Micro Final

MPlabor

TP - previous TP

Which of the following graphs represents long run equilibrium for a monopolistically competitive industry?

ATC is above MR and is adjacent to demand

Natural monopolies result from

Extensive economies of scale in production

One shortcoming of the kinked-demand curve model of oligopoly is that it does not explain

How the going price gets determined in the first place

The kinked demand model of oligopoly assumes a specific firm dynamic that

If a firm raises its price, its rivals will ignore it

Which of the following statement is TRUE for a two-person game?

In a prisoner's dilemma game, both players would have been better off had they played their dominated strategies

Which of the following statements is TRUE for a profit-maximizing monopolistically competitive firm?

In the long run, the firm's price is equal to its ATC

Which of the following statements is TRUE of a profit-maximizing perfectly competitive firm?

Its average revenue is the same as its marginal curve

When a monopoly sells an additional unit of the good,

Its marginal revenue will be positive or negative, depending on whether the demand is own-price elastic or inelastic

Which of the following statements is CORRECT for a perfectly competitive industry in the long-run equilibrium?

P=ATC, implying zero economic profit

MRPlabor

Product price x MPlabor

If oligopolistic firms facing similar cost and demand conditions successfully collude, price and output results in this industry will be most accurately predicted by which of the following models?

Pure monopoly model

Which of the following statement about the law of diminishing returns (LDR) is FALSE?

The LDR ensures that diseconomies of scale will eventually be put in place as more inputs are included in the production

Which of the following statements about marginal cost curves is FALSE?

The MC curve will shift up if there is an increase in the price of a fixed input

What is likely to happen when the government requires a natural monopoly to charge a price that is equal to the firm's marginal cost of production?

The firm's economic profit is likely to be negative

If a firm increases all its inputs by 15 percent and its output increases by 12 percent, then,

The firm's long-run ATC curve is rising

If an industry's long-run average total cost curve has an extended range of constant returns to scale, what can we say about the market structure of this industry?

The industry is likely to consist of firms of various sizes, small and large

A profit-maximizing monopoly is to practice price discrimination, charging two prices to two groups of consumers. Which of the following statements is FALSE?

The practice is likely to decrease consumer surplus

Which of the following statements is FALSE for a monopolistically competitive industry?

There are significant barriers for new firms to enter

What is the reason tacit collusions among oligopolistic firms tend to collapse over time?

There is an embedded tension between the narrow interest of individuals and the broader interest of the group

Suppose a profit-maximizing perfectly competitive firm experiences an increase in its variable cost of production. Holding output price constant, which of the following statements is TRUE?

There will be a decrease in the firm output quantity

MRClabor

Total labor cost - previous total labor cost

Total Labor Costs

Units of labor x reservation wage

Compared to the social optimal solution, the monopolistic competitive firm has:

a higher price and lower output