Econ 200 Test 2 Bilas
the demand curve for a purely competitive industry is perfectly elastic, but the demand curves faced by individual firms in such an industry are downsloping
FALSE
the monopolistically competitive seller equates price and marginal cost in maximizing profits
FALSE
the monopolistically competitive seller maximizes profits by equating price and marginal cost
FALSE
Because the monopolist's demand curve is downsloping: A) MR will equal price B) Price must be lowered to sell more output C) The elasticity coefficient will increase as price is lowered D) Its supply curve will also be downsloping
B
Unlike most demand curves, the demand curve for loneable funds is upsloping
FALSE
a pure monopolist will maximise profits by producing at that output where price and marginal cost are equal
FALSE
economic profits are the salaries received by the hired managers business corporations
FALSE
Which of the following statements is correct? A. Economic profits can properly be regarded as the salaries received by the hired managers of corporations. B. Economic rent is a price paid for productive resources whose supply is perfectly inelastic C. Economic profits would be nonexistent in a dynamic, purely competitive company. D. Economic or pure profit is the minimum return which entrepreneurs must receive to continue in a particular line of production
B
After all long-run adjustments have been completed, a firm in a competitive industry will produce that level of output where average total cost is at a minimum.
TRUE
price and marginal revenue are identical for an individual purely competitive seller
TRUE
In the long run a pure monopolist will charge the highest price the market will bear from its product
FALSE
In the short run 2 competitive firms will always choose to shut down if the product price is less than the lower alternate average total cost.
FALSE
A purely competitive seller is: A) both "a price maker" and a "price taker" B) neither a "price maker" nor a "price taker" C) a "price taker" D) a "price maker"
C
Marginal revenue product measures the: A. Amount by which the extra production of one more worker increases a firm's total revenue B. Decline in product price that a firm must accept to sell the extra output of one or more worker. C. Increase in total resource cost resulting from the hire of one extra unit of a resource D. Increase in total revenue resulting from the production of one more unit of a product
A
Oligopolistic industries are characterized by: A. A few dominant firms and substantial entry barriers B. A few dominant firms and no barriers to entry C. A large number of firms and low entry barriers D. A few dominant firms and low entry barriers
A
Marginal cost is a measure of the alternate goods which society forgoes in using resources to produce additional unit for a specific product
TRUE
A competitive employer should hire additional labor as long as: A. The MRP exceeds the wage rate B. The wage rate is less than the MP C. Average product exceeds MP D. MC exceeds MR
A
In which of the following market models do demand marginal revenue diverge? A. Pure monopoly, oligopoly, and monopolistic competition B. Pure monopoly, oligopoly, and pure competition C. Pure monopoly only D. Oligopoly only
A
Other things equal, in which of the following cases would economic profit be the greatest? A. An unregulated monopolist which is able to engage in price discrimination B. An unregulated, nondiscriminating monopolist C. A regulated monopolist charging a price equal to average total cost D. A regulated monopolist charging a price equal to marginal cost
A
The interest is the: A. Price paid for the use of money B. Opportunity cost of time C. Expectation of a future return on investment D. Reward for consuming rather than saving.
A
Which of the following is not a characteristic of pure competition? A) Price strategies by firms B) standardized product C) No barriers to entry D) A larger number of sellers
A
Which of the following statements is correct? A) The demand curve for a purely competitive firm is perfectly elastic, but the demand curve for a purely competitive industry is downsloping. B) The demand curve for a purely competitive firm is downsloping, but the demand curve for a purely competitive industry is perfectly elastic. C) The demand curves are downsloping for both a purely competitive firm and a purely competitive industry. D) The demand curves are perfectly elastic for both a purely competitive firm and a purely competitive industry.
A
If a firm in a purely competitive industry is confronted with an equilibrium price of $5, its marginal revenue: A) May be either greater or less than $5 B) Will also be $5 C) Will be less than $5 D) Will be greater than $5
B
The demand schedule or curve confronted by the individual purely competitive firm is: A) Relatively elastic, that is, the elasticity coefficient is greater than unity. B) Perfectly elastic C) Relatively inelastic, that is, the elasticity coefficient is less than unity. D) Perfectly inelastic
B
Which of the following is not a basic characteristic of monopolistic competition? A. The use of trademarks and brand names B. Recognized mutual interdependence C. Product differentiation D. A relatively large number of sellers
B
Which of the following is the best example of oligopoly? A. Womens dress manufacturing B. Automobile manufacturing C. Restaurants D. Cotton farming
B
Monopolistic competition is characterized by a: A. Few dominant firms and low entry barriers B. Large number of firms and substantial entry barriers C. Large number of firms and low entry barriers D. Few dominated firms and substantial entry barriers
C
Monopolistic competition means: A. A market situation where competition is based entirely on product differentiation and advertising B. A large number of firms producing a standardized or homogeneous product C. Many firms producing differentiated products D. A few firms producing a standardized homogenous product
C
Price discrimination refers to: A. Selling a given product for different prices at two different points in time. B. Any price above that which is equal to a minimum average total cost C. The selling of a given product at different prices that do not reflect cost differences. D. The difference between the prices a purely competitive seller and a purely monopolistic seller would charge
C
The term oligopoly indicates: A. A one firm industry B. Many producers of a differentiated product C. A few firms producing either a differentiated or a homogeneous product D. An industry whose four-firm concentration ratio is low
C
When total revenue is increasing: A) Marginal revenue may be either positive or negative B) The demand curve is relatively inelastic C) Marginal revenue is positive D) Marginal revenue is negative
C
Which of the following is an illustration of differentiated oligopoly? A. The aluminum industry B. The steel industry C. The soft drink industry D. Retail stores in large cities
C
Which of the following statements is correct? A. Purely competitive firms, monopolistically competitive firms, and pure monopolies all earn zero economic profits in the long run B. Purely competitive firms, monopolistically competitive firms, and pure monopolies all earn positive economic profits in the long run C. In the long run, purely competitive firms and monopolistically competitive firms earn zero economic profits, while pure monopolies may or may not earn economic profits D. Monopolistically competitive firms earn zero economic profits in both the short run and the long run
C
In the short run, a monopolist's economic profits: A) Are always positive because the monopolist is a price-maker B) Are usually negative because of government price regulation C) Are always zero because consumers prefer to buy from competitive sellers D) May be positive or negative depending on market demand and cost
D
Resource pricing is important because: A. Resource prices are a major determinant of money incomes B. Resource prices allocate scarce resources among alternative uses C. Resource prices, along with resource productivity, are important to firms in minimizing their costs D. All of the above reasons
D
When the pure monopolist's demand curve is elastic, marginal revenue: A) May be either positive or negative B) Is zero C) Is negative D) Is positive
D
A pure monopolist will maximize profits by producing at that output where price and marginal cost are equal
FALSE
Although individual purely competitive firms can influence the price of their product, these firms as a group cannot influence market price.
