual firm operating in a perfectly competitive factor market is
answer
perfectly elastic
question
!!!An increase in the price of the good produced by a laborer would increase which of the following?
answer
I and III
question
!!!Calculate the marginal product of the 4th worker hired.
answer
60
1 of 54
question
!!!The combination where Firm A advertises and Firm B does not advertise is Nash equilibrium because
answer
it is best for each firm given what the other firm has chosen
question
!!!A company recently added 5 additional workers to their labor force, and total output for the company increased from 40 to 45 units. What was the marginal product for those 5 workers hired?
answer
1 unit
question
!!!Identify the quantity of labor hired if TreeMart operated in a competitive labor market.
answer
200
question
!!!Which of the following statements is true?
answer
Breadbasket has a dominant strategy of choosing the low price.
question
!!!Assuming the firms do not cooperate on setting prices, what will be the profit for Breadbasket and Quicklunch, respectively?
answer
$120 for Breadbasket and $80 for Quicklunch
question
!!!If the firms do not cooperate, which of the following represents the payoff North Springs and South Springs receive in the Nash equilibrium?
answer
($27, $28)
question
!!!Fill in the blanks: As marginal product in a labor market __________, marginal revenue product __________.
answer
decreases, decreases
question
!!!The government regulated the natural monopoly above to produce the output resulting in zero economic profit, then the output would be
answer
Q4
question
!!!Compared with a perfectly competitive market, a single-price monopoly with the same market demand and cost curves will
answer
decrease output and increase price
question
!!!Assume the profit-maximizing monopolist is unregulated. Using the letters on the graph, identify the area of deadweight loss.
answer
acf
question
!!!Assume the profit-maximizing monopolist is unregulated. Using the letters on the graph, identify the firm's area of economic profit.
answer
P3P1ac
question
!!!Now assume that the monopolist can perfectly price discriminate. Identify the quantity produced by the firm.
answer
Q3
question
!!!An individual firm hiring from a perfectly competitive factor market will NOT hire a laborer if which of the following is true?
answer
MFC > MRP
question
!!!The firm show in the diagram above qualifies as a natural monopoly because
answer
the average total cost is decreasing in the relevant range of market demand
question
!!!The table below shows the productivity of both labor (L) and capital (K) used by a firm. Assume each additional unit of labor is hired for $8 per hour and the cost of each unit of capital is $4 per hour. If the firm has a budget of $44 to spend on labor and capital per hour, then what is the cost-minimizing combination of these factors?
answer
3 units of labor and 5 units of capital
question
!!!Game theory is used to explain
answer
strategic behavior of firms in oligopoly
question
!!!If the price of the product in the chart shown above is $5, then what is the marginal revenue product (MRP) of the 1st unit of labor hired?
answer
$60
question
!!!Based on the chart above, what is the marginal factor cost (MFC) of hiring the third unit of labor?
answer
$20
question
!!!If the same wage (MFC) is paid to each additional unit of labor hired, then which of the following is true?
answer
supply is perfectly elastic
question
!!1If the firm in the graph above is profit-maximizing, then the firm's total revenue is equal to
answer
area 0P3JQ1
question
!!!Which of the following is likely to shift the industry labor supply curve to the left in a perfectly competitive factor market?
answer
an increase in the preference for leisure
question
!!!Which of the following conditions does NOT accurately describe a monopoly?
answer
creates allocative efficiency by producing the output at which P=MC
question
!!!If the price of the product in the chart shown above is $2, then what is the marginal revenue product (MRP) of the 3rd unit of capital purchased?
answer
$20
question
!!!Based on the payoff matrix, which of the following is correct?
answer
Firm A's dominant strategy is to advertise.
question
!!!Based on the graph above, which of the following is true?
answer
The firm must continue to pay each additional worker a higher wage rate (MFC) in order to hire more employees.
question
!!!Assume that a monopolistically competitive firm is currently maximizing profit with an output of 100 units and a price of $50. Which of the following is true?
answer
Marginal cost is greater than marginal revenue when the firm produces 150 units of output.
question
!!!Which of the following would NOT cause the labor supply curve to shift leftward in a market?
answer
decrease in required educational attainment for laborers
question
!!!Fill in the blanks: As the wage in a market __________, marginal factor cost ________.
answer
-increases, increases
question
!!!Identify the wage rate TreeMart would pay if it operated in a competitive labor market.
answer
$15
question
!!!One difference between oligopolies and monopolistically competitive markets is that
answer
there are fewer firms in oligopolistic markets than in monopolistically competitive ones
question
!!!Which of the following characteristics is prevalent in oligopolies?
answer
consideration of rivals' reactions
question
!!!Which of the following must be true if a profit-maximizing monopolistically competitive firm continues to operate in the short run while incurring a loss?
answer
Marginal revenue equal marginal cost and price is greater than average variable cost.
question
!!!Which of the following is true of a monopolistically competitive firm in long-run equilibrium?
answer
It produces where marginal cost equals marginal revenue, and the price is equal to average total cost.
question
!!!Identify the profit-maximizing quantity of labor for British Industrial.
answer
3
question
!!!Which of the following changes in a factor market would cause the demand to increase?
answer
increase in demand for the good produced by the factor
question
!!!Which of the following would NOT cause the labor demand curve to shift rightward in a market?
answer
decrease in the price of the good produced by labor
question
!!!Assume the firm above currently has two units of capital and is using three units of labor. Calculate the firm's average total cost for its current level of production.
answer
$10
question
!!!In monopolistic competition, a goal of advertising is to
answer
make a firm's demand curve less elastic
question
!!!If the price of the product in the chart shown above is $10, then what is the marginal revenue product (MRP) of the 5th unit of capital purchased?
answer
$40
question
!!!If the firm in the graph above is profit-maximizing, then the firm's economic profit is equal to
answer
area P2P3JK
question
Monopolistically competitive product markets are inefficient because
answer
price is greater than marginal cost
question
!!!Which of the following items are true about a monopsonistic market?
answer
III only
question
!!!Which of the following is true about marginal product and average product?
answer
All of the options provided are true
question
!!!Assume the firm above currently has two units of capital and is using three units of labor. If the firm's output is sold in a perfectly competitive product market, then what is the lowest output price at which the third unit of labor would be hired?
answer
$8
question
!!!An increase in educational attainment required for a particular job would have which of the following impacts on the equilibrium in the labor market?
answer
decrease in quantity, increase in wage
question
!!!Which of the following items are true about an individual firm hiring from a perfectly competitive labor market?
answer
I and II
question
!!!If the price of the product in the chart shown above is $3, then what is the marginal revenue product (MRP) of the 4th unit of labor hired?
answer
$18
question
!!!Which of the following is true about the market above?
answer
The firm can continue to pay a consistent wage rate (MFC) in order to hire more employees.
question
!!!Antitrust policies are put in place to limit which of the following?
answer
monopolistic power
question
!!!Identify the profit-maximizing quantity of labor for TreeMart.
answer
100
question
!!!Which of the following is true of an oligopoly?
answer
firms are interdependent
question
!!!The supply curve for an individual firm operating in a perfectly competitive factor market is
answer
perfectly elastic
question
!!!An increase in the price of the good produced by a laborer would increase which of the following?
answer
I and III
question
!!!Calculate the marginal product of the 4th worker hired.
answer
60
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