Microecomonics 11_21_19

b. $160

A firm received $00 per unit at an equilibrium level of out put of 80 units. The average total cost at 80 units of output is $8. The firm makes a total economic profit of: a. $120 b. $160 c. $100 d. $80

a. higher; less

A monopolist would charge _________ prices and produce __________ output than would exist under perfect competition a. higher; less b. lower; more c. higher; more d. the same; the same

b. price taker

A perfectly competitive firm is a: a. price giver b. price taker c. price maker d. price leader

b. both maximize profits by choosing an output where marginal revenue equals marginal cost

A price-taking firm and a monopoly firm are alike in that: a. price equals marginal revenue for both b. both maximize profits by choosing an output where marginal revenue equals marginal cost c. price exceeds marginal cost at the profit-maximizing level of out put for both d. in the long run, both earn zero economic profits

d. not be able to sell any output

A profit-maximizing firm that is operating in the short run will sell an additional unit of output as long as: a. as doing so reduces the firm's per-unit costs b. doing so reduces the firm;s marginal costs c. doing so add more to revenue than it adds to cost d. there is additional plant capacity with which to produce

d. marginal revenue equals marginal cost

A profit-maximizing monopolist, if producing at all, chooses a level of output where: a. total revenue is maximized b. total cost is minimized c. average total cost is minimized d. marginal revenue equals marginal cost

b. is less than; equals

As exit from the perfectly competitive industry that is currently unprofitable pushes up the market price, producers will move from a situation where price _______ average total cost ---- ________ average total cost a. exceeds; equals b. is less than; equals c. equals; is less than d. equals; exceeds

c. firms facing a downward-sloping demand curve

Characteristics shared by monopolistically competitive markets and monopoly markets include: a. strategic interactions among sellers b. many sellers c. firms facing a downward-sloping demand curve d. insignificant barriers to entry

a. shut down as quickly as possible in order to minimize her losses

Darlene runs a fruit and vegetable stand in a medium-sized community where there are many such stands. Her weekly total revenue equals $2,000. Her weekly total cost of running --- $3,500, consisting of $2,500 of variable costs and $1,000 of fixed costs. An economist would like advise Darlene to: a. shut down as quickly as possible in order to minimize her losses b. keep the stand open because it is generating an economic profit c. keep the stand open for a while longer because she is covering all of her variable costs and some of her fixed costs d. keep the stand open for a while longer because she is covering all of her fixed costs and some of her variable costs

b. keep the stand open because it is coverall all expenses and has potential to increase profit.

Darlene runs a fruit and vegetable stand in a medium-sized community where there are many such stands. Her weekly total revenue equals $3,500. Her weekly total cost of running --- $3,500, consisting of $2,500 of variable costs and $1,000 of fixed costs. An economist would likely advise Darlene to: a. shut down as quickly as possible because the stand is generating losses. b. keep the stand open because it is coverall all expenses and has potential to increase profit. c. keep the stand open for a while longer because she is covering all of her variable costs and some of her fixed costs. d. Keep the stand open for a while longer because she is covering all of her fixed costs and some of her variable costs.

c. monopolistically competitive

Hotels in New York City frequently experience an average vacancy rate of about 20 percent (i.e., on an average night, 80 percent of their rooms are full). This excess capacity is __________ industry a. perfectly competitive b. monopoly c. monopolistically competitive d. oligopoly

d. not be able to sell any output

If a price-taking firm selling in a competitive market raises the price of its product above the market-clearing price, it will: a. increase its profits v. maintain its profit base since the demand for the product is inelastic c. be able to increase its sales d. not be able to sell any output

b. increase price and decrease output

If a profit-maximizing monopolist finds that marginal cost in increasing an exceeds marginal revenue, it should: a. increase output and decrease price b. increase price and decrease output c. decrease both price and output d. increase both price and output

d. all of the above will occur

If an unregulated monopolist operated in a market, then: a. customers will pry higher prices than if the market were competitive b. customers will purchase fewer units of output than if the market were competitive c. society will not be allocating its resources efficiently d. all of the above will occur

c. is greater than $4

If marginal revenue on the tenth unit of output equals $4 for a non-discriminating, profit-maximizing monopolist, then price: a. equals $4 b. is less the $4 c. is greater than $4 d. must be equal to average total cost

d. all of the above will occur

If monopolistically competitive firms are earning economic profits, then in the transition to the long-run equilibrium: a. more firms will enter the industry b. prices will tend to fall c. each firm will produce a smaller quantity of output d. all of the above will occur

c. signal new firms to enter; enter; left

In monopolistically competitive markets, economic profits _______ , and _______ shifts the demand curve of the remaining firms to the _________. a. signal some remaining firms to exit; exit; right b. signal some remaining firms to exit; exit; left c. signal new firms to enter; enter; left d. signal new firms to enter; entry; right

