ECON FINAL EXAM

The goal of product differentiation and advertising in monopolistic competition is to make

Price less of a factor and product difference is more of a factor in consumer purchases

Use the following graph to answer the next question. What is the difference between the perfectly competitive equilibrium level of output and the pure monopoly equilibrium level of output?

20 units

Which set of characteristics below best describes the basic features of monopolistic competition?

easy entry, many firms, and differentiated products

And perfect competition, the demand faced by single firm is perfectly

elastic, because many other firms produce the same standardized product.

In the long run, the representative firm of monopolistic competition tends to have

excess capacity

Answer the next question based on the following demand and cost data faced by a pure monopoly At equilibrium, the pure monopoly will generate ________

An economic profit of $6.50

Buying in bulk to save money is an example of ________

Block pricing

Use the following graph to answer the next question. What per unit profit will this from receive?

$10

Use the following graph to answer the next question. If the industry were perfectly competitive then at the market price would be _______

$25 which is lower than what the price would have been if the industry were a pure monopoly

Answer the next question based on the demand and cost schedules for a monopolistically competitive firm given in the table below Price $20,18,16,14,12,10 Quantity Demanded 1,2,3,4,5,6 TC &10,20,29,36,40,42 Output 1,2,3,4,5,6 At the profit maximizing level of output marginal revenue is

$4

Use the table below to answer the next question for perfectly competitive firm. Output 0,1,2,3,4,5 TR $0,40,80,120,160,200 TC $50,74,94,117,142,172 The marginal revenue generated from the third unit up output is

$40

Given the data in the table below what is the short run profit maximizing level of output for the perfectly competitive firm Output 1,2,3,4,5 TR $4,8,12,16,20 TC $2,3,6,10,15

4 units

Under oligopoly if one firm in an industry significantly increases advertising expenditures to capture a greater market share it is most likely that other firms in that industry will

Decide to increase advertising expenditures even if it means a reduction in profits

Use the following and graph to answer the next question. Which point is not on the perfectly competitive firm short run supply curve

E

Which of the following statements about perfect competition is true?

In the long run, the entry and exit of firms will generate normal profits for firms

Many people believe that pure monopolies charge any price they want to without affecting sales. Instead, the output level for a profit maximizing pure monopoly occurs where ________

Marginal revenue equals marginal cost

Are unique feature of an oligopolistic industry is

Mutual interdependence

Use the following graph to answer the next question. The short run supply curve for this perfectly competitive firm is the

Segment of the MC curve lying at and to the right of quantity H

T-shirt Enterprises is operating in a perfectly competitive market it is producing 3000 T-shirts and selling them for $10 each at this level of output the average total cost is $10.50 and the average variable cost is $10.20 based on these data the firm should

Shut down in the short run

Assume that the market for corn is perfectly competitive. Currently, the firms growing corn are generating losses. In the long run, we can expect

Some firms to exit causing the market price of corn to increase

Chipotle offered free burritos to celebrate teachers. What type of price discrimination does this demonstrate?

Third-degree price discrimination

Mutual interdependence means that a firms

behavior is affected by other firms' actions.

A pure monopoly monopoly sell 6 units of a product per day at a unit price of $15. If it lowers the price to $14 it's total revenue increases by $22. This implies that it's sold output increases by _______

2 units per day

Use the following graph to answer this question. What is the profit maximizing quantity of output for this pure monopoly?

90

Use the following graph for a monopolistically competitive firm to answer the next question. Marginal revenue and marginal cost intersect at what point

A

The demand curve faced by perfectly competitive firm

Is the same as it's marginal revenue curve

Use the following graphs for a perfectly competitive market in the short run to answer the next question. The graph suggest that in the long run, assuming no changes in the given information, the market

Supply curve will shift to the right

Use the following graph for a monopolistically competitive firm to answer the next question. Point B indicates

The price output combination that yields maximum profits

In an oligopolistic market there are:

few sellers

One feature of pure monopoly is that the firm is ____

price maker