Econ Exam 2 Clickers

A util is

A hypothetical unit of satisfaction

If the market price is $18, John makes

a normal profit or zero economic dollars

As output increases, average total cost and average variable cost get closer to each other because:

average fixed cost decreases

On a graph of the long run average total cost curve, constant returns to scale are shown as:

constant average costs as output expands

With each additional unit consumed, Marginal Utility will

decrease

Money that is real cost to the company but that is not actually paid at the time a machine wears down

implicit cost

As one moves along the budget line

income and prices are held constant, but quantities change.

The demand curve faced by a firm in monopolistic competition is:

less elastic than the demand curve for a competitive firm

The characteristic of a corporation that most encourages investors to invest large amounts of money in it is

limited liability

In a competitive market, price is always equal to

marginal revenue

An oligopoly differs from a monopoly that an oligopolist:

must consider the behavior of its rivals when it makes decisions.

Kellog, General Mills, Post, and Quaker Oats dominate the cereal market. This industry has consistently displayed profits in the long run and is difficult to enter due to brand recognition. What market structure does the cereal industry represent?

Oligopoly

Which is NOT a significant barrier to entry?

Opportunity cost

The demand curve for an individual perfectly competitive firm is:

Perfectly elastic

The perfectly competitive market structure assumes:

1. Ease of entry and exit 2. Identical products 3. Zero economic profit in the long run

Calvin runs a transportation service. His van can carry four people in addition to himself. He pays $50 in insurance per month. Assuming he has a full van, it costs him $2.50 per student per round trip. Which statements are correct? I. Calvins average variable cost will be $15 II. Calvins marginal cost is constant at $2.50 III. Calvins average variable cost is constant at $2.50

2 and 3

People contribute to disaster relief even when they do not know anyone who was personally affected by the disaster. What psychological factor associated with behavioral economics explains this behavior?

Altruism

Specialization of labor and management typically supports:

Economies of scale

Which type of price discrimination results in the monopolist obtaining the entire consumer surplus?

First degree price discrimination

At movie theaters, lower prices are charged for matinees than for evening shows of the same film. The customers attending the matinees have

Higher elasticities of demand than customers attending the evening show

After Rachel bought a magazine subscription, she does not enjoy the articles in the magazine. However, she dutifully reads the entire magazine ever month because she already payed for the subscription. What psychological factor associated with behavioral economics explains Rachels behavior?

The sunk cost fallacy

The stability of a cartel is improved if

the participating members have similar cost structures

A natural monopoly could possibly arise when

there are large economies of scale relative to the industry's market