Ag Econ- Miller NWMSU

As the number of firms in an oligopoly market

increases, the market approaches the competitive market outcome.

Monopolistic competition is an

inefficient market structure because there is deadweight loss.

A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $30, its average revenue is $60, and its average total cost is $34, at Q = 500, the firm's total revenue is

$30,000

Assume a certain firm is producing Q = 1,000 units of output. At Q = 1,000, the firm's marginal cost equals $20 and its average total cost equals $25. The firm sells its output for $30 per unit. at Q = 1,000, the firm's profits equal

$5,000.

A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $30, its average revenue is $60, and its average total cost is $34, the firm's profit-maximizing price is

$60

If the price elasticity of supply is 1.2, and a price increase led to a 5% increase in quantity supplied, then the price increase is about

4.2%.

An inferior good would be one that

A consumer purchases more of if their income decreases

Know this:

If duopolists successfully collude, then their combined output will be equal to the output that would be observed if the market were a monopoly. Although the logic of self-interest decreases a duopoly's price below the monopoly price, it does not push the duopolists to reach the competitive price. Although the logic of self-interest increases a duopoly's level of output above the monopoly level, it does not push the duopolists to reach the competitive level

Which of the following is not an example of scarcity?

Miranda has an unlimited supply of oranges in her orchard.

Suppose a market is initially perfectly competitive with many firms selling an identical product. Over time, however, suppose the merging of the firms results in the market being served by only three or four firms selling this same product. As a result, we would expect

a decrease in market output and an increase in the price of the product.

The term market failure refers to

a market that fails to allocate resources efficiently.

the opportunity cost of obtaining more of one good is shown on the production possibilities frontier as the

amount of the other good that must be given up.

Patents, copyrights, and trademarks

are examples of government-created monopolies, are examples of barriers to entry, and allow their owners to charge higher prices.

As a group, oligopolists would always be better off if they would act collectively

as a single monopolist.

A monopoly's marginal cost will

be less than the price per unit of its product.

In a competitive market, the quantity of a product produced and the price of the product are determined by

both buyers and sellers.

The likely outcome of the standard prisoners' dilemma game is that

both prisoners confess.

A firm that has little ability to influence market prices operates in a

competitive market.

A distinguishing feature of an oligopolistic industry is the tension between

cooperation and self interest.

Suppose you are in charge of setting prices at a local ice cream shop. The business needs to increase its total revenue, and your job is on the line. You evaluate the data and determine that the price elasticity of demand for ice cream at your shop is 1.8. You should

decrease the price of ice cream.

If the number of buyers in a market decreases, then

demand will decrease.

If two firms comprise the entire soft drink market, the market would be a(n)

duopoly.

In general, elasticity is a measure of

how much buyers and sellers respond to changes in market conditions.

Assume milk has an inelastic demand, and beef has an elastic demand. Suppose that a mysterious increase in bovine infertility decreases both the population of dairy cows and the population of beef cattle by 50 percent. the equilibrium price will

increase in both the milk and beef markets.

Assume a certain firm is producing Q = 1,000 units of output. At Q = 1,000, the firm's marginal cost equals $20 and its average total cost equals $25. The firm sells its output for $30 per unit. to maximize its profit, the firm should

increase its output.

A decrease in the price of a good would

increase the quantity demanded of the good.

Assume milk has an inelastic demand, and beef has an elastic demand. Suppose that a mysterious increase in bovine infertility decreases both the population of dairy cows and the population of beef cattle by 50 percent.

increase, and total consumer spending on beef will decrease.

A competitive firm

is a price taker, whereas a monopolist is a price maker.

A firm that shuts down temporarily has to pay

its fixed costs but not its variable costs.

The monopolist's profit-maximizing quantity of output is determined by the intersection of which of the following two curves?

marginal cost and marginal revenue

When profit-maximizing firms in competitive markets are earning profits,

new firms will enter the market.

The breakfast cereal industry, with its concentration ratio of 80%, would best be described as a(n)

oligopoly.

A cooperative agreement among oligopolists is less likely to be maintained,

the greater the number of oligopolists.

When an economy is operating at a point on its production possibilities frontier, then

there is no way to produce more of one good without producing less of the other.

High-school athletes who skip college to become professional athletes

understand that the opportunity cost of attending college is very high.

From society's standpoint, cooperation among oligopolists is

undesirable, because it leads to output levels that are too low and prices that are too high.

Jerome says that he will spend exactly $25 each month on new apps for his mobile device, regardless of the price of apps. Jerome's demand for apps is

unit elastic