microeconomics

which of the following conditions is characteristic of a monopolistically competitive firm in both the short-run and the long run? a. P > MC b. