econ final- sammer

Sophia Brown runs a company that sells encyclopedia sets for $250 each. When she employs 10 workers, they can sell 60 sets per week, while only 54 sets are sold when 9 workers are employed. What is the weekly marginal revenue product of the tenth worker?

$1,500

If a perfectly competitive firm sells 50 units of output at a market price of $10 per unit, its marginal revenue is:

$10

In Exhibit 11-3, the total wage cost of hiring 6 employees is:

$108 per hour.

Use Exhibit 11-13. What wage rate will the monopsonist pay the workers?

$12

As shown in Exhibit 9-4, in order to maximize its profit (or minimize its loss), what price should the monopoly charge for its product?

$120 per unit

Consider a firm with the following cost information: ATC = $15, AVC = $12, and MC = $14. If we know that this firm has decided to produce Q = 20 by following the rule to maximize profits or minimize losses, then the price of the output is:

$14

As shown in Exhibit 13-1, if regulators follow a fair return pricing strategy, the price will be:

$15, the quantity will be 80, and the profit will be $0.

BigBiz, a local monopsonist, currently hires 50 workers and pays them $6 per hour. To attract an additional worker to its labor force, BigBiz would have to raise the wage rate to $6.25 per hour. What is BigBiz's marginal factor cost?

$18.75 per hour.

Refer to Exhibit 9-2. Using the rule that focuses on the marginal approach to maximizing profits, the monopolist maximizes profit by choosing price equal to:

$20

As shown in Exhibit 8-18, the perfectly competitive firm is in long-run equilibrium at a price of:

$200

If the profit-maximizing monopoly in Exhibit 9-7 becomes a profit-maximizing perfectly competitive market, the price will go from

$8 to $6

Use the data provided in Exhibit 9-5. If the firm decides to produce 7 units of output, profit is equal to

0

In Exhibit 8-2, economic profit for the firm is at a maximum when output per week equals:

250 units

As shown in Exhibit 9-4, in order to maximize its profit (or minimize its loss), how much output should the monopoly produce?

4 units per hour

As presented in Exhibit 10-3, the long-run profit-maximizing output for the monopolistic competitive firm is:

400 units per week.

In Exhibit 9-1, the marginal revenue curve corresponding to the monopolist's demand curve would be a straight line drawn between points:

A and D.

Which of the following does not represent an arbitrage transaction?

A boat manufacturer buys the electrical components for its boats from the lowest cost supplier and then sells the boats to consumers.

Suppose ABC Dairy is one firm competing in the perfectly competitive market for milk. Now suppose ABC Dairy decides to produce only organic milk. Which of the following best describes the effects of this change in the market?

ABC Dairy is differentiating its product and will likely be able to charge a higher price than before.

Which of the following best describes why a perfectly competitive firm will sometimes continue producing in the short run even if it incurs a loss?

As long as price exceeds average variable cost, the loss from producing will be smaller than the loss from shutting down, which is equal to the amount of total fixed cost

If the labor market shown in Exhibit 11-8 is competitive, the wage rate and number of workers employed will be determined at point:

F.

Which of the following statements is true?

Government regulation is economically justifiable for a natural monopoly.

If an employer currently finds that the MRP of its labor resources equals $67, and the MFC equals $56, what would you advise the firm to do?

Hire additional workers.

Which of the following statements is true?

In long-run equilibrium, a competitive firm produces at the point of minimum average total cost.

Which of the following is not true about a monopsonist?

It can set the wage rate and hire any desired number of workers at that wage.

Which of the following is the result of competing through advertising for a monopolistically competitive firm?

Long-run average costs shift upward.

If a firm in a competitive industry is making zero economic profit but still producing, it must be the case that:

MC=MR=ATC

If a product's price increases, then its:

MRP will increase.

Comparing a perfectly competitive market to a monopoly, which of the following is true?

Price will be equal to marginal revenue in the perfectly competitive market but will be higher than marginal revenue in the monopoly.

Which of the following is true of a perfectly competitive firm?

The firm will not earn an economic profit in the long run.

Which of the following statements best describes firms under monopolistic competition?

The firms compete, using quality, location, advertising, and price.

The market for Product A has many sellers, selling identical products, each earning an economic profit of zero in the long run. The market for Product B has many sellers, selling differentiated products, each earning an economics profit of zero in the long run. Given this information, one can conclude that

The market for Product A is perfectly competitive and the market for Product B is monopolistically competitive.

Which of the following most closely approximates the conditions of a monopolistically competitive market?

The restaurant industry, which is characterized by firms producing a differentiated product in a market with low entry barriers.

Which of the following best explains why the monopolist's marginal revenue is less than the selling price?

To sell more units, the monopolist must reduce price on all units sold.

The landmark antitrust case which established that size alone is not sufficient to prove an antitrust violation is the:

U.S. steel case

Which of the following would be illegal under the Clayton Act?

Xerox will only sell its copy machines if buyers agree to also buy a printer.

a natural monopoly is a market where:

a single large firm can produce the entire market output at a lower per-unit cost than a group of smaller firms.

The government's court case against Microsoft is an example of:

antitrust enforcement

Wage and MFC differ for a monopsonist because:

any wage increase applies to all workers, not just to the next hired.

A profit-maximizing firm will continue to expand output:

as long as the revenue from the production and sale of an additional unit exceeds the marginal cost of the unit.

For a monopolist with a downward-sloping demand curve,

as price decreases, marginal revenue decreases.

Suppose there are four buyers all considering purchasing round-trip airfare from Cleveland to San Juan with the following price elasticities of demand for this purchase: Buyer A: 1.5, Buyer B: 0.7, Buyer C: 1.0, Buyer D: 2.3. If the airline knows these elasticities and practices price discrimination, which buyer will pay the highest price for the airfare?

buyer B.

Suppose a monopolist and a perfectly competitive firm have the same cost curves. The monopolistic firm would:

charge a higher price than the perfectly competitive firm

Which act of Congress declared tying contracts, exclusive dealing, and price discrimination illegal?

clayton act

The process of negotiating labor contracts between the union and management concerning wages and working conditions is called

collective bargaining.

The two tendencies of a firm in a cartel are the incentive to:

cooperate to maximize joint profits and to cheat on the agreement in order to increase the firm's share of the profit.

In Exhibit 13-3, if this is an unregulated monopoly firm, the price and output which would maximize profits are:

price = $10; output = 25.

Which of the following is not one of the three basic situations in which regulation is imposed?

price fixing

for a monopolist:

price is above marginal revenue

Suppose that R. J. Reynolds raises the price of cigarettes by 10 percent. Although they have no requirement or agreement to do so, the other cigarette firms decide to raise their prices accordingly. This situation is best described as:

price leadership

A monopolist earning economic profit in the short run determines that at its present level of output, marginal revenue is $23 and marginal cost is $30. Which of the following should the firm do to increase profit?

raise price and lower output

In the late 1970s and 1980s a movement toward deregulation took place because

regulation was leading to higher production costs, which caused widespread dissatisfaction.

Which of the following correctly describes price discrimination?

selling the same product to different people for different prices

Critics of advertising argue that it:

serves as a barrier to entry for new firms.

In long-run equilibrium, which of the following is not equal to price for a perfectly competitive firm?

short-run average variable cost

If a good causes a positive externality, regulation might take the form of a

subsidy

Economists believe that government regulation to prevent companies from making false or deceptive claims may be justified when:

the equilibrium quantity and price are higher than they would be if consumers had complete information.

At the level of output where the marginal cost and marginal revenue curves intersect, two firms demand curves pass above their average total cost curve. One firms is a monopoly and the other is perfectly competitive. Which statement is true for both firms?

the firms are making an economic profit

Marginal cost pricing is a system of pricing in which the price charged equals the marginal cost of:

the last unit produced and the firm suffers a loss unless the government gives the firm a subsidy.

The price-taker firm should discontinue production immediately if:

the market price is less than the firm's average variable costs.

The marginal cost of labor for a perfectly competitive firm is given by:

the market wage rate.

Costume jewelry is produced in a monopolistically competitive market. One producer finds that MR = MC = $3 when output is 700 necklaces. An economist studying this information can conclude that:

the producer charges a price greater than $3.

In the perfectly competitive market, individual firms exert no effect on the market price. Therefore, the firm's marginal revenue is:

the same as the firm's demand curve

Perfect competition and monopolistic competition are similar because under both market structures,

there are many firms

If the marginal product of labor is always positive, the total revenue will grow with each additional worker. Firms do not continuously hire new workers because:

they stop when MRP = wage.

In Exhibit 8-8, product price in this market is fixed at $35. This firm is currently operating where MR = MC. What do you advise this firm to do?

this firm should continue to operate at its current output

Which of the following scenarios demonstrates price discrimination?

tickets to a play are sold for $15 to students and $25 to adults

If a monopsonist offers a wage of $6, they find that 1,200 people are willing to work for them. This means that the:

total wage cost is $7,200.

Iyana decides to build a chicken coop, get some chickens, and start selling fresh eggs in her neighborhood. This example describes which of the following characteristics of perfect competition?

very easy entry and exit

Regulatory commissions may focus on establishing a "fair-return" price to be charged by a monopolist. Under this policy, the monopolist would earn:

zero economic profits.

If a perfectly competitive industry's long-run supply curve is downward sloping, we can conclude that input prices will:

decrease as industry output increases

A decrease in the marginal product of labor would be represented by a(n):

decrease in labor demand.

If the MRP of labor decreases, labor:

demand will decrease.

the long run is a planning period:

durning which the firm can vary its plant size

Comparing the firms in a monopolistically competitive industry shown in Exhibit 10-2 to a perfectly competitive firm in long-run equilibrium, we find that both firms

earn zero economic profits

The neighborhood ice cream shop finds that when it charges $3 per ice cream cone, its total revenues are $90,000. It has total variable costs of $30,000 and total fixed costs of $40,000. From this we can infer the:

economic profits are $20,000

If the equilibrium wage rate in Exhibit 11-4 increased, the cause could be that:

either the demand for labor increased or the supply of labor decreased.

In the long run, the economic profits of Hoot's Chicken 'n' Ribs, a monopolistic competitor, are:

eliminated due to firms entering the industry.

A monopsony will:

employ a quantity of labor where the marginal revenue product equals the marginal factor cost.

Ersatz Kreme will sell its filling to Hunky Donuts only if Hunky Donuts agrees not to buy filling from other suppliers. This is an example of:

exclusive dealing

If all firms in a monopolistically competitive industry have demand and cost curves like those shown in Exhibit 10-2, we would expect that in the long run:

firms in the industry earn zero economic profits.

Suppose the price of a product is less than its average variable cost. When the firm's fixed obligations are completely ended, it will now most likely:

go out of business

A price-discriminating monopoly charges the lowest price to the group that:

has the most elastic demand

In the United States, regulation increased steadily in the early 1970s in the areas of

health, safety, and the environment

A market failure that causes overconsumption of a product because the sellers know something negative about a product that the buyers do not know is called

imperfect information

Which of the following can shift the labor demand curve to the right?

increase in productivity

In Exhibit 8-5, a firm is currently producing 40 units of output. What would you advise this firm to do?

increase output

According to the information provided in Exhibit 9-7, if the Rudd Ice Company is a monopoly and is currently charging a price of $6, what would you advise them to do?

increase price and decrease output

The kinked demand theory attempts to explain why an oligopolistic firm:

infrequently changes its price.

Given the same marginal revenue product (MRP) and supply curves, the equilibrium quantity of labor employed in a monopsonistic labor market will be:

less than that of a competitive labor market.

above the shutdown point, a competitive firm's supply curve coincides with its:

marginal cost curve

The government will have to subsidize a natural monopoly in the long run if regulators choose to pursue:

marginal cost pricing

If OPEC is an effective cartel,

members agree on output quotas.

Suppose the firm or firms in the market for Good A face a downward-sloping demand curve, maximize profit by producing the quantity at which marginal revenue equals marginal cost, set the price higher than the marginal cost, and break even in long run equilibrium. Which one of the following market structures most likely exists for Good A?

monopolistic competition

The Sherman Antitrust Act of 1890 is the federal antitrust law that prohibits:

monopolization and conspiracies to restrain trade.

Economic regulation occurs when:

monopoly is the optimal market structure.

Product differentiation makes the demand for a monopolistically competitive firm's product:

more elastic than for a monopoly

A kinked demand curve is perceived by the firm as being:

more inelastic to the right of the kink.

One reason the supply of carpenters is greater than the supply of physicians is because:

of differences in human capital.

Deficient information on unsafe products can cause:

overconsumption of a product.

In long-run equilibrium, output is expanded to the minimum long-run average total cost by:

perfectly competitive firms but not by monopolistically competitive firms.