Microeconomics Final Exam (Chpt. 11, 12, 13)
Productive efficiency refers to: A. Cost minimization, where P = minimum ATC B. Production, where P = MC C. Maximizing profits by producing where MR = MC D. Setting TR = TC
A
In the short-run, a maximizing monopolistically competitive firm sets its prices...
Above marginal cost
When a purely competitive industry is in long-run equilibrium, which statement is true? A. Average total cost is less than marginal cost B. Price and average total cost are equal C. Marginal cost is at its maximum level D. Marginal revenue is greater than price
B.
Which of the following is not a barrier to entry? A. Patents B. X-inefficiency C. Economies of scale D. Ownership of essential resources
B. X-inefficiency
An economy is producing at the least-cost rate of production when: A. Price and the minimum average total cost are equal B. Marginal cost is greater than average total cost C. Marginal revenue is greater than price D. Price and marginal revenue are equal
A
The herfindahl index is: A. the sum of the squared percentage market shares of all firms in the industry B. The sum of the market shares for the top 10 firms in the industry C. A measure of product differentiation in the market D. A measure of how easy it is for new firms to enter the market
A
X-inefficiency is said to occur when a firm's: A. Average costs pf producing any output are greater than the minimum possible average costs B. Marginal costs of producing any output are greater than the minimum possible total costs C. Total costs of producing any output are greater than minimum possible average costs D. Short-run costs of producing any output are greater than the long-run costs
A
A constant-cost industry is one in which: A. A higher price per unit will not result in an increased output B. If 100 units can be produced for $100, then 150 can be produced for $150, 200 for $200, and so forth C. The demand curve and therefore the unit price and quantity sold seldom change D. The total cost of producing 200 or 300 units is no greater than the cost producing 100 units
B
A pure monopolist should never produce the: A. Elastic segment of its demand curve B. Inelastic segment of demand curve C. Segment of its demand curve where the price elasticity coefficient is greater than one.
B
If a purely competitive firm is producing at the MR = MC output level and earning an economic profit, then: A. The selling price for this firm is above the market equilibrium price B. New firms will enter this market C. Some existing firms in this market will leave D. There must be price fixing by the industry's firm
B
In a monopolistically competitive market, the firm's marginal revenue schedule: A. Is the same as the demand schedule B. Lies below the demand schedule C. Lies above the demand schedule D. Is not dependent on the demand schedule
B
Other things equal, a price discriminating monopolist will: A. Realize a smaller economic profit than a non-discriminating monopolist B. Produce a larger output than non-discriminating monopolist C. Produce the same output as a non-discriminating monopolist D. Produce a smaller output than a non-discriminating monopolist
B
The long-run equilibrium of a purely competitive industry ensures: A. Consumer and producer surplus is maximized B. Consumer and producer surplus is minimized C. Only producer surplus is maximized D. Only consumer surplus is maximized
B
When a purely competitive firm is in long-run equilibrium: A. Marginal revenue exceeds marginal cost B. Price equals marginal cost C. Total revenue exceeds total cost D. Minimum average total cost is less than the product price
B
The long-run supply curve is a constant-curve industry would be: A. Vertical B. Horizontal C. Upsloping D. Downsloping
B Horizontal
Suppose that a monopolist calculates that at present output and sales levels, marginal revenue is $1.00 and marginal cost is $2.00. He could maximize profits or minimize losses by: A. Decreasing price and increasing output B. Increasing price and decreasing output C. Decreasing price and leaving output unchanged D. Decreasing output and leaving price unchanged
B. Increasing price and decreasing output
Allocative inefficiency due to unregulated monopoly is characterized by the condition: A. P = MC B. P = MR C. P > MC D. P > AVC
C
Non-price competition refers to: A. Competition between products of different industries B. Price increases by a firm that is ignored by its rivals C. Advertising, product promotion, and changes in the real or perceived characteristics of a product D. Reductions in production costs that are not reflected in price reductions
C
Product differentiation is an important characteristic in a monopolistically competitive market because: A. It results in zero profits in the short run B. It promotes productive efficiency in the long run C. It provides firms with some market power D. It implies market share is zero in the long run
C
Which value of the four-firm concentration ratio is most likely to indicate a monopolistically competitive market? A. 100% B. 60% C. 30% D. 45%
C - Anything below 40%
A monopolistically competitive firm in the short run is producing where price is $3.00 and marginal cost is $1.50. To maximize profits: A. The firm should continue to produce this quantity B. The firm should increase output and decrease quantity C. The firm should decrease output and increase price D. It is unclear what the firm should do without knowing marginal revenue
D
Creative destruction: A. Stimulates growth B. Contributes to the production of new goods C. Forces firms to be innovative D. Does all of the above
D
If profits are negative in a monopolistically competitive market, then: A. The industry will stop production B. New firms will enter the market until economic profits are zero C. Firms will exit the market until economic profit returns to the optimal positive level D. Firms will exit the market until economic profit returns to zero
D
In a monopolistic competitive market: A. There is a relatively small number of sellers B. All products are identical C. It is typically difficult to enter the market D. There is a relatively large number of sellers
D
In the long run, new firms will enter a monopolistically competitive industry: A. Provided economies of scale are being realized B. Even though losses are incurred in the short run C. Until minimum average total cost is acheived D. Until economic profits are zero
D
In the short run, purely competitive firms earn ____________ in equilibrium while in the long run firms earn ______________ in equilibrium A. Normal profits; economic profits B. Profits or losses; profits or losses C. Profits; normal profit D. Profits or losses; normal profit
D
Many people believe that monopolies change any price they want to without affecting sales. Instead the output level for a profit-maximizing monopoly is determined by: A. Marginal Cost = Demand B. Marginal Revenue = Demand C. Average Total Cost = Demand D. Marginal Cost = Marginal Revenue
D
In moving down the elastic demand curve, total revenue is...
Increasing, and marginal revenue is positive
Price discrimination refers to...
The selling of a given product at different prices to different buyers that do not reflect cost differences
