Big ass econ #4
How does the entry of new coffeehouses affect the profits of existing coffeehouses? A. Entry will shift the market demand curve for coffee to the right. B. Entry will shift the firm's demand curve to the right. C. Entry will make the firm's demand curve more elastic. D. Entry will in no way affect the profits of existing coffeehouses.
A
If marginal revenue slopes downward, which of the following is true? A. The firm must cut the price to sell a larger quantity. B. The firm must increase the price to sell a larger quantity. C. The firm must cut its price if it wants to keep on selling the same quantity day after day. D. The firm is unable to adjust price in order to adjust quantity sold.
A
Refer to the figure below. Which demand curve is associated with the shutdown point? A. Demand1 B. Demand2 C. Demand3 D. Demand4
A
To determine whether a firm makes a profit, breaks even, or experiences losses, we compare price to: A. marginal cost. B. average total cost. C. average variable cost. B. average fixed cost.
B
What is the term given to a cost that has already been paid and cannot be recovered? A. Unrecoverable cost. B. Variable cost. C. Sunk cost. D. Implicit cost.
C
Which of the following are characteristics of monopolistic competition? A. High barriers to entry. B. Few firms compete. C. Firms sell similar, but not identical, products. D. All of the above.
C
Which of the terms below is defined as follows: "A market structure in which a small number of interdependent firms compete"? A. Game theory. B. Barriers to entry. C. Oligopoly. D. Economies of scale.
C
Economies of scale and ownership of a key input are two types of: A. Competitive advantages. B. Concentration ratios. C. Strategic advantages. D. Barriers to entry.
D
In Michael Porter's Competitive Forces Model, which term describes the threat of competition from new entrants? A. Buyers B. Suppliers C. Industry competitors D. Potential entrants
D
Match the following definition with one of the terms below: "A situation where each firm chooses the best strategy, given the strategies chosen by other firms." A. Payoff matrix. B. Collusion. C. Dominant strategy. D. Nash equilibrium.
D
Refer to the figure below. The figure shows the Competitive Forces Model. What is the name of the box in the center? A. Industry Competitors B. Bargaining Power C. Industry Threats D. Extent of Competition
D
Refer to the figure below. What is this graph trying to explain? A. The decision of a producer to charge $4.00 for 3,000 bushels or for 7,500 bushels. B. Uncertainty about producing 3,000 or 7,500 bushels given the market price of $4.00 C. How market demand and the firm's demand curve are one and the same in a perfectly competitive market. D. The ability of the perfectly competitive firm to sell any amount of output as long as it accepts the market price of $4.00.
D
e-Bay is considered a second-price auction because: A. Every item is listed for two different prices. B. The auction winner always beats the second-best price. C. The items on e-Bay have already been auctioned once elsewhere. D. The winner pays only as much as the second-highest bidder was willing to pay.
D
Refer to the figure below. Which graph best depicts the relationship between price and average total cost in the long run for a monopolistically competitive firm? A. The graph on the left. B. The graph in the middle. C. The graph on the right. D. None of the above.
A
Refer to the graph below. What do you expect to happen in this market as it approaches long run equilibrium? A. Profits and entry. B. Losses and exit. C. Profits and exit. D. Losses and entry.
A
Refer to the graph below. Which of these two curves is the firm's supply curve as opposed to the market supply curve? A. The graph on the left. B. The graph on the right. C. Either graph. They are one and the same. D. Neither curve. There isn't sufficient information to establish which curve is the firm's supply curve and which curve is the market supply curve.
A
Refer to the payoff matrix below. Based on the information on the payoff matrix, what is the dominant strategy? A. Both firms will charge $150. B. Both firms will charge $200. C. Wal-Mart will charge $150, and Target will charge $200. D. Wal-Mart will charge $200, and Target will charge $150.
A
We often think of firms as being either price takers or price makers. In the case of consumers, we can say that they are primarily: A. Price takers. B. Price makers. C. Both price takers and price makers. D. Neither price takers nor price makers but price setters.
A
What is long-run competitive equilibrium? A. The situation in which the entry and exit of firms have resulted in the typical firm just breaking even. B. A situation in which market price is at a level equal to the minimum point on the typical firm's marginal cost curve. C. The end of a process during which firms are prevented from adjusting their production methods. D. All of the above.
