Microeconomics final

Refer to the above diagram for a monopolistically competitive firm in short run equilibrium. This firms profit maximizing price will be

$16

Refer the the above data, the firms optimal amount of R&D spending is

$80 million

Refer to diagram. At the profit maximizing output, total revenue will be

0AHE

Answer on the basis of the relationships shown in the four figures below. The amount of Y is directly related to the amount of X in:

1 only

Refer to the above diagram for a monopolistically competitive firm in short run equilibrium. The profit maximizing output for this firm will be

160

Refer to the above diagram for a pure monopolist. Monopoly price will be

C.

Refer to the above diagram for a pure monopolist. Monopoly profit will be

Cannot be determined from the info given

"Spillovers" or "externalities" weaken the efficiency of the market system bc they

Cause certain goods to be overproduced or underproduced

The long run

The ability of the firm to change its plant size

Oppirtunity Cost

The amount of one product that must be given up to produce one more unit of another product

price discrimination

The selling of a given product at different prices that don't reflect cost differences

A pure monopolist:

Will realize an economic profit if price exceeds ATC at the equilibrium output

Technological advance is three-step process involving

invention, innovation, diffusion

The demand curve faced by a pure monopolist

is less elastic than that faced by a single purely competitive firm.

A pure monopolist demand curve is

Downsloping

In purchasing products A and B, a consumer is in equilibrium when

MUa/Pa = MUb/Pb

monopolistic competition

Many firms producing differentiated products

Which is correct?

A purely competitive firm is a "price taker" while a monopolist is a "price maker"

Refer to above diagram. A price of $20 in this market will results in

A shortage of 100 units

mutual interdependence that characterizes oligopoly arise bc

A small number of firms produce a large proportion of industry output

If the price of product A is 50 cents the firm will realize

An economic profit of $2

The law of diminishing returns indicates

As extra units of a variable resource are added to a fixed resource, a marginal product will decline beyond some point

short run

At least one fixed resource

Which of the following is a shortcoming if the market system

Certain goods will not be produced bc there is no way of excluding nonpaying (free-rider) individuals from the associated benefits

If there is significant economies of scale in an industry, then:

Competitors will follow a price cut but ignore a price increase

Broadly defined, technological advance

Comprises new and improved foods and services and new and improved ways of producing of distributing them

Refer to the above diagram. This economy will experience unemployment if it produces at point:

D.

In deciding on an optimal amount and type of research and development, firms should adhere to the rule: Expand R&D until:

Expected rate of return equals the interest rate

If we plotted the above data on a graph with R&D expenditures in the horizontal (maybe vertical??) axis the:

Expected-rate-of-return-curve would slope downward

Refer to the above diagram for a pure monopolist. Monopoly output will be

F.

Refer to above diagram. Which technique is most efficient in producing A?

IV

If we plotted the above data on a graph with R&D expenditures in the horizontal axis the:

Interest-rate-cost-of-funds-curve would be horizontal

The modern view of technological advance is that it

Is an internal element of capitalism, occurring in responses to profit incentives

In the short run, a purely competitive seller will shut down if product price:

Is less than average variable cost (AVC) at all outputs

Refer to above data. At $100 million of R&D expenditures, the

Marginal cost of R&D exceeds the marginal benefit

Monopolostic Competition and oligopoly are alike in that

Nonprice competition is common to both

Technological advance is shown as a(n)

Outward shift of a production possibilities curve

The term oligopoly indicates

a few firms producing either a differentiated or a homogeneous product.

Refer to above diagram. A price of $60 in this market will result in

a surplus of 100 units.

nonprice competition

advertising, product promotion, and changes in the real or perceived characteristics of a product

The kinked-demand curve of an oligopolist is based on the assumption that

competitors will follow a price cut but ignore a price increase.

If a pure monopolist is producing at that output where P = ATC, then:

its economic profits will be zero.

Monopolistically competitive firms

may realize either profits or losses in the short run but realize normal profits in the long run.

For an imperfectly competitive firm:

the marginal revenue curve lies below the demand curve because any reduction in price applies to all units sold.

Economics

the social science concerned with the efficient use of scarce resources to achieve the maximum satisfaction of economic wants

What do economies of scale, the ownership of essential raw materials, and patents have in common?

they are all barriers to entry

The automobile, household appliance, and automobile tire industries are all illustrations of:

differentiated oligopoly

Refer to the diagram. To maximize profits or minimize losses, this firm should produce:

E units at price A

How do entrepreneurs differ from "other innovators?"

Entrepreneurs bear risk; "other innovators" do not

Utility

Satisfaction that a consumer derives from a good or service