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Microeconomics 4th Section of Units - Pallab Ghosh

Pataasin ang iyong marka sa homework at exams ngayon gamit ang Quizwiz!

(Class Quiz Ch14 Pt1) _____________ is the market structure in which there are a few rival firms. 1. Monopoly 2. Perfect competition 3. Oligopoly 4. Monopolistic competition

Oligopoly

What is residual demand?

The demand not met by the other firm(s) and dependent on the prices of all the firms in the industry

(Ch12 HW) An industry is deemed concentrated when ___________. 1. a few firms account for a large fraction of total sales in that industry 2. most of the firms in that industry earn zero economic profits in the long run 3. all the firms in that industry charge a price lower than the average cost of production 4. each firm in that industry has a small market share

a few firms account for a large fraction of total sales in that industry

(Ch12 HW) The following table shows the quantity of a good sold by a monopolist at different prices. Quantity (units) Price ($) 150 9 200 8 250 7 300 6 350 5 400 4 450 3 Refer to the table above. What is the total revenue of the monopolist when it charges a price of $9? 1. $1,750 2. $1,350 3. $1,250 4. $2,250

$1,350

(Ch12 HW) The following table shows the quantity of a good sold by a monopolist at different prices. Quantity (units) Price ($) 150 9 200 8 250 7 300 6 350 5 400 4 450 3 Refer to the table above. What is the total revenue when the monopolist charges a price of $3? 1. $2,750 2. $1,750 3. $1,350 4. $1,050

$1,350

(Ch12 HW) The following table shows the quantity of a good sold by a monopolist at different prices. Quantity (units) Price ($) 150 9 200 8 250 7 300 6 350 5 400 4 450 3 Refer to the table above. What is the total revenue when the monopolist charges a price of $6? 1. $1,800 2. $2,150 3. $3,200 4. $1,550

$1,800

(Ch14 HW) The price charged by a monopolistic competitor for each unit of a good is $7. If it produces 5,000 units of the good at a total cost of $25,000, what is his profit? 1. $7,000 2. $35,000 3. $8,000 4. $10,000

$10,000

(Ch14 HW) Scenario: The fixed cost of producing 500 units of Good Y is $25,000, while the variable cost of producing 500 units of Good Y is $60,000. Refer to the scenario above. If the market for Good Y is monopolistically competitive, a firm producing Good Y will shut down production in the short run if price falls below ________. 1. $50 2. $120 3. $60 4. $200

$120

(Class Quiz Ch14 Pt2) Scenario: The fixed cost of producing 500 units of Good Y is $25,000, while the variable cost of producing 500 units of Good Y is $60,000. Refer to the scenario above. If the market for Good Y is monopolistically competitive, a firm producing Good Y will shut down production in the short run if price falls below 1. $50 2. $200 3. $60 4. $120

$120

(Ch14 HW) A monopolistic competitor produces 1,200 units of a good at an average cost of $120 per unit. If the price charged is $135, calculate his total profit. 1. $2,000 2. $1,100 3. $13,500 4. $18,000

$18,000

$250

$300

(Ch12 Quiz) Suppose you are a monopolist, and you have two customers, A and B. Each will buy either zero or one unit of the good you produce. A is willing to pay up to $45 for your product; B is willing to pay up to $10. You produce this good at a constant average and marginal cost of $5. If you could not engage in third-degree price discrimination, what price would you charge? 1. $55. 2. $15. 3. $10. 4. $45.

$45.

$60,000

(Ch14 HW) Suppose a monopolistic competitor produces 2,000 units of the good in equilibrium and charges a price of $10 for each unit. If the average total cost of producing 2,000 units of the good is $6, what is the total profit earned by the producer? 1. $20,000 2. $2,000 3. $4,000 4. $8,000

$8,000

(Class Quiz Ch14 Pt2) Suppose a monopolistic competitor produces 2,000 units of the good in equilibrium and charges a price of $10 for each unit. If the average total cost of producing 2,000 units of the good is $6, what is the total profit earned by the producer? 1. $20,000 2. $8,000 3. $4,000 4. $2,000

$8,000

Can't really put extensive-form/prisoner's dilemma/Nash Equillibrium Problems in this Quizlet but if you want to review:

-Ch13 Pt 2 -Ch13 Pt3 -Textbook Pages -Ex Problems in back of Textbook

(Class Quiz Ch14 Pt2) There are four firms in the cement industry in Richland. Firm A has a market share of 30%, Firm B has a market share of 20%, Firm C has a market share of 25%, and Firm D has a market share of 25%. The Herfindahl-Hirschman Index for the cement industry is 1. 100 2. 4,000 3. 2,550 4. 50

2,550

(Ch14 Quiz) Suppose there are five firms in an industry. Their sales (that is, total revenue) are as follows: Firm 1: 98 million Firm 2: 46 million Firm 3: 46 million Firm 4: 14 million Firm 5: 6 million The Herfindahl-Hirschman Index (HHI) for this industry is (Enter your response as an integer.) 1. 3,312 2. 4,312 3. 2,312 4. 5,312

3,312 (don't know why)

(Class Quiz Ch14 Pt1) Which of the following is true of a duopoly with differentiated products? 1. A firm faces a perfectly elastic demand curve 2. A firm does not lose all its customers when its rival lowers the price of its product 3. A firm loses all its customers when its rival lowers the price of its product 4. A firm faces a perfectly inelastic demand curve

A firm does not lose all its customers when its rival lowers the price of its product

(Ch14 HW) Which of the following is true of a duopoly with differentiated products? 1. A firm faces a perfectly elastic demand curve. 2. A firm does not lose all its customers when its rival lowers the price of its product. 3.A firm faces a perfectly inelastic demand curve. 4. A firm loses all its customers when its rival lowers the price of its product.

A firm does not lose all its customers when its rival lowers the price of its product.

(Lecture Ch12) Which of the following firms is most likely to have a constant marginal cost? 1. A firm that is a price taker 2. A firm that has extremely high fixed costs 3. A firm that has extremely high variable costs 4. A firm that faces a horizontal demand curve

A firm that has extremely high fixed costs

(Lecture Ch12) Which of the following statements is true? 1. A monopoly is a price taker because it faces a downward sloping demand curve 2. A monopoly is a price maker because it faces a downward sloping demand curve 3. A perfectly competitive firm is a price taker because it faces a downward sloping demand curve 4. A perfectly competitive firm is a price maker because it faces a downward sloping demand curve

A monopoly is a price maker because it faces a downward sloping demand curve

(Ch12 HW) Which of the following statements is true? 1. A monopoly is a price maker because it faces a downward sloping demand curve. 2. A monopoly is a price taker because it faces a downward sloping demand curve. 3. A perfectly competitive firm is a price maker because it faces a downward sloping demand curve. 4. A perfectly competitive firm is a price taker because it faces a downward sloping demand curve.

A monopoly is a price maker because it faces a downward sloping demand curve.

(Ch12 HW) Which of the following statements correctly differentiates between a monopoly and a perfectly competitive firm? 1. A perfectly competitive firm faces a horizontal demand curve, whereas a monopoly faces an upward sloping demand curve. 2. A perfectly competitive firm sets its product price at its marginal cost, whereas a monopoly sets the price above its marginal cost. 3. A perfectly competitive firm faces an upward sloping demand curve, whereas a monopoly faces a horizontal demand curve. 4. A perfectly competitive firm sets its product price above its marginal cost, whereas a monopoly sets its product price equal to its marginal cost.

A perfectly competitive firm sets its product price at its marginal cost, whereas a monopoly sets the price above its marginal cost.

(Ch12 Quiz) Suppose the government grants an individual or company the exclusive right to intellectual property. In this case, the government is granting a copyright. Which of the following is not likely covered by a copyright? 1. A new song. 2. A photocopier. 3. A work of Art. 4. A photograph.

A photocopier.