A
Which of the following conditions must exist in order to have a perfectly competitive market? A. There must be many buyers and many firms, all of whom are small relative to the market. B. The products sold by firms in the market must be different from each other. C. There must be some barriers to entry in order to protect perfect competition. D. All of the above.
A
Which of the following measures is conceptually the same as price? A. Average revenue. B. Marginal revenue. C. Total revenue. D. Marginal cost.
A
Which of the following terms best describes a state of the economy in which production reflects consumer preferences? A. Allocative efficiency. B. Productive efficiency. C. Capitalism. D. Consumer equilibrium.
A
Which type of barrier to entry is the granting of a patent or copyright to an individual or firm considered? A. Entry blocked by government action. B. Entry blocked by externalities. C. Entry blocked by economies of scale. D. Entry blocked by natural and/or technical constraints.
A
Refer to the table below. The table is a decision tree for an entry game. In this case, Wal-Mart will: A. Build a large store. B. Build a small store. C. Be indifferent between building a large store or a small store. D. Whatever it takes to prevent Target from entering.
B
Economies of scale help determine the extent of: A. Market failure in an industry. B. Competition in an industry. C. Product differentiation in an industry. D. Product innovation in an industry.
B
If a firm that has the ability to affect the price of the good or service it sells, what is the relationship between its marginal revenue curve and its demand curve? A. The firm will have a marginal revenue curve that is above its demand curve. B. The firm will have a marginal revenue curve that is below its demand curve. C. The firm will have a marginal revenue curve that is the same as its demand curve. D. The firm will have an upward-sloping marginal revenue curve and a downward-sloping demand curve.
B
In the broadest sense, game theory studies the decisions of firms in industries where the profits of each firm depend on: A. the ability of a firm to set up barriers to entry. B. the firm's interactions with other firms. C agreements among firms to charge the same price. D. the ability to achieve a dominant position in the industry.
B
In which of the following situations can a firm be considered a monopoly? A. When a firm is surrounded by other firms that produce close substitutes. B. When a firm can ignore the actions of all other firms. C. When a firm uses other firms' prices in order to price its products. D. When barriers to entry are eliminated.
B
Refer to the figure below. After the shift in market demand, how will the firm react? A. The firm will adjust its output upward in search of higher profit. B. The firm will have to adjust its output downward and suffer losses. C. The firm will maintain output constant but suffer losses. D. The firm will adjust its output downward and earn higher profit.
B
Refer to the figure below. The graph describes a typical firm in the competitive DVD player industry. Which point represents the combination of price and output levels that prevail when the DVD industry experiences productive efficiency? A. Point A. B. Point B. C. Both points reflect productive efficiency. D. Neither point reflects productive efficiency.
B
Refer to the figure below. To determine how much output to produce in order to maximize profit, we focus first on: A. The distance between A and B in the figure on the left. B. Point A in the figure on the left. C. The green area in the figure on the right. D. The ATC curve in the figure on the right.
B
Refer to the figure below. Which graph best depicts the profit or loss situation for a monopolistically competitive firm in the long run? A. The graph on the left. B. The graph in the middle. C. The graph on the right. D. None of the above.
B
Refer to the figure below. Which of the following best represents profit per unit? A. The shaded rectangle. B. The distance between points A and B. C. Market price, or the demand (marginal revenue) curve. D. None of the above.
B
What trade-offs do consumers face when buying a product from a monopolistically competitive firm? A. Consumers pay a lower price but also have fewer choices. B. Consumers pay a price greater than marginal cost but also have choices more suited to their tastes. C. Consumers pay a higher price but are happy knowing that the industry is highly efficient. D. Consumers pay a price as low as the competitive price but have difficulty finding and buying the product.
B
Which of the following is more consistent with the pursuit of self-interest? A. Cooperative equilibrium. B. Noncooperative equilibrium. C. Both cooperative and noncooperative equilibrium are situations entirely consistent with the pursuit of self interest. D. Neither the cooperative nor the noncooperative equilibrium situations are consistent with the pursuit of self interest.