FALSE
Because of their large scale level of production, pure monopolists overallocate resources to their industry by producing beyond the P = MC output
FALSE
Competitive firms will produce in the short run so long as its price exceeds its average fixed cost.
FALSE
Homogeneous oligopolists tend to advertise more than do differentiated oligopolists.
FALSE
In a maximizing profit a firm will always produce that output where total revenue are a maximum
FALSE
In maximizing profit a firm will always produce that output where total revenues are at a maximum.
FALSE
In the long run a pure monopolist must produce at that output where average total cost is at a minimum
FALSE
In the short run a competitive firm will always choose to shut down if product price is less than the lowest attainable average total cost.
FALSE
In the short run a pure monopolist will charge the highest price the market will bear for its product
FALSE
Price discrimination occurs every time a firm sells a good for two different prices.
FALSE
Producers should hire resources until the total output of each is equal
FALSE
The demand curve for a purely competitive industry is perfectly elastic, but the demand curves faced by individual firms in such an industry are downsloping
FALSE
because for the ability to influence price, a pure monopolist can increase price and increase volume simultaneously
FALSE
because of their large-scale level of production, pure monopolist over allocate resources to their industry production beyond P=MC output.
FALSE
in the long run a pure monopolist must produce at the output where average total cost is at a minimum
FALSE
in the short run a pure monopolist will maximize profits by producing at that level of output where the difference between price and average total cost is at a maximum
FALSE
monopolistically competitive sellers produce efficiently because they obtain only normal profits in the long run
FALSE
monopolistically competitive sellers realize economic profits in the long run because entry barriers are significant.
FALSE
price discrimination is illegal in the US under antitrust regulations
FALSE
price discrimination occurs every time a firm sells a good for 2 different prices
FALSE
pure monopolists always earn economic profits
FALSE
sale taxes are proportional in relation to income because the same tax rate applies regardless of the size of a purchase
FALSE
the benefits received principle of taxation is used to support corporate and personal income taxes
FALSE
the benefits-received principle of taxation supports the case for highly progressive taxation
FALSE
the closer the Lorenz curve is to the diagonal, the greater is the degree of income inequality
FALSE
the optimal (economically-efficient) level of air pollution is zero emissions
FALSE
the supply of loanable funds is perfectly elastic
FALSE
the top 20 percent of US income earners receive nearly 80 percent of total US income
FALSE
Generally speaking, the larger the number of firms in an oligopolistic industry, the more difficult it is for those firms to collide.
TRUE
Marginal cost is a measure of the alternative goods which society forgoes in using resources to produce an additional unit of some specific product.
TRUE
Marginal revenue is the addition to total revenue resulting from the sale of one more unit of output
TRUE
The interest rate is the price paid for the use of money
TRUE
a firm should reduce its employment of a resource whose marginal resource cost exceeds its marginal revenue product
TRUE
because equilibrium position of a purely competitive sellers entails an equality of price and marginal costs, competition produces up to an efficient allocation of economic resources.
TRUE
demand is the active and supply the passive determinant of land and rent
TRUE
government transfer programs result in the US Lorenz Curve that is closer to the diagonal line than would be the case without the programs
TRUE
highly progressive tax takes relatively more from the rich than it does from the poor
TRUE
if three or four homogenous oligopolists collude, the resulting price and production outcomes will be similar to those of pure monopoly
TRUE
it will be profitable for a firm to hire additional units of any resource up to the point at which its MRP is equal to its MRC
TRUE
pay $1000 tax on $10,000 of taxable income and a $3000 tax on a taxable income of $16,000 the tax is progressive
TRUE
price and marginal revenue are identical for an individual purely competitive seller.
TRUE
the US poverty rate was considerably lower in 2004 than in 1960
TRUE
the basic function of profits and losses is to allocate society's scarce resources to their highest valued uses
TRUE
the demand curve of a monopolistically competitive firm is more elastic than that of a pure monopolist
TRUE
the demand curve of a monopolistically competitive producer is less elastic than that of a purely competitive producer.
TRUE
the economic profits earned by monopolistically competitive sellers are zero in the long run
TRUE
the marginal revenue product curve of a purely competitive seller declines solely because of the law of diminishing returns
TRUE
total revenue curve of a competitive seller graphs as a straight, upsloping little
TRUE