(CH13 HW) Scenario: Two friends have settled on a unique strategy to decide who will complete his homework first and help the other. They have agreed to simultaneously make one of the three symbols with their fists - a rock, a paper, or scissors. Simple rules of "rock breaks scissors, scissors cut paper, and paper covers rock" dictate which symbol beats the other. If both of them hold out the same symbols, the game is a tie Which of the following is a winning strategy for this game? 1. A random mix of all the three symbols 2. A strategy to always show a paper 3. A strategy to always show a scissor 4. A strategy to always show a rock

A random mix of all the three symbols

(Ch12 Quiz) Which of the following statements are true regarding the profit-maximizing price charged by a monopolist? 1. It occurs at the quantity where MR= MC 2. It occurs along the elastic part of the demand curve 3. It is greater than MC 4. All of the above.

All of the above.

(Ch13 Lecture) Which of the following is true of a simultaneous move game? 1. Players choose their actions after knowing the action of the first player 2. All relevant benefits and costs of each action are taken into account 3. It involves strategic interactions among a large number of players 4. This game cannot be represented by a payoff matrix

All relevant benefits and costs of each action are taken into account

(Ch12 HW) Which of the following statements is true? 1. A natural monopoly earns higher profits than a monopolistically competitive firm because it faces a horizontal market demand curve. 2. A natural monopoly earns higher profits than a monopolistically competitive firm because it faces an upward sloping market demand curve. 3. A natural monopoly always arises from government intervention in the market. 4. An increase in consumer demand can change a natural monopoly into a multi-seller market.

An increase in consumer demand can change a natural monopoly into a multi-seller market.

(Ch14 HW) An oligopoly model in which sellers compete on prices rather than quantities is called a ____________ model. 1. Keynesian 2. Bertrand 3. Ricardian 4. Cournot

Bertrand

(Ch14 HW) There are two firms in an industry and their products are perfect substitutes for each other. Each firm had a market share of 50% and charged equal prices. However, when the demand for the good declined due to a recession, Firm A lowered its price to increase sales. Firm B responded by lowering its price further. This is an example of the ________ of oligopoly. 1. Keynesian model 2. Cournot model 3. Bertrand model 4. Ricardian model

Bertrand model

(Class Quiz Ch14 Pt1) There are two firms in an industry and their products are perfect substitutes for each other. Each firm had a market share of 50% and charged equal prices. However, when the demand for the good declined due to a recession, Firm A lowered its price to increase sales. Firm B responded by lowering its price further. This is an example of the −−−−−−−−− of oligopoly 1. Bertrand model 2. Cournot 3. Keynesian 4. Ricardian

Bertrand model

(Ch12 HW) Which of the following is an example of a good produced under perfect competition? 1. Cars 2. Bottled water 3. Patented software 4. Corn

Corn

(Class Quiz Ch14 Pt1) An oligopoly model in which sellers compete on quantities rather than prices is called a ___________ model. 1. Ricardian 2. Bertrand 3. Keynesian 4. Cournot

Cournot

(Ch14 HW) Crisps and Smith's are the only two bakeries that sell cookies in a small community. Crisps sells butter cookies while Smith's sells chocolate cookies. Which of the following will happen if Smith's lowers its price for cookies slightly below Crisps's price? 1. Smith's will face a lower demand for its cookies. 2. Crisps will lose all its customers to Smith's. 3. Smith's will lose all its customers to Crisps. 4. Crisps will face a lower demand for its cookies.

Crisps will face a lower demand for its cookies.

(Class Quiz Ch14 Pt1) Which of the following is a feature of an oligopoly market? 1. Each firm in this market earns zero economic profits 2. Each firm's action affects the decisions of its rival 3. There are no barriers to entry in this market 4. There is a large number of sellers in this market

Each firm's action affects the decisions of its rival

(Ch14 HW) Which of the following is a feature of an oligopoly market? 1. There are no barriers to entry in this market. 2. Each firm's action affects the decisions of its rival. 3. There is a large number of sellers in this market. 4. Each firm in this market earns zero economic profits.

Each firm's action affects the decisions of its rival.

(Ch14 Quiz) Firms A and B plan to collude in an economy for their similar products, which includes the grim strategy for punishment. They plan to set the price of their product at $8. The marginal cost of Firm A is $5 and Firm B is $4.50. If firm A is impatient to earn more profits and Firm B wishes to last in the business for the long-run, which of the following situations would likely occur? 1. Firm B reduces the price to $7 causing Firm A to reduce its price to $7. 2. Firm B reduces the price to $7 causing Firm A to exit the market. 3. Firm A reduces the price to $7 causing Firm B to exit the market. 4. Firm A reduces the price to $7 causing Firm B to reduce its price to $4.50.

Firm A reduces the price to $7 causing Firm B to reduce its price to $4.50.

(Class Quiz Ch12 Pt1) Which of the following statements is true? 1. Monopoly is characterized by no entry barriers 2. Firms in a market with no entry barriers are likely to have more market power than firms in a market with entry barriers. 3. Firms in a market with entry barriers are likely to have more market power than firms in a market with no entry barriers. 4. Perfect competition is characterized by high entry barriers.

Firms in a market with no entry barriers are likely to have more market power than firms in a market with entry barriers.

(Ch14 HW) Which of the following is a difference between an oligopoly with differentiated products and a monopolistic competition? 1. Firms in an oligopoly market with differentiated products charge a price higher than marginal cost in the long run, while firms in a monopolistic competition charge a price lower than marginal cost in the long run. 2. There are no barriers to entry in an oligopoly with differentiated products, while there are huge barriers to entry in a monopolistic competition. 3. Firms in an oligopoly with differentiated products charge a price lower than average total cost in the long run, while firms in a monopolistic competition earn a price higher than average total cost in the long run. 4. There are huge barriers to entry in an oligopoly with differentiated products, while there are minimal barriers to entry in a monopolistically competitive market

Firms in an oligopoly with differentiated products charge a price lower than average total cost in the long run, while firms in a monopolistic competition earn a price higher than average total cost in the long run.

(Ch14 HW) Which of the following is a difference between an oligopoly with homogeneous products and an oligopoly with differentiated products? 1. There are huge barriers to entry in an oligopoly with homogeneous products, while there are no barriers to entry in an oligopoly with differentiated products. 2. There are a large number of sellers in an oligopoly with homogeneous products and there are a few sellers in an oligopoly with differentiated products. 3. Firms in an oligopoly with homogeneous products earn zero economic profits in equilibrium, while firms in an oligopoly with differentiated products earn positive economic profits. 4. Firms in an oligopoly with homogeneous products earn positive economic profits in equilibrium, while firms in an oligopoly with differentiated products earn zero economic profits.

Firms in an oligopoly with homogeneous products earn zero economic profits in equilibrium, while firms in an oligopoly with differentiated products earn positive economic profits.

(TA Review) Which of the following is a difference between an oligopoly with homogeneous products and an oligopoly with differentiated products? 1. There are huge barriers to entry in an oligopoly with homogeneous products, while there are no barriers to entry in an oligopoly with differentiated products. 2. Firms in an oligopoly with homogeneous products earn zero economic profits in equilibrium, while firms in an oligopoly with differentiated products earn positive economic profits. 3. Firms in an oligopoly with homogeneous products earn positive economic profits in equilibrium, while firms in an oligopoly with differentiated products earn zero economic profits. 4. There are a large number of sellers in an oligopoly with homogeneous products and there are a few sellers in an oligopoly with differentiated products.

Firms in an oligopoly with homogeneous products earn zero economic profits in equilibrium, while firms in an oligopoly with differentiated products earn positive economic profits.

(Class Quiz Ch13 Pt1) Which of the following is likely to use the concepts of game theory? 1. International trade negotiation 2. Exit decision of competitive firms in the long run 3. Pricing decision of a firm operating in a competitive market 4. Deciding on how much to spend on monthly groceries

International trade negotiation

(CH13 HW) Which of the following is true of a payoff matrix? 1. It shows the payment made to each factor of production for the production of a good. 2. It is the representation of only the best response of each player. 3. It does not represent all the costs and benefits associated with the choices of the players. 4. It takes into account all relevant costs and benefits associated with each action of the players.

