Econ Ch 6-9 Homework prep for exam

T/F - Monopolies produce differentiated products.

False

T/F- Perfect (pure) competition is characterized by product differentiation.

False

Which of the following makes monopolistic competition different than perfect competition? Monopolistically competitive firms A) face competition from many other firms B) participate in markets where barriers to entry are present C) differentiate their products

C

A firm's ___________________ are costs that are incurred even if there is no output. In the short run, these costs ___________________ as production increases.

fixed costs; do not change

The amount by which total cost increases when an additional unit is produced

marginal cost

The change in total cost divided by the change in output

marginal cost

In game theory, a dominant strategy is

the best strategy to pick, no matter which moves are chosen by the other player.

The total cost divided by the quantity of output

average total cost

Monopolies and monopolistically competitive firms differ in that monopolies A) face competition from many other firms. B) participate in markets where barriers to entry are present. C) differentiate their products.

B

The long run is best defined as a time period A) that is longer than five years. B) during which all inputs can be varied. C) during which prices of other goods change. D) during which at least one input cannot be changed.

B

In comparison to oligopolies, firms in monopolistic competition A) differentiate their products. B) participate in markets where barriers to entry are present. C) face competition from many other firms.

C

One thing that distinguishes the short run and the long run is A) the existence of variable costs. B) the number of months considered. C) the existence of at least one fixed input. D) opportunity costs

C

Which of the markets is the best example of monopolistic competition? A) the market for sugar snap peas B) the market for cola C) the fast food industry D) your town's utilities distributor(s) of electricity and water

C

Which of the statements is not true? A) marginal cost curve will always intersect the average variable cost curve at the minimum average variable cost. B) Marginal cost is the change in a firm's variable cost due to a one‑unit change in output. C) Costs that are small and unimportant with little impact on profits are called marginal costs. D) Marginal cost and marginal productivity are inversely related.

C

Which of the statements is true of the prisoner's dilemma? A) One player has a dominant strategy and the other has a mixed strategy. B) Firms in a repeated game are more likely to fall into the prisoner's dilemma. C) In the prisoner's dilemma, firms could do better if they both did exactly the opposite of what they ultimately choose to do. D) The prisoner's dilemma is an example of a cooperative equilibrium. E) In the game that includes two prisoners, from which this game derives its name, neither prisoner will confess and they will both walk free.

C

A group of sellers who agree to restrict their collective output in order to drive up prices above marginal costs is a

Cartel

T/F- Monopolistic competition is a market structure that consists of a small number of producers.

False

Average fixed cost is always higher than average variable cost.

False

A single firm produces a product with no close substitutes and control over the market price.

Monopoly

All costs are either fixed or variable.

True

In the short run, ATC is always greater than or equal to AVC.

True

Marginal cost refers to the change in total cost associated with the production of another unit

True

T/F- Oligopolies exist in a market that has a small number of producers that may or may not exhibit product differentiation.

True

The average fixed cost curve is downward-sloping.

True

The sum of all costs that change as output changes divided by the number of units produced

average variable cost

Suppose that in the small town, Prairie, there are only two cable providers. What type of market structure does the local cable market have?

duopoly

A firm's ______________ are costs that increase as quantity produced increases. These costs often show ________________ illustrated by the increasingly steeper slope of the total cost curve.

variable costs; diminishing marginal returns