B
Which of the following strategies has been more successful in the recent history of the US airline industry? A. Entering as many segments of the market as possible and confronting competitors through steep price cuts. B. Deterring entry by building a large fleet of airplanes and cutting labor costs. C. Identifying a segment of the market and shaping the company to fit that segment. D. Using game theory to analyze the actions of existing and potential firms in the market.
B
Why does a monopolistically competitive firm have a downward-sloping demand curve? A. Because the firm is considered to be a monopoly in its own market. B. Because changing the price will affect the quantity sold. C. Because the firm is close to a price taker, like a wheat farmer. D. Because the level of output produced depends on the cost structure of the firm.
B
A game theory analysis of deterring entry concludes that: A. deterring entry is always a good idea. B. deterring entry is always a bad idea. C. deterring entry may be a good or a bad idea, depending on the circumstances. D. It is difficult to predict whether deterring entry is a good or a bad idea.
C
A game where pursuing dominant strategies results in noncooperation that leaves everyone worse off is called: A. A cooperative equilibrium. B. A noncooperative equilibrium. C. A game known as the Prisoners' dilemma. D. A dominant strategy.
C
According to the textbook, which of the following industries in manufacturing had the highest concentration ratios in the United States? A. Aircraft and breakfast cereal. B. Automobiles and dog and cat food. C. Cigarettes and beer. D. Computers.
C
Economic loss refers to a situation in which a firm's total revenue is less than its total cost. To figure out the amount of loss, which of the following costs should be included? A. Explicit costs only. B. Implicit cost only. C. Both explicit costs and implicit cost. D. Fixed costs only.
C
Fill in the blanks. Suppliers have more bargaining power when ______ firms can supply the input and the input _______ specialized. A. many; is B. many; is not C. few; is D. few; is not
C
For a monopolistically competitive firm, is zero economic profit inevitable in the long run? A. Yes. There is nothing the firm can do to avoid zero economic profit in the long run. B. No. A firm could try to avoid losing its profit in the long run by producing a product identical to those of competing firms. C. No. A firm could try to avoid losing profits by reducing production costs and improving its products. D. No. A firm could simply offer goods that are cheaper to produce even if they have less value than those offered by competing firms.
C
How do consumers benefit from monopolistic competition? A. Consumers can purchase the goods produced at the lowest possible prices. B. Consumers don't have to pay the high prices associated with inefficiencies in production. C. Consumers enjoy a greater variety of products. D. Consumers don't benefit at all from monopolistic competition.
C
In order to maximize profit, a firm must: A. minimize cost. B. maximize revenue. C. set marginal revenue equal to marginal cost. D. All of the above.
C
Refer to the figure below. Based on the information in the graph, what can be said about marginal revenue? A. Marginal revenue increases as the quantity of bushels produced and sold increases. B. Marginal revenue decreases with additional bushels produced and sold. C. Marginal revenue remains constant as additional bushels are produced and sold. D. There is insufficient information to deduct the behavior of marginal revenue from this graph.
C
Refer to the figure below. One of the curves in this figure is not necessary in order to determine the profit-maximizing level of output. Which curve can be discarded? A. The marginal cost curve. B. The demand curve. C. The average total cost curve. D. None of the above. All three curves must remain in place in order to determine which level of output maximizes profit.
C
Refer to the payoff matrix below. The payoff matrix refers to the OPEC cartel with unequal members. Fill in the blanks. The equilibrium of this game will occur with Saudi Arabia producing a _______ output and Nigeria producing a _______ output. A. low; low B. high; high C. low; high D. high; low
C
The price at which a competitive firm will supply output in the long run is determined by: A. marginal cost. B. the minimum point on the typical firm's marginal cost curve. C. the minimum point on the typical firm's average total cost curve. D. the minimum point on the typical firm's average variable cost curve.
C
What is the relationship between price, average revenue, and marginal revenue for a firm in a perfectly competitive market? A. Price is equal to average revenue and greater than marginal revenue. B. Price is greater than average revenue and equal to marginal revenue. C. Price is equal to both average revenue and marginal revenue. D. Price, average revenue, and marginal revenue are usually all different values.
C