It takes into account all relevant costs and benefits associated with each action of the players.

(Class Quiz Ch13 Pt1) Which of the following is true of a payoff matrix? 1. It is the representation of only the best response of each player. 2. It shows the payment made to each factor of production for the production of a good. 3. It takes into account all relevant costs and benefits associated with each action of the players. 4. It does not represent all the costs and benefits associated with the choices of the players.

It takes into account all relevant costs and benefits associated with each action of the players.

(Class Quiz Ch14 Pt1) La Dila and Swiss Pro are the only two firms in an industry. The firms initially charge equal prices for their products, which are perfect substitutes. What happens if La Dila decides to lower its price slightly? 1. Swiss Pro will earn positive economic profits 2. La Dila will lose all its market share 3. La Dila will face the entire market demand 4. Swiss Pro will gain market share

La Dila will face the entire market demand

(Ch14 HW) La Dila and Swiss Pro are the only two firms in an industry. The firms initially charge equal prices for their products, which are perfect substitutes. What happens if La Dila decides to lower its price slightly? 1. Swiss Pro will gain market share. 2. Swiss Pro will earn positive economic profits. 3. La Dila will face the entire market demand. 4. La Dila will lose all its market share.

La Dila will face the entire market demand.

What is the optimal quantity for a monopolist to produce?

MR=MC

(Lecture Ch12) ___________ refers to the ability of sellers to affect market prices. 1. Goodwill 2. Market hold 3. Market power 4. Capital adequacy

Market power

(Class Quiz Ch14 Pt1) _________ is the market structure in which there are many rival firms producing differentiated products. 1. Monopolistic competition 2. Oligopoly 3. Perfect competition 4. Monopoly

Monopolistic competition

(Class Quiz Ch12 Pt1) Sellers in which of the following market structures are likely to have the highest market power? 1. Monopoly 2. Oligopoly 3. Monopolistic competition 4. Perfect competition

Monopoly

(Lecture Ch12) Sellers in which of the following market structures are likely to have the highest market power? 1. Monopoly 2. Oligopoly 3. Perfect Competition 4. Monopolistic competition

Monopoly

(Ch14 Quiz) Both monopolies and monopolistically competitive firms set marginal revenue equal to marginal cost to maximize profit. Given the same cost curves, would you expect prices to be higher in a monopoly or a monopolistically competitive market? 1. Monopolistically competitive market, because demand is greater. 2. Monopoly, because its demand is more inelastic. 3. Monopoly, because it is a price taker 4. Monopoly, because consumers are more sensitive to price.

Monopoly, because its demand is more inelastic.

(Class Quiz Ch12 Pt2) Which of the following statements is true? 1. If a firm is enjoying economies of scale, then its product must have network effects. 2. Network effects act as barriers to entry in a market. 3. If a firm's product has network effects, then the firm must be enjoying economies of scale 4. Economies of scale act as incentives for new firms to enter a market.

Network effects act as barriers to entry in a market.

(TA Review) Which of the following statements is true? 1. If a firm is enjoying economies of scale, then its product must have network effects. 2. Network effects act as barriers to entry in a market. 3. If a firm's product has network effects, then the firm must be enjoying economies of scale 4. Economies of scale act as incentives for new firms to enter a market.

Network effects act as barriers to entry in a market.

(CH13 HW) Which of the following is true of a Nash equilibrium? 1. No player can improve his payoff by changing his strategy once in Nash equilibrium. 2. A Nash equilibrium occurs if each player earns a zero payoff irrespective of the strategy he chooses. 3. A game can have only one Nash equilibrium. 4. A Nash equilibrium cannot occur if each player is aware of the strategies of other players.

No player can improve his payoff by changing his strategy once in Nash equilibrium.

(Class Quiz Ch13 Pt2) Which of the following is true of a Nash equilibrium? 1. A game can have only one Nash equilibrium. 2. A Nash equilibrium occurs if each player earns a zero payoff irrespective of the strategy he chooses. 3. No player can improve his payoff by changing his strategy once in Nash equilibrium. 4. A Nash equilibrium cannot occur if each player is aware of the strategies of other players.

No player can improve his payoff by changing his strategy once in Nash equilibrium.

(TA Review) Which of the following is true of a Nash equilibrium? 1. No player can improve his payoff by changing his strategy once in Nash equilibrium. 2. A Nash equilibrium occurs if each player earns a zero payoff irrespective of the strategy he chooses. 3. A Nash equilibrium cannot occur if each player is aware of the strategies of other players. 4. A game can have only one Nash equilibrium.

No player can improve his payoff by changing his strategy once in Nash equilibrium.

(CH13 Quiz) Suppose that a player has a dominant strategy. Would she choose to play a mixed strategy (such as playing two strategies each with probability 50-50)? Why or why not? 1. No, because a mixed strategy would not use preassigned probabilities for the various actions. 2. Yes, a mixed strategy would be optimal if one of its actions were the dominant strategy. 3. No, because it would involve choosing actions other than the dominant strategy. 4. Yes, because a mixed strategy would involve choosing a single action.

No, because it would involve choosing actions other than the dominant strategy.

(CH13 Quiz) Suppose you were playing rock-paper-scissors as an extensive from game; first you choose rock, or paper, or scissors, and then your opponent makes a choice. Is there a first-mover advantage in this game? 1. Yes, first mover wins in this game. 2. No, first mover must play a dominant strategy which is good for mixed strategy games. 3. No, if you show your move first you will lose every time. 4. Yes, first mover has an advantage by getting to pick their first choice.

No, if you show your move first you will lose every time.

(Ch14 Quiz) Suppose you and your friends decide to go to the beach during spring break. You need to fly from Kansas City to Miami but only two airlines provide the service. This market is best characterized as ___________. 1. Oligopoly. 2. Monopoly. 3. Perfect Competition. 4. Monopolistic Competition.

Oligopoly

(Ch12 Quiz) Which of the following is not one of the sources of natural market power? 1. The presence of economies of scale 2. network externalities. 3. Controlling a key resource. 4. Owning a firm in a small community.

Owning a firm in a small community.

What is the relationship of Price, Marginal Revenue, and Marginal Cost in perfect competition?

P = MR = MC

(Class Quiz Ch12 Pt3) The pricing rule for a monopolist is: 1. P > MR = MC. 2. P > MR > MC. 3. P = MR > MC. 4. P = MR = MC.

P > MR = MC.

What is the relationship of Price, Marginal Revenue, and Marginal Cost for a monopolist?

P > MR = MC

(Lecture Ch12) Which of the following is an example of a good produced under a monopoly? 1. CDs 2. Books 3. Soda 4. Patented Software

Patented Software

(CH13 Quiz) Chevron and BP are bidding against each other for new oil drilling leases in the Gulf of Mexico. The bids will be simultaneous with the high bidder as the winner. Chevron decides to hire you as a consultant to help it use game theory to make the best decision on how much to bid. What must you, as the consultant, construct for Chevron before you can determine if there is a dominant strategy equilibrium? 1. Payoff matrix. 2. Extensive-form game tree. 3. Table with numerical probabilities. 4. Three-by-three

Payoff matrix.

(Ch12 HW) Which of the following market structures provides socially efficient outcomes? 1. Oligopoly 2. Perfect competition 3. Monopolistic competition 4. Monopoly

Perfect competition

(Class Quiz Ch12 Pt1) The effect of the invisible hand is likely to be the strongest under which market structure? 1. Monopolistic competition 2. Oligopoly 3. Perfect competition 4. Monopoly

Perfect competition

(Ch14 Quiz) Which of the following statements is true of monopolistic competition and perfect competition? 1. Perfect competition is a special case of monopolistic competition, which occurs when demand is perfectly inelastic. 2. Perfect competition is a special case of monopolistic competition, which occurs when demand is perfectly elastic. 3. Perfect competition and monopolistic competition are completely unrelated. 4. Perfect competition is a special case of monopolistic competition, except firms in monopolistic competition can earn profits in the long run.

