ECON final

second degree

a firm that has the market power to charge different prices to different groups of buyers based on how much they buy is practicing what degree of price discrimination?

third degree

a firm that has the market power to split their customer base according to unique demographics such as students and/or senior citizens and is able to prevent arbitrage is practicing which degree of price discrimination?

renaud's parents are wrong: the marginal benefit to Renaud of another year of uni is less than the marginal cost of uni

after 3 years at MIT, Renaud realizes he wants to be a chef. when Renaud mentions he is considering leaving uni for culinary school his parents insist he stay for one more year to get his degree

robinson patman act

antitrust law that deals with price discrimination and resulted in reducing competition

clayton act

antitrust law that prohibited firms from buying the stock of its rivals and prohibited directors from serving on boards of competing firms

diminishing marginal returns

ashley furniture expects its marginal cost curve to eventually slope up because, as with most production processes, furniture manufacturing has:

HHI is 3250 and it is a very strong oligopoly situation

assume we are looking at a market that has 10 firms, 9 have 5% market share and 10th has the remainder of the market. what is the HHI value and how would you classify the market

elastic; reductions; large increases

demand for air travel in the tourism industry tends to be relatively ________. thus small ______ in air fares will result in relatively _____ in air travel

accounting costs and best opportunity foregone

economic profit is obtained by subtracting which measure of cost from total revenue?

mental accounting

edward is tired of grad school and his part time job. on spur of the moment he buys a weekend trip to the Cayman Islands. he pays for it with his credit card rather than money from his account. which type of irrational behavior does this describe?

reduce intensity of competition among firms in an oligopoly

effect of product differentiation is to:

MSB = MSC

efficient rate of emissions occurs when:

marginal benefit

the ________ of a good/service is the additional benefit derived from producing one more unit of that good or service

can be increased by decreasing production

if a perfectly competitive firm is producing a quant where MC > MR, then profit:

positive economic profits; attract new firms; fall

if a perfectly competitive market starts in a long run equilibrium, holding all else constant this will result in a higher market price, which will lead to __________ in the industry and ___________ the market. this causes price to __________

horizontal merger

if there was a merger of ford motor co and toyota motor co this would be called:

create a brand

if you are a business owner in a very highly competitive market, what could you do to get yourself in a position to be able to increase the price of your own product on your own?

firm would shut down in the short run

in a perfectly competitive market, if a firm is suffering an economic loss in the short run and not covering average variable costs what would happen?

we would see new firms enter the market causing the market price and short run economic profits to decrease

in a perfectly competitive market, if the avg firm is making an economic profit in the short run, what would we see happen as we move to the long run

a few firms would leave the market causing the market price to increase and causing economic loss to decline

in a perfectly competitive market, if we see the avg firm suffering an economic loss in the short run but covering variable costs what would happen in the long run?

5,000

in a pure duopoly situation where each firm has an equal share of the market, what would be the value of the HHI?

10,000

in a pure monopoly situation what would be the value of the HHI?

total benefit exceeds the total cost by the greatest amount, and marginal benefit equals marginal cost

in economic analysis, at the optimal quantity of an activity:

P > MR

in monopolistic competition, long run equilibrium is characterized by:

price would move into elastic part of demand curve and revenue would likely fall

in relation to kinked demand theory, why would an oligopoly be reluctant to increase price of its product on its own:

price would move into inelastic portion of demand curve and revenue will likely decrease

in relation to the kinked demand curve theory, why would an oligopoly be reluctant to decrease the price of its product on its own?

30%

in the cereal market, advertising can account for abt how much of retail price of a box of cereal?

P = ATC

in the short run, a perfectly competitive firm produces output and earns ZERO economic profit if:

oligopoly

in which market type will a firm be able to make an economic profit in the long run?

economies of scale

long run avg total cost of producing 250 wet suits is $56. long run avg total cost of producing 270 wet suits is $36. numbers suggest that between output levels of 250 and 270 wet suits, Gabriella is experiencing:

rise; rise

market is in long run equilibrium (monopolistically competitive firm); there is an increase in market demand for snacks. in short run, the price of snacks will _______ and the market output of snacks will _____

established by govs when they issue tradable pollution permits

markets for the right to pollute are:

provide a subsidy to firms for each unit of the good consumed to achieve the socially optimal level of output

to encourage consumption of a good that generates a positive externality, the BEST option for policymakers is to:

environmental protection agency plan

tools the gov commonly uses to regulate activities that impact the environment include all of the following EXCEPT:

115,000

waterworks irrigation was a startup open for one year. collected 175,000 in revenue and spent 50,000 on trucks and utiities. owner spent 100,000 of his own money to set up office (instead of buying bonds and earning 10% interest) which he later sold at end of year for 100,000. firm's economic profit is:

fixed cost

what type of cost does inflation not have an impact on in the long run

tacit collusion

when firms in a particular industry informally agree to charge the same price as the largest firm in that industry

Cellar-Kefauver Act

which antitrust act toughened restrictions on mergers by prohibiting mergers that would reduce competition

firms merging with and buying out other firms in their markets, leading to a reduction in market competition

which could the existance of economies of scale cause in a market?

oligopoly

which market type is known to have a few firms, high barriers to entry and firms in the market are able to make an economic profit in the long run?

monopolistic competition

which market type is known to have many firms, a differentiated product, and will likely NOT make a profit in the long run

since the beginning of 2021, the world price of oil has more than doubled

which of the following statements about recent oil prices is true?

variable; $2

you run a business making paintings. total cost of production is 10,000, variable cost is 6,000 and you produce 3,000 paintings. it follows that your average _____ cost is ______

coke and pepsi openly agree on production and price in an effort to achieve monopoly profits

overt collusion example:

designed to encourage activities that generate external benefits

pigouvian subsidy is:

external costs

pigouvian tax is designed to reduce:

people make decisions that appear to be irrational

purpose of behavioral economics is to determine why:

discrimination leads to higher profits, discrimination helps increase revenue, discrimination allows for better use of extra capacity

reasons why firms who have market power choose to price discriminate:

affect economic profit

sunk costs:

mow the 10th lawn

suppose ben has a part time business mowing lawns. he mowed 9 lawns on a given day; marginal benefit of 10th lawn is $20, and marginal cost is $12. bob should:

consumer and total

suppose the gologos logo monopoly is broken up, and the logo industry becomes perfectly competitive. we would expect ______ surplus to increase and _______ surplus to decrease after the breakup

implicit costs are greater than her accounting profits

given info provided, Jill should stop selling cupcakes if her:

patent

gives an inventor a temporary monopoly on use/sale of invention

monopsony

market in which there is one buyer

no noticeable effect; standardized

for the texas beef industry to be considered perfectly competitive, each rancher in texas must have ________ on prices and beef must be a ___________ product

its value to an individual increases when the number of other people using it increases

facebook is subject to network externalities because:

first degree

firm that has the market power to charge each customer their max reservation price is practicing what degree of price discrimination

more to total revenue than to total cost

for a firm producing at a quant of output below the profit-maximizing quant of output, an increase in output adds:

less than price

for a monopolistically competitive firm, marginal cost is ________ in long run equilibrium

duopoly

james is one of two producers of doodads in the city of Hoovile. because the industry consists of two firms, he is operating in:

10

janelle loves sashimi. first piece gives her a benefit of $5. each additional piece yields a marginal benefit that declines by 0.25 per piece. if favorite sushi bar charges 2.75 per piece, how many pieces should she eat?

profit; 39,000

janelle owns a small hotel in San Fran. she pays 30,000 in insurance, 418,000 in wages, 43,000 in supplies. forgoes 30,000 a year she could make as a police officer. total revenue last year was 560,000. that means her economic ________ equaled __________

loss aversion

lucille bought stoke 10 years ago that has hovered at half its purchase price over last 5 years. lucille refuses to sell stock, thinking if she waits long enough she'll recover her investment. what does this represent?

increase its profits

main reason a monopoly engages in price discrimination is:

its lowest point

marginal cost curve intersects the average variable cost curve at:

present value of these three payments is greater than 1,000,000

someone you know to be honest and trustworthy comes to you with a business offer ... after three years he's paid you 1,350,000. which statement would justify saying yes to this proposition

diminishing returns

the eventual increase in AVC as output increases is the _________ effect

spreading; lower

the larger the output, the more output over which fixed cost is distributed. called the ______ effect, this leads to a _______ avg fixed cost as output rises

is the benefit to society of one more unit of pollution

the marginal social benefit of pollution: