Micro Exam 3

What is the firm's profit-maximizing price?

$16

What is the amount of the monopoly's total cost of production?

$17,700

What is the amount of the monopoly's profit?

$2,700

What is the amount of the monopoly's total revenue?

$20,400

If the market price is $25 in a perfectly competitive market, the average revenue of selling five units is

$25

If the market price is $25 in a perfectly competitive market, the marginal revenue from selling the fifth unit is

$25

What is the price charged for the profit-maximizing output level?

$34

If the market price is $20, what is the amount of the firm's profit?

$6,750

If the market price is $20, what is the firm's profit-maximizing output?

1,350 units

What is the profit-maximizing output level?

22 cases

What is the profit-maximizing/loss-minimizing output level?

600 units

If Alistair assumes that Baine would increase its advertising budget, what should it do?

Alistair should also increase its advertising budget

What is likely to happen to this monopoly in the long run?

As long as there are entry barriers, this firm will continue to enjoy economic profits

What is the Nash equilibrium in this game?

Both Alistair and Baine increase their advertising budgets.

What is the Nash equilibrium in this game? (2nd)

Both Ming and Henri offer free pickup and delivery.

In long-run perfectly competitive equilibrium, which of the following is false?

Firms earn economic profit.

Does Henri have a dominant strategy? If yes, what is it?

No, Henri does not have a dominant strategy - his best outcome depends on what Ming does

Is a monopolistically competitive firm productively efficient?

No, because it does not produce at minimum average total cost.

Is a monopolistically competitive firm allocatively efficient?

No, because price is greater than marginal cost.

Which of the graphs in the figure depicts a monopolistically competitive firm that is earning economic profits?

Panel A

Which of the graphs in the figure depicts a monopolistically competitive firm that is minimizing its losses?

Panel C

At price P2, the firm would produce

Q2 units

At price P3, the firm would produce

Q3 units

At price P4, the firm would produce

Q4 units

Which of the following is not a characteristic of a perfectly competitive market structure?

There are restrictions on exit of firms

If the firm is producing 700 units, what is the amount of its profit or loss?

There is insufficient information to answer the question

If the firm is producing 500 units, what is the amount of its profit or loss?

There is insufficient information to answer the question.

How are the firms in this advertising game caught in a prisoner's dilemma?

They would be more profitable if they refrained from advertising but each fears that if it does not advertise, it will lose customers

Does Alistair have a dominant strategy and if so, what is it?

Yes, Alistair should increase its advertising budget.

Does Baine have a dominant strategy and if so, what is it?

Yes, Baine should increase its advertising budget

Does Ming have a dominant strategy? If yes, what is it?

Yes, Ming's dominant strategy is to offer free pickup and delivery.

In the United States, government policies with respect to monopolies and collusion are embodied in

antitrust laws.

Identify the short-run shut down point for the firm

b

At price P3, the firm would

break even

Which of the following products allows the seller to identify different groups of consumers (segment the market) at virtually no cost?

early bird dinner specials

At the profit-maximizing output level the firm will

earn a profit of $88.

When a firm charges each customer the maximum price that the customer is willing to pay, the firm

engages in first-degree price discrimination

The perfectly competitive market structure benefits consumers because

firms are forced by competitive pressure to be as efficient as possible

An oligopolistic industry is characterized by all of the following except

firms pursuing aggressive business strategies, independent of rivals' strategies

A monopolistically competitive firm will

have some control over its price because its product is differentiated

A monopoly firm's demand curve

is the same as the market demand curve.

If the firm is charging a price of $12 per unit

it is not selling any output

If the firm is producing 700 units

it should cut back its output to maximize profit

If the firm is producing 200 units

it should increase its output to maximize profit.

If the firm is producing 500 units

it should maintain its output to maximize profit.

At price P2, the firm would

lose an amount less than fixed cost

At price P1, the firm would

lose an amount more than fixed cost

At price P4, the firm would

make a profit

The key characteristics of a monopolistically competitive market structure include

many small (relative to the total market) sellers acting independently

If a typical firm in a perfectly competitive industry is earning profits, then

new firms will enter in the long run causing market supply to increase, market price to fall, and profits to decrease

Based on the diagram, one can conclude that

new firms will enter the market.

A monopolistically competitive firm faces a downward-sloping demand curve because

of product differentiation.

An electric power company uses block pricing for electricity sales. Block pricing is an example of:

second-degree price discrimination

Identify the firm's short-run supply curve

the marginal cost curve from b and above

An oligopolist differs from a perfect competitor in that

there are no entry barriers in perfect competition but there are entry barriers in oligopoly

A monopoly is characterized by all of the following except

there are only a few sellers, each selling a unique product

A tennis pro charges $15 per hour for tennis lessons for children and $30 per hour for tennis lessons for adults. The tennis pro is practicing

third-degree price discrimination

Some grocery stores are now offering customers coupons which entitle them to a discount on certain items on their next visit when they go through the check-out line. This practice is an example of:

third-degree price discrimination

A doctor charges two different prices for medical services, and the price level depends on the patients' income such that wealthy patients are charged more than poorer ones. This pricing scheme represents a form of

third-degree price discrimination.

At price P1, the firm would produce

zero units