Perfect competition is a special case of monopolistic competition, which occurs when demand is perfectly elastic

(Ch12 Quiz) Which of the following is not a characteristic of monopoly? 1. Market power. 2. A single seller. 3. Produces identical goods. 4. Price-maker

Produces identical goods.

(Ch12 HW) Which of the following statements correctly identifies a similarity between monopoly and perfect competition? 1. Production is expanded until marginal revenue equals marginal cost in both the market structures. 2. Price equals marginal cost in both market structures. 3. Entry is restricted in both market structures. 4. Firms face an upward sloping demand curve and a downward sloping marginal revenue curve in both the market structures.

Production is expanded until marginal revenue equals marginal cost in both the market structures.

(Ch12 Quiz) Which of the following equations calculates economic profits for a monopoly? 1. Profits = P x Q 2. Profits = P + ATC/Q 3. Profits = (P - ATC) x Q 4. Profits = ATC x Q

Profits = (P - ATC) x Q

(Class Quiz Ch14 Pt1) Which of the following is an example of differentiated goods? 1. Tea and energy drinks 2. Potatoes grown by different farmers 3. Fuel and water 4. Books and cosmetics

Tea and energy drinks

(Class Quiz Ch12 Pt3) Which of the following statements is true? 1. The basis for both first-degree price discrimination and third-degree price discrimination is differences in the buyers' willingness to pay for a good. 2. The basis for both first-degree price discrimination and third-degree price discrimination is differences in the sellers' willingness to accept payment for a good. 3. The basis for first-degree price discrimination is differences in the seller's willingness to accept payment for a good, whereas the basis for third-degree price discrimination is differences in buyers' willingness to pay for a good. 4. The basis for first-degree price discrimination is differences in willingness to pay, whereas the basis for third-degree price discrimination is differences in the sellers' willingness to accept payment for a good.

The basis for both first-degree price discrimination and third-degree price discrimination is differences in the buyers' willingness to pay for a good.

(TA Review) Which of the following statements is true? 1. The basis for first-degree price discrimination is differences in willingness to pay, whereas the basis for third-degree price discrimination is differences in the sellers' willingness to accept payment for a good. 2. The basis for first-degree price discrimination is differences in the seller's willingness to accept payment for a good, whereas the basis for third-degree price discrimination is differences in buyers' willingness to pay for a good. 3. The basis for both first-degree price discrimination and third-degree price discrimination is differences in the sellers' willingness to accept payment for a good. 4. The basis for both first-degree price discrimination and third-degree price discrimination is differences in the buyers' willingness to pay for a good.

The basis for both first-degree price discrimination and third-degree price discrimination is differences in the buyers' willingness to pay for a good.

(CH13 HW) Which of the following statements is true? 1. In any game, the best response of a player is also her dominant strategy. 2. A prisoners' dilemma game is an example of a zero-sum game. 3. The best response of a player is not always her dominant strategy. 4. A prisoners' dilemma game is an example of an extensive-form game.

The best response of a player is not always her dominant strategy.

(Class Quiz Ch13 Pt1) Which of the following statements is true? 1. The best response of a player is not always her dominant strategy. 2. A prisoner's dilemma game is an example of a zero-sum game. 3. In any game, the best response of a player is also her dominant strategy. 4. A prisoners' dilemma game is an example of an extensive-form game.

The best response of a player is not always her dominant strategy.

(TA Review) Which of the following statements is true? 1. The best response of a player is not always her dominant strategy. 2. In any game, the best response of a player is also her dominant strategy. 3. A prisoners' dilemma game is an example of a zero-sum game. 4. A prisoners' dilemma game is an example of an extensive-form game.

The best response of a player is not always her dominant strategy.

(Ch14 HW) Refer to the scenario above. How will the demand for pens faced by the existing pen manufacturers in Eduland be affected if several firms exit the industry in the long run? 1. The demand faced by existing firms will increase. 2. The demand curve by existing firms will become perfectly inelastic. 3. The demand curve by existing firms will become perfectly elastic. 4. The demand faced by existing firms will decrease.

The demand faced by existing firms will increase.

(Ch14 HW) Scenario: There are several pen manufacturers in Eduland. However, the pens sold by each manufacturer have a unique design. Refer to the scenario above. How will the demand for pens faced by the existing pen manufacturers in Eduland be affected if new firms enter the industry in the long run? 1. The demand faced by the existing firms will become perfectly inelastic. 2. The demand faced by the existing firms will decrease. 3. The demand faced by the existing firms will become perfectly elastic. 4. The demand faced by the existing firms will increase.

The demand faced by the existing firms will decrease.

(Class Quiz Ch14 Pt2) Scenario: The fixed cost of producing 500 units of Good Y is $25,000, while the variable cost of producing 500 units of Good Y is $60,000. Refer to the scenario above. Which of the following will happen if the equilibrium price charged by the firm in the short run is $130? 1. New firms will enter the industry in the long run 2. The firm will earn positive economic profits and continue production 3. All firms will incur losses in the long run 4. The firm will incur a loss but continue production

The firm will incur a loss but continue production

(Class Quiz Ch14 Pt2) Which of the following is a similarity between a monopoly and an oligopoly with differentiated products? 1. The long-run equilibrium price in both markets exceeds marginal cost 2. Firms in both the markets earn zero profit in the long run 3. There is a single seller in both markets 4. There are no barriers to entry in both markets

The long-run equilibrium price in both markets exceeds marginal cost

(Class Quiz Ch14 Pt1) Which of the following markets is an example of an oligopoly? 1. The market for premium apparel 2. The market for video games 3. The market for books 4. The market for wheat

The market for premium apparel

(Class Quiz Ch14 Pt1) Which of the following is an example of a monopolistically competitive market? 1. The market for coffee beans 2. The market for premium cars 3. The market for shampoo 4. The market for wheat

The market for shampoo

(Ch12 HW) At a certain level of production, the marginal revenue and marginal cost of a monopolist are $8 and $6, respectively. Which of the following statements is true in this context? 1. The monopolist should expand production. 2. The profits of the monopolist are minimized. 3. The monopolist should contract production. 4. The profits of the monopolist are maximized.

The monopolist should expand production.

(Class Quiz Ch12 Pt3) At a certain level of production, the marginal revenue and marginal cost of a monopolist are $12 and $10, respectively. Which of the following statements is true in this context? 1. The profits of the monopolist are maximized. 2. The profits of the monopolist are minimized. 3. The monopolist should contract production. 4. The monopolist should expand production.

The monopolist should expand production.

(Class Quiz Ch12 Pt3) At a certain level of production, the marginal revenue and marginal cost of a monopolist are $8 and $6, respectively. Which of the following statements is true in this context? 1. The monopolist should contract production 2. The profits of the monopolist are minimized. 3. The monopolist should expand production. 4. The profits of the monopolist are maximized.

The monopolist should expand production.

(Ch14 Quiz) Seller A increases the price of its good by 20% and still enjoys a high market demand. Due to the high demand, there is an increase in the number of similar sellers in the long-run. This is an example of monopolistic competition. Suppose Good A belongs to a market where the firms earn zero economic profits in the long-run and entry of new firms will result in price changes that operate through shifts in the market supply curve for Good A. Which market structure does Good A belong to? 1. The oligopolistic market with differentiated products. 2. The monopolistic competitive market. 3. The oligopolistic market with homogenous products. 4. The perfectly competitive market.

The perfectly competitive market.

(Ch14 Quiz) Suppose Good A belongs to a market where the firms earn zero economic profits in the long-run and entry of new firms will result in price changes that operate through shifts in the market supply curve for Good A. Which market structure does Good A belong to? 1. The oligopolistic market with differentiated products. 2. The oligopolistic market with homogenous products. 3. The monopolistic competitive market. 4. The perfectly competitive market.

The perfectly competitive market.

(Ch14 Quiz) Seller A increases the price of its good by 20% and still enjoys a high market demand. Due to the high demand, there is an increase in the number of similar sellers in the long-run. Which of the following is not a common characteristic between a monopoly and monopolistic competition? 1. The price set by the seller/producer will be above marginal revenue. 2. There is deadweight loss in the market. 3. The slope of the demand curve is negative. 4. The products sold have close substitutes.