c. identical products

In the perfectly competitive model, all firms are assumed to be producing: a. products that are heavily advertised. b. differentiated products c. identical products d. complementary products

a. government licensing

Many communities have granted monopoly rights to cable companies. This is a example of a monopoly created through: a. government licensing b. ownership of the cable resources c. patent protection d. smart business practices by shrewd entrepreneiurs

b. (i) and (ii) only

Monopolistic competition is characterized by which of the following attributes: i. Many sellers ii. Product differentiation iii. Significant barriers to entry a. (i) and (iii) only b. (i) and (ii) only c. (ii) and (iii) only d. (i), (ii), and (iii)

d. differentiated products

Monopolistic competition is characterized by: a. homogeneous products b. barriers to entry c. firms earning economic profits in the long run d. differentiated products

d. a large number of firms selling differentiated products

Monopolistic competition is characterized by; s. a small number of firms selling differentiated products b. a large number of firms selling identical products c. high barriers to entry d. a large number of firms selling differentiated products

a. retail selling

Monopolistic competition is common in: a. retail selling b. farming c. basic manufacturing d. electric power generation

b. an industry in which numerous price-taking firms produce identical products.

Perfect competition is the term used to describe: a. an industry in which a few price-taking firms produce identical products. b. an industry in which numerous price-taking firms produce identical products. c. an industry in which firms are price takers and compete for market share by varying the qualitative characteristics of products. d. an industry in which numerous firms are price makers and produce identical products.

a. in perfect competition MC = P, while a monopolist produces where P is greater then MC

Perfectly competitive firms and monopolists are different because a. in perfect competition MC = P, while a monopolist produces where P is greater then MC b. in perfect competition MC = P, while a monopolist produces where MC is greater then P c. in perfect competition P is greater the MC; while a monopolist produces where MC = P d. in perfect competition MC is greater the P, while a monopolist produces where MC = P

d. non of the above

Perfectly competitive markets are characterized by: a. rivalry in product design b. competition in terms of product quality c. attempts by sellers to outdo one another with good service d. non of the above

b. charging different prices to different groups without a basis for doing so because of differences in production costs

Price discrimination refers to: a. charging different prices to different groups on the basis of production cost differences b. charging different prices to different groups without a basis for doing so because of differences in production costs c. the ability of a firm to charge a price in excess of marginal cost d. consumer bargain hunting

d. is characterized by all of the above

Pure monopoly: a. is characterized by a single supplier b. is a market structure in which no close substitute products are available c. exists when entry and survival of potential competitors is extremely unlikely d. is characterized by all of the above

c. continue to produce at some prices at which American firms would shut down

Say that Japanese firms commit to avoid laying off their employees when demand for their products is low, but American firms often lay off workers when demand is low. As a result we would expect Japanese firms to: a. face more elastic demand curves than American firms b. have relatively greater variable costs than American firms c. continue to produce at some prices at which American firms would shut down d. shut down at prices at which American firms would continue to operate

b. prevent firms from acquiring or exercising undue market power

The aim of antitrust policy is to: a. provide adequate incentives for inventors and entrepreneurs b. prevent firms from acquiring or exercising undue market power c. protect established firms by deterring new entry into industries d. regulate the prices charges by perfectly competitive firms

b. the price paid by consumers would be unchanged

The patent system is intended to: a. prevent adequate incentives for inventors and entrepreneurs b. the price paid by consumers would be unchanged c. the average cost of producing the good would increase d. the average cost of producing the good would decrease

c. firms facing a downward-sloping demand curve

The restaurant market in San Francisco is probably best categorized as: a. perfectly competitive b. monopolistic c. firms facing a downward-sloping demand curve d. insignificant barriers to entry

b. there are few barriers to entry

Under monopolistic competition: a. there are significant barriers to entry b. there are few barriers to entry c. firms sell identical products d. firms face perfectly elastic demand curves

c. the average cost of producing the good would increase

What would be the impact if the government forced the breakup of a natural monopoly to promote greater competition in an industry? a. smaller firms would have a cost advantage over larger firms b. the price paid by consumers would be unchanged c. the average cost of producing the good would increase d. the average cost of producing the good would decrease

c. prices fall

When firms enter a monopolistically competitve market; a. product variety diminishes b. the demand curves of established firms shift to the right c. prices fall d. profits increase

d. the average revenue received by remaining firms will increase at each level of output

When firms exit a monopolistically competitive industry: a. the average total cost curves of remaining firms will shift upward b. the demand curves of remaining firms are decreased at each level of output c. the remaining firms will decrease production d. the average revenue received by remaining firms will increase at each level of output

c. we would expect exit from the industry

When perfectly competitive firms are earning zero accounting profits a. we would expect entry into the industry b. we would expect stability in the industry, since it is in long run equilibrium c. we would expect exit from the industry d. we would expect non of the above

a. we would expect entry into the industry

When perfectly competitive firms in an industry are earning positive economic profits a. we would expect entry into the industry b. we would expect stability in the industry, since it is a long run equilibrium c. we would expect exit from the industry d. we do no know whether there would tend to be entry, exit, or stability in the industry

a. perfect competition

Which market structure is characterized by may seller, easy entry, and homogeneous products a. perfect competition b. monopolistic competition c. oligopoly d. monopoly

b. The monopolist may earn long-run economic profit; firms in perfectly competitive markets cannot

Which of the following accurately describes a major difference between a monopolist and firms in perfectly competitive markets? a. The monopolist maximized profit; firms in perfectly competitive markets maximize sales b. The monopolist may earn long-run economic profit; firms in perfectly competitive markets cannot c. The monopolist is a price taker; firms in other markets are price searchers d. The monopolist may earn short-run profit; firms in perfectly competitive markets cannot

a. the sock market

Which of the following best resembles a perfectly competitive maker? a. a stock market b. the book publishing industry c. the steel industry d. the used car industry

d. all of the above

Which of the following can serve as a barrier to entry? a. legal restrictions b. patents c. control of scarce input or resources d. all of the above

c. large barriers to entry

Which of the following is a characteristic of a monopoly? a. a large number of sellers b. homogeneous products c. large barriers to entry d. price taking firms

a. Homogeneous products

Which of the following is a characteristic of a perfectly competitive market? a. Homogeneous products b. Barriers to entry c. Substantial expenditures on advertising d. All of the above

d. each firm has significant control over the market

Which of the following is a characteristic of perfect competition? a. homogeneous products b. many sellers c. many buyers d. each firm has significant control over the market

b. homogeneous products

Which of the following is a characteristic of perfect competition? a. substantial barriers to entry b. homogeneous products c. few sellers d. each firm has significant control over the market

a. perfect competition - monopolistic competition - monopoly

Which of the following is a correct listing of industry models ordered from most competitive to least competitive? a. perfect competition - monopolistic competition - monopoly b. perfect competition - monopoly - monopolistic competition c. monopolistic competition - perfect competition - monopoly d. monopolistic competition - monopoly - perfect competition

d. all of the above are generally turn of monopoly

Which of the following is generally true of monopoly? a. price exceeds marginal cost b. marginal revenue is less than price output is restricted relative to the socially efficient level c. output is restricted relative to the socially efficient level d. all of the above are generally turn of monopoly

d. computers

Which of the following is the most likely candidate for decreasing-cost industry? a. airlines b. oil c. constructions d. computers

c. identical products

Which of the following is the most likely to be a price taker? a. a respected heart surgeon b. and ice cream shop owner located in Atlanta, Georgia c. identical products d. complementary products

b. Perfect price discrimination

Which of the following is the worst-case scenario for a consumer? a. Perfect competition b. Perfect price discrimination c. Single-price monopoly d. peak load pricing

c. firms can potentially earn economic profits in the the long run

Which of the following is true of monopoly but not true of perfect competition? a. Firms can potentially earn economic profits in the short run b. total revenue is the product of price times the quantity sold c. firms can potentially earn economic profits in the the long run d. a profit-maximizing firm will shut down if price falls below the average variable cost

d. firms have no excess capacity

Which of the following is uncharacteristic of monopolistic competition in the long run? a. a large number of sellers in the industry b. zero economic profits c. price in excess of marginal cost d. firms have no excess capacity

d. Monopolistically competitive sellers are price makers

Which of the following overvaluations is true? a. Monopolistically competitive sellers are price takers b. Monopolistically competitive sellers treat price in the same manner as in perfect competition c. Monopolistically competitive sellers regard regard price as a given by market condition d. Monopolistically competitive sellers are price makers

d. non of the above

Which of the following would likely be an example of a monopolistic industry? a. fast-fool restaurants b. cell phone service c. auto manufacturing d. non of the above

d. Numerous competitors produce the same product and charge the market price.

Why can't a firm in a perfectly competitive industry charge a price above the market-clearing price? a. Government-imposed price ceilings prevent prices from being raised b. Firms in a perfectly competitive industry face significant barriers to entry c. Perfectly competitive firms are price searchers. d. Numerous competitors produce the same product and charge the market price.

c. to promote technological progress

Why does the government allow some markets to be monopolized by granting patents: a. to promote a more equal distribution of income b. to correct for negative entrepreneurs c. to promote technological progress d. to ensure lower prices for consumers in the short run