The products sold have close substitutes.

(Ch14 Quiz) Seller A increases the price of its good by 20% and still enjoys a high market demand. Due to the high demand, there is an increase in the number of similar sellers in the long-run. This is an example of monopolistic competition. Which of the following is not a common characteristic between a monopoly and monopolistic competition? 1. The slope of the demand curve is negative. 2. The products sold have close substitutes. 3. There is deadweight loss in the market. 4. The price set by the seller/producer will be above marginal revenue.

The products sold have close substitutes.

(Ch14 Quiz) A consumer stops to buy an ice cream from Gene's Ice Cream Stand who charges $2 more per ice cream than the general market price of similar ice cream stands. All of the ice cream stands incur the same costs. However, the quantity of ice cream supplied by Gene's Ice Cream Stand is exhausted for the day. Based on the given scenario, which of the following statements is not true about Gene's Ice Cream Stand? 1. The quantity produced was at the minimum of the average total cost curve. 2. The quantity produced is less than the socially efficient production level causing it to create a deadweight loss. 3. The quantity produced is limited to earn higher economic profits. 4. The price charged is above the marginal cost.

The quantity produced was at the minimum of the average total cost curve.

(Class Quiz Ch12 Pt2) Scenario: When a monopolist charges $5 for its product, it sells 250 units of the product. When it decreases the price of the product to $4, it sells 325 units of the product. Refer to the scenario above. What is the change in total revenue due to the price reduction? 1. The total revenue increases by $50. 2. The total revenue decreases by $175. 3. The total revenue decreases by $105. 4. The total revenue increases by $25.

The total revenue increases by $50.

(TA Review) Scenario: When a monopolist charges $5 for its product, it sells 250 units of the product. When it decreases the price of the product to $4, it sells 325 units of the product. Refer to the scenario above. What is the change in total revenue due to the price reduction? 1. The total revenue increases by $25. 2. The total revenue increases by $50. 3. The total revenue decreases by $175. 4. The total revenue decreases by $105.

The total revenue increases by $50.

(Class Quiz Ch14 Pt1) Which of the following is true of monopolistic competition? 1. The product sold by each seller in this market structure is identical. 2. The firms in this market structure earn huge economic profits in the long run 3. There are a large number of sellers each selling a differentiated product 4. There is only one seller in this market structure.

There are a large number of sellers each selling a differentiated product

(TA Review) Which of the following is a difference between an oligopoly with differentiated products and a monopolistic competition? 1. There are huge barriers to entry in an oligopoly with differentiated products, while there are minimal barriers to entry in a monopolistically competitive market 2. Firms in an oligopoly market with differentiated products charge a price higher than marginal cost in the long run, while firms in a monopolistic competition charge a price lower than marginal cost in the long run. 3. There are no barriers to entry in an oligopoly with differentiated products, while there are huge barriers to entry in a monopolistic competition. 4. Firms in an oligopoly with differentiated products charge a price lower than average total cost in the long run, while firms in a monopolistic competition earn a price higher than average total cost in the long run.

There are huge barriers to entry in an oligopoly with differentiated products, while there are minimal barriers to entry in a monopolistically competitive market

(Ch12 Quiz) As this chapter explains, a monopoly is an industry structure where only one firm provides a good or service that has no close substitutes. This question explores the last part of this definition further. In 1947, the United States government charged the DuPont Company with a violation of the Sherman Act. The government argued that DuPont was monopolizing the cellophane market. At trial, the government showed that DuPont produced nearly 75 percent of all of the cellophane sold in the United States each year. Nonetheless, the U.S. Supreme Court ruled in favor of DuPont and dismissed the case. Which of the following is a likely argument used by DuPont to convince the Supreme Court that it did not violate the Sherman Act? 1. As a monopoly, DuPont was beneficial to the community since it hired many workers and paid high salaries. 2. Cellophane is a small part of consumers' consumption, so monopoly pricing has not caused any harm to consumers. 3. There are many close substitutes for cellophane such as aluminum foil and waxedpaper, so DuPont did not have significant market power. 4. Since DuPont only produced 75 percent of allcellophane, not 100 percent, it is a price-taker with no pricing power.

There are many close substitutes for cellophane such as aluminum foil and waxedpaper, so DuPont did not have significant market power.

(Ch12 Quiz) Sirius XM Satellite Radio and XM Satellite Radio were the only two satellite radio providers in the United States. The Department of Justice (DOJ) and the Federal Communications Commission (FCC) approved the merger of the two companies in 2008 even though Sirius-XM would then control 100 percent of the satellite radio market. Which of the following arguments do you think Sirius and XM used to convince the DOJ and the FCC to allow the merger to proceed? 1. There are many close substitutes for satelliteradio; therefore, Sirius-XM would not exercise market power. 2. By stopping themerger, it would have limited the amount of variety on the radio, thereby limiting free speech. 3. Compared to the price of acar, the satellite radio subscription was too small a part of the consumer budget to matter. 4. Satellite radio is most often used in cars and neither firm had any pricing power in the car market.

There are many close substitutes for satelliteradio; therefore, Sirius-XM would not exercise market power.

(Ch12 Quiz) Which of the following best describes network externalities? 1. They are the benefits received by other firms from the actions taken by a monopolist. 2. They occur when a firm hires an outside company to help lower its costs. 3. They are the benefits to a firm from increasing its online presence. 4. They occur when a product's value increases as more consumers begin to use it.

They occur when a product's value increases as more consumers begin to use it.

(CH13 Quiz) Chevron and BP are bidding against each other for new oil drilling leases in the Gulf of Mexico. The bids will be simultaneous with the high bidder as the winner. Chevron decides to hire you as a consultant to help it use game theory to make the best decision on how much to bid. What elements must be known to set up a simultaneous move game? 1. The payoffs, the move order, the players. 2. The move order, the players, the strategies. 3. Name of third player, the payoffs, the move order. 4. The players, the strategies, the payoffs.

The players, the strategies, the payoffs.

(Class Quiz Ch12 Pt3) Which of the following statements is true? 1. Under perfect competition, prospective buyers may not be able to buy a good even if they have a willingness to pay above marginal costs. 2. Under monopoly, the seller sets the price of its good below marginal costs. 3. Under perfect competition, sellers set the price of their goods below marginal costs. 4. Under monopoly, prospective buyers may not be able to buy a good even if they have a willingness to pay above marginal costs.

Under monopoly, prospective buyers may not be able to buy a good even if they have a willingness to pay above marginal costs.

(Ch12 Quiz) Which of the following best describes the relationship between price (P), marginal revenue (MR), and total revenue (TR) for a monopolist? 1. When MR is rising, TR is rising, and when MR is falling, TR is falling. 2. When MR is positive, TR is rising, and when MR is negative, TR is falling. 3. As MR falls, TR rises. 4. They are all equal for a monopolist.

When MR is positive, TR is rising, and when MR is negative, TR is falling.

What is a zero-sum game?

When one player wins, the other loses, so the payoffs sum to zero

(CH13 Quiz) Two firms are thinking of entering a new market. If one enters it will be successful but if a second enters both will suffer very large losses. Is there a first-mover advantage in this game 1. Yes. The firm that goes first can enter and the firm that goes second will have no incentive to enter. 2. No. The firm that goes first can enter and the firm that goes second will have no incentive to enter. 3. Yes. The firm that goes first can choose not to enter and therefore incur large losses. 4. No. The firm that goes first can choose not to enter and the firm that goes second will therefore incur large loses.

Yes. The firm that goes first can enter and the firm that goes second will have no incentive to enter.

(Class Quiz Ch14 Pt1) A collusion breaks down if 1. the price set by the colluding firms exceeds the marginal cost of production 2 a firm charges a price higher than the price set by the other colluding firms 3. a firm charges a price lower than the price set by the other colluding firms 4. the price set by the colluding firms equals the marginal cost of production

a firm charges a price lower than the price set by the other colluding firms

(CH13 HW) Perfect price discrimination occurs when: 1. a firm charges the same buyer different prices at different points of time. 2. a firm charges wealthier buyers a lower price. 3. a firm charges different buyers according to the characteristic of their purchase. 4. a firm charges each buyer exactly their willingness to pay.

a firm charges each buyer exactly their willingness to pay.

(Class Quiz Ch12 Pt2) A market in which a firm emerges as a monopoly due to large economies of scale is referred to as: 1. an exclusive monopoly. 2. a natural monopoly. 3. a legal monopoly 4. a regulated monopoly.

a natural monopoly.

(Class Quiz Ch14 Pt2) Scenario: The fixed cost of producing 500 units of Good Y is $25,000, while the variable cost of producing 500 units of Good Y is $60,000. Refer to the scenario above. If the equilibrium price charged by the firm in the short run is $170, the firm will earn 1. a profit of $0 per unit 2. a profit of $25 per unit 3. a profit of $30 per unit 4. a profit of $10 per unit

a profit of $0 per unit

(Lecture Ch12) The quantity effect of a price reduction causes: 1. a decrease in revenue because of a lower price 2. an increase in revenue because of increased sales 3. an increase in labor demand due to increased sales of the product 4. a decrease in labor demand because of a lower price of the final product

an increase in revenue because of increased sales

(Ch12 HW) When compared to a perfectly competitive industry, in a monopoly: 1. both consumer surplus and social surplus are smaller. 2. consumer surplus is higher but social surplus is smaller. 3. both consumer surplus and social surplus are larger. 4. consumer surplus is lower but social surplus is larger.

both consumer surplus and social surplus are smaller.

(Class Quiz Ch12 Pt1) Compared to a firm under perfect competition, a monopolist: 1. charges less and produces less. 2. charges more and produces more. 3. charges more and produces less. 4. charges less and produces more.

charges more and produces less.

(Ch13 Lecture) In a two-player simultaneous game if player A has a dominant strategy and player B does not, player B will 1. employ a mixed strategy 2. choose his best strategy assuming that player A plays her dominant strategy 3. not achieve a Nash equilibrium 4. assume that player A does not choose her dominant strategy

choose his best strategy assuming that player A plays her dominant strategy

(CH13 Quiz) A pure strategy involves ____________. 1. choosing one particular action for a situation. 2. choosing ethical actions over Nash strategies. 3. choosing ethical actions over dominant strategies. 4. choosing different actions randomly.

choosing one particular action for a situation.

(Ch14 HW) The firms in the petroleum industry of Oiland have decided to cooperate with each other by setting their respective market shares. This is an example of ________ in the petroleum industry. 1. collusion 2. undercutting 3. free riding 4. cost cutting

collusion

(Class Quiz Ch14 Pt1) There are a few firms in the automobile industry in Portland. In order to prevent a price war, these firms have secretly agreed to charge a price 20% above the marginal cost of production. This is an example of 1. cost-cutting 2. undercutting 3. free riding 4. collusion

collusion

What is second degree price discrimination?

consumers are charged different prices based on the quantity they purchase

What is third degree price discrimination?

consumers are charged different prices based on their own attributes such as age, gender, culture or location

What is first degree/perfect price discrimination?

consumers are charged the maximum price they are willing to pay

(Class Quiz Ch12 Pt2) A musician was guaranteed by the government that no one else could replicate or sell his music CDs. This is an example of a: 1. patent 2. trademark 3. blueprint 4. copyright

(Lecture Ch12) A ___________ is an exclusive right granted by the government to an author's intellectual property

(CH13 HW) A strategy is called a mixed strategy if it involves choosing ___________. 1. an action that yields a higher payoff to the opponent 2. different actions randomly 3. one particular action for a situation 4. an action that yields zero payoff to the player

different actions randomly

(Class Quiz Ch14 Pt1) Goods that are similar but are not perfect substitutes are called _________ goods. 1. homogeneous 2. differentiated 3. inferior 4. normal

differentiated

(Ch14 Quiz) How are the products sold by a monopolistically competitive firm different from the products sold in a competitive market? Unlike products sold in a competitive market, the products sold in a monopolistically competitive market are ___________. 1. homogenous. 2. differentiated. 3. expensive. 4. perfect substitutes.

differentiated.

What does a monopolists' demand curve look like?

downward sloping

(Class Quiz Ch14 Pt1) A monopolistically competitive firm always faces a(n) 1. horizontal demand curve 2. vertical demand curve 3. upward sloping demand curve 4. downward sloping demand curve

downward sloping demand curve

(CH13 HW) A Nash equilibrium occurs if ____________. 1. each player chooses strategies that are mutual best responses 2. each player chooses only a pure strategy 3. each player chooses his or her dominant strategy 4. each player chooses only a mixed strategy

each player chooses strategies that are mutual best responses

(Class Quiz Ch13 Pt2) A Nash equilibrium occurs if 1. each player chooses only a mixed strategy 2. each player chooses strategies that are mutual best responses 3. each player chooses his or her dominant strategy 4. each player chooses only a pure strategyeach player chooses only a pure strategy

each player chooses strategies that are mutual best responses

(TA Review) A Nash equilibrium occurs if 1. each player chooses only a mixed strategy 2. each player chooses only a pure strategyeach player chooses only a pure strategy 3. each player chooses strategies that are mutual best responses 4. each player chooses his or her dominant strategy

each player chooses strategies that are mutual best responses

(Class Quiz Ch14 Pt2) Scenario: The fixed cost of producing 500 units of Good Y is $25,000, while the variable cost of producing 500 units of Good Y is $60,000. Refer to the scenario above. A firm producing Good Y will 1. incur losses if it charges a price of $200 2. earn economic profits if it charges a price of 120 3. shut down production if price falls below $200 4. earn zero economic profits if it charges a price of $170

earn zero economic profits if it charges a price of $170

(Ch14 HW) If firms in a duopoly with homogeneous products compete on price, a Nash equilibrium is reached when each firm charges a price ___________. 1. higher than its average cost 2. equal to its average cost 3. equal to its marginal cost 4. lower than its marginal cost

equal to its marginal cost

(Class Quiz Ch14 Pt2) The Herfindahl-Hirschman Index is used to 1. measure the price elasticity of market supply in an industry 2. estimate the degree of competition in an industry 3. estimate the profit earned by firms in an industry 4. measure the price elasticity of demand faced by a firm

estimate the degree of competition in an industry

(Class Quiz Ch14 Pt2) A firm is said to have market power if it charges a price ___________of production. 1. lower than the marginal cost 2. equal to the marginal cost 3. higher than the marginal cost 4. equal to the average fixed cost

higher than the marginal cost

(Ch12 HW) The price chosen by a monopolist: 1. is independent of the production of other firms. 2. is dependent on the production of other firms. 3. maximizes social surplus. 4. maximizes consumer surplus.

is independent of the production of other firms

(Lecture Ch12) The total revenue curve of a monopolist: 1. is positively sloped when marginal revenue is negative 2. is negatively sloped when marginal revenue is negative 3. is positively sloped when the marginal revenue curve is upward sloping 4. is negatively sloped when the marginal revenue curve is downward sloping

is positively sloped when the marginal revenue curve is upward sloping

(Class Quiz Ch12 Pt3) When a monopolist sells positive levels of output, its demand curve: 1. lies below its marginal revenue curve. 2. and marginal revenue curve overlap. 3. is vertical while its marginal revenue curve is horizontal. 4. lies above its marginal revenue curve.

lies above its marginal revenue curve.

(Ch12 HW) Everything else remaining unchanged, if a new seller enters a market to compete with an existing monopoly that is enjoying economies of scale, it will lead to: 1. higher profits for the existing firm. 2. higher profits for both firms. 3. higher market power for the existing firm. 4. lower profits for the existing firm

lower profits for the existing firm

(Class Quiz Ch14 Pt2) The quantity produced in a monopolistically competitive market is ___________ than the quantity produced in a perfectly competitive market, and the price charged in a monopolistically competitive market is ___________ than the price charged in a perfectly competitive market. 1. higher; higher 2. higher; lower 3. lower; higher 4. lower; lower

lower; higher

(Class Quiz Ch14 Pt1) In an oligopoly with differentiated products, firms 1. make positive economic profits 2. incur losses 3. earn zero economic profits 4. do not face competition from its rivals

make positive economic profits

(Ch12 HW) At the profit-maximizing level of production of a monopolist, ____________. 1. marginal revenue equals marginal cost 2. both marginal revenue and marginal cost are negative 3. marginal revenue exceeds marginal cost 4. marginal revenue is less than marginal cost

marginal revenue equals marginal cost

(Class Quiz Ch14 Pt1) A profit-maximizing monopolistic competitor continues production until 1. marginal revenue equals marginal cost 2. marginal revenue exceeds marginal cost 3. marginal revenue equals average revenue 4. marginal revenue exceeds average revenue

marginal revenue equals marginal cost

(Class Quiz Ch14 Pt2) A monopolistic competitor exits the industry in the long run if 1. total revenue exceeds total cost 2. marginal revenue equals marginal cost 3. marginal revenue exceeds marginal cost 4. total costs exceed total revenue

marginal revenue equals marginal cost

(Ch14 Quiz) Consider four market structures: perfect competition, monopolistic competition, oligopoly, and monopoly. Firms in all four market structures maximize profits by producing the quantity where ___________. 1. price equals marginal cost. 2. marginal cost equals zero. 3. marginal revenue equals marginal cost. 4. price equals marginal revenue.

marginal revenue equals marginal cost.

(Ch12 Quiz) The Department of Justice filed a lawsuit against Microsoft claiming it was engaging in unfair practices by ____________. 1. keeping the software code behind its operating system secret from users and competitors. 2. producing less than the efficient amount of its operating system and charging above the competitive market price 3. monopolizing the market by bundling its operating system with its Internet Explorer browser. 4. selling its operating system at different prices to different people based on consumer characteristics.

monopolizing the market by bundling its operating system with its Internet Explorer browser.

(Ch12 HW) If a monopolist owns or controls a key resource necessary for production, it is a source of: 1. regulated market power. 2. natural market power. 3. restricted market power. 4. legal market power.

natural market power.

(Class Quiz Ch12 Pt2) Economies of scale in production act as a source of: 1. natural market power. 2. regulated market power. 3. legal market power. 4. restricted market power.

natural market power.

(Class Quiz Ch12 Pt2) If a monopolist owns or controls a key resource necessary for production, it is a source of: 1. restricted market power. 2. regulated market power 3. legal market power. 4. natural market power.

natural market power.

(Ch12 Quiz) Some economists believe the threat of unfair monopolies is greater today than when the Sherman Act was first enacted. They argue that modern software can gain monopoly status and establish a barrier to entry through ____________. 1. greater costs in applying for patents and copyrights 2. network externalities. 3. increased access to venture capital money. 4. the ability to raise money from the stock market.

network externalities.

(CH13 Quiz) In a game with mixed strategies, does either of the players have a dominant strategy? Why or why not? 1. no, because dominant strategies involve picking random strategies. 2. yes, because dominant strategies involve picking random strategies 3. no, because the best choice in a mixed strategy game is to pick a random strategy. 4. yes, because the best choice in a mixed strategy game is to pick a random strategy.

no, because the best choice in a mixed strategy game is to pick a random strategy.

What is natural market power?

occurs when a firm obtains market power through barriers to entry created by the firm itself.

(Class Quiz Ch14 Pt2) There are a few ship manufacturers in Polonia and each firm faces a downward sloping demand curve. The ship-building industry in Polonia is an example of a(n) 1. monopolistic competition 2. perfect competition 3. oligopoly 4. monopoly

oligopoly

(CH13 HW) In a zero-sum game, __________. 1. one player's loss is another player's gain 2. each player chooses a pure strategy 3. each player earns a zero payoff irrespective of the strategy one chooses 4. each player has a dominant strategy

one player's loss is another player's gain

(CH13 HW) A best response is ___________. 1. one player's optimal action choice taking the other player's action as given 2. an action choice that always results in a zero payoff to the opponent 3. one player's optimal action choice irrespective of the action of the other player 4. an action choice that results in equal payoffs to all the players in a game

one player's optimal action choice taking the other player's action as given

(Ch13 Lecture) A best response is ___________ 1. one player's optimal action choice irrespective of the action of the other player 2. one player's optimal action choice taking the other player's action as given 3. an action choice that always results in a zero payoff to the opponent 4. an action choice that results in equal payoffs to all the players in a game

one player's optimal action choice taking the other player's action as given

(Class Quiz Ch13 Pt1) A best response is 1. an action choice that results in equal payoffs to all the players in a game 2. one player's optimal action choice taking the other player's action as given 3. an action choice that always results in a zero payoff to the opponent 4. one player's optimal action choice irrespective of the action of the other player

one player's optimal action choice taking the other player's action as given

What are two examples of natural market power?

ownership of key resources and economies of scale

(Class Quiz Ch12 Pt1) A _________ is the privilege granted to an individual or company by the government, which gives them the sole right to produce and sell a good. 1. copyright 2. brand 3. patent 4. trademark

patent

(Class Quiz Ch12 Pt1) Greenaqua Corp. was given the exclusive right to produce and sell its newly introduced water purifier for 20 years. The right granted to Greenaqua is an example of a: 1. patent 2. copyright 3. trademark 4. blueprint

patent

(Lecture Ch12) Greenaqua Corp. was given the exclusive right to produce and sell its newly introduced water purifier for 20 years. The right granted to Greenaqua is an example of a:

patent

What are two examples of legal market power?

patent or copyright

What is the only type of market that is a price-taker?

perfect competition

(Class Quiz Ch13 Pt1) A game is called a simultaneous move game if 1. players choose their actions at the same time. 2. players choose mixed strategies to play the game 3. one player chooses her action after the other player makes a move players choose their dominant strategies to play the game.

players choose their actions at the same time.

(Class Quiz Ch12 Pt3) When firms charge different prices to different consumers for the same good or service, it is referred to as ________. 1. price discrimination 2. price bias 3. predatory pricing 4. shadow pricing

price discrimination

(Class Quiz Ch14 Pt2)A monopolistically competitive firm makes positive economic profits if 1. price equals average fixed cost 2. price equals marginal cost 3. price is less than average total cost 4. price is higher than average total cost

price is higher than average total cost

(Ch14 HW) La Dila and Swiss Pro are the only two firms in an industry. The firms charge equal prices for their products, which are perfect substitutes. La Dila decides to lower its price slightly. Swiss Pro responds by cutting its price further. This price cutting will continue as long as each firm's 1. price is higher than marginal cost 2. price is lower than marginal cost 3. price is higher than zero 4. price is higher than the average fixed cost

price is higher than marginal cost

(Lecture Ch12) In comparison to firms in other market structures, monopolists 1. maximize social surplus 2. encourage the entry and exit of new firms 3. set price lower than marginal revenue 4. produce goods that do not have close substitutes

produce goods that do not have close substitutes

(Class Quiz Ch12 Pt1) In comparison to firms in other market structures, monopolists: 1. set price lower than marginal revenue. 2. produce goods that do not have close substitutes. 3. encourage the entry and exit of new firms. 4. maximize social surplus.

produce goods that do not have close substitutes.

(CH13 Quiz) Suppose that a goalie is playing a mixed strategy between diving to the left and the right. A player decides which strategy to employ when playing a game with mixed strategies by choosing ____________. 1. based on the dominant strategy. 2. based on the Nash equilibrium. 3. randomly. 4. the Fibonacci sequence.

randomly.

(Class Quiz Ch12 Pt3) Buyers who buy in bulk are often offered discounts. This is an example of: 1. first-degree price discrimination. 2. second-degree price discrimination. 3. third-degree price discrimination. 4. predatory pricing.

second-degree price discrimination.

(TA Review) Buyers who buy in bulk are often offered discounts. This is an example of: 1. second-degree price discrimination. 2. predatory pricing. 3. first-degree price discrimination. 4. third-degree price discrimination.

second-degree price discrimination.

(Ch12 HW) If a monopoly engages in first-degree price discrimination: 1. consumer surplus is maximized. 2. producer surplus is minimized. 3. the deadweight loss is maximized. 4. social surplus is maximized.

social surplus is maximized.

(Class Quiz Ch14 Pt2) The Herfindahl-Hirschman Index is calculated by 1. adding the number of firms in the market and squaring the resulting number 2. adding the market share of each firm in the market and squaring the resulting number 3. squaring the market share of each firm competing in the market and then summing the resulting numbers 4. adding the profit earned by each firm in the market

squaring the market share of each firm competing in the market and then summing the resulting numbers

What does a perfect competition demand curve look like?

straight line D=MR

(Class Quiz Ch13 Pt1) Game theory is the study of 1. policy analysis 2. strategic interactions 3. irrational decision making 4. program evaluation

strategic interactions

(Class Quiz Ch13 Pt1) A ________ is a complete plan describing how a player will act. 1. hypothesis 2. strategy 3. payoff 4. policy

strategy

(Ch14 Lecture) Which of the following is an example of differentiated goods? 1. books and cosmetics 2. fuel and water 3. potatoes grown by different farmers 4. tea and energy drinks

tea and energy drinks

(Ch 13 Lecture) In a two-player simultaneous game where neither player has a dominant strategy, 1. there is never a Nash equilibrium 2. there is only one Nash equilibrium 3. the actual outcome can be unpredictable 4. the actual outcome will not be a Nash equilibrium

the actual outcome can be unpredictable

(Ch12 HW) Average total cost decreases with an increase in output because: 1. the marginal cost of production increases with an increase in output. 2. the total variable cost decreases with an increase in output. 3. the average fixed cost decreases with an increase in output. 4. diminishing marginal returns sets in after a particular level of production.

the average fixed cost decreases with an increase in output.

(Ch14 HW)If new firms enter a monopolistically competitive market structure in the long run, ________. 1. the demand curves faced by the existing firms become perfectly inelastic 2. the demand curves faced by the existing firms shift to the right 3. the demand curves faced by the existing firms become more elastic 4. the supply curves of the existing firms become relatively more elastic

the demand curves faced by the existing firms become more elastic

(TA Review) If new firms enter a monopolistically competitive market structure in the long run, ________. 1. the demand curves faced by the existing firms become more elastic 2. the supply curves of the existing firms become relatively more elastic 3. the demand curves faced by the existing firms shift to the right 4. the demand curves faced by the existing firms become perfectly inelastic

the demand curves faced by the existing firms become more elastic

(Lecture Ch12) As a monopolist expands its output 1. the difference between the demand curve and the marginal revenue curve decreases 2. the difference between the demand curve and the marginal revenue curve increases 3. the slope of the demand curve decreases, while the slope of the marginal revenue curve increases 4. the slope of the demand curve increases, while the slope of the marginal revenue curve decreases

the difference between the demand curve and the marginal revenue curve increases

(CH13 Quiz) A first-mover advantage occurs if __________. 1. the first mover to act in a strategic game reaches the Nash equilibrium. 2. the first mover to act in a sequential game reaches the dominant strategy equilibrium. 3. the first mover to act in a sequential game gets a benefit from doing so. 4. the first mover to act in a strategic game reaches the dominant strategy equilibrium.

the first mover to act in a sequential game gets a benefit from doing so.

(Lecture Ch12) The price effect of a price decrease by a monopolist refers to: 1. the loss in revenue due to the price reduction 2. the increase in sales due to the price reduction 3. the increase in revenue because of an increase in sales 4. the decrease in the demand for labor due to the lower price of the final product

the loss in revenue due to the price reduction

(Ch12 HW) A monopolist faces an average total cost of $6 when it produces 200 units of its product. If it sells the 200 units at $8 per unit, ________. 1. the monopolist makes a profit of $200 2. the monopolist incurs a loss of $400 3. the monopolist makes a profit of $400 4. the monopolist incurs a loss of $200

the monopolist makes a profit of $400

(Ch13 Lecture) The term prisoners' dilemma refers to a game in which 1. there are no Nash equilibria 2. there are no dominant strategies 3. the payoff from playing the dominant strategy is the same for each player 4. the payoff from playing the dominant strategy is not the highest payoff possible

the payoff from playing the dominant strategy is not the highest payoff possible

(Ch14 HW) Refer to the scenario above. The demand for Sporty's soccer balls is 2,500 units if ________. 1. the price charged by Go! is higher than the price charged by Sporty 2. the price charged by Sporty is equal to the price charged by Go! 3. the price charged by Sporty is higher than the price charged by Go! 4. the price charged by Go! is higher than the unit cost of producing a ball

the price charged by Go! is higher than the price charged by Sporty

(Ch14 HW) Scenario: The market demand for soccer balls in a small town is 2,500 units and there are two rival sports brands selling soccer balls in this town—Sporty and Go! The products of the two brands are identical. Refer to the scenario above. The demand for Sporty's soccer balls is 1,250 units if ________. 1. the price charged by Sporty is higher than the price charged by Go! 2. the price charged by Sporty is higher than the cost of production of each ball 3. the price charged by Sporty is equal to the price charged by Go! 4. the price charged by Go! is higher than the price charged by Sporty

the price charged by Sporty is equal to the price charged by Go!

(Ch14 HW) Refer to the scenario above. The demand for Go!'s soccer balls is 2,500 units if ________. 1. the price charged by Sporty is higher than the price charged by Go! 2. the price charged by Go! is higher than the cost of producing a ball 3. the price charged by Go! is higher than the price charged by Sporty 4. the price charged by Sporty is equal to the price charged by Go!

the price charged by Sporty is higher than the price charged by Go!

(Class Quiz Ch14 Pt1) In a duopoly with homogeneous products, the best response of a firm is to charge a lower price than its rival as long as 1. the rival's price is above marginal cost 2. the rival's price is below average cost 3. the rival's price is below marginal cost 4. the rival's price is above average cost

the rival's price is above marginal cost

(Class Quiz Ch12 Pt2) A network externality refers to a situation where: 1. the value of a product increases as more consumers start to use it. 2. the government interferes to prevent the concentration of market power in the hands of a few firms 3. firms collude to sell products at a price higher than the equilibrium market price. 4. a firm that has control over key resources auctions the resources off to other firms.

the value of a product increases as more consumers start to use it.

(Ch12 Quiz) In recent years, some online firms have offered different consumers different prices for the same good. These firms use the consumer's IP address to find what city they are in and then charge a higher price to people in wealthier cities. This type of pricing behavior is ____________. 1. third-degree price discrimination 2. first-degree price discrimination. 3. location discrimination 4. second-degree price discrimination.

third-degree price discrimination

(Ch12 HW) Scenario: When a monopolist charges $5 for its product, it sells 250 units of the product. When it decreases the price of the product to $4, it sells 325 units of the product. Refer to the scenario above. What is the change in total revenue due to the price reduction? 1. The total revenue decreases by $105. 2. The total revenue increases by $25. 3. The total revenue decreases by $175. 4. total revenue increases by $50.

total revenue increases by $50.

(Class Quiz Ch14 Pt2) A monopolistically competitive firm shuts down in the short run if 1. marginal revenue equals marginal cost 2. average total cost exceeds price 3. total revenues do not cover variable costs 4. marginal revenue covers average fixed costs

total revenues do not cover variable costs

(CH13 HW) Scenario: Two friends have settled on a unique strategy to decide who will complete his homework first and help the other. They have agreed to simultaneously make one of the three symbols with their fists - a rock, a paper, or scissors. Simple rules of "rock breaks scissors, scissors cut paper, and paper covers rock" dictate which symbol beats the other. If both of them hold out the same symbols, the game is a tie. Refer to the scenario above. This is an example of a(n) ________. 1. variable-sum game 2. zero-sum game 3. prisoners' dilemma 4. extensive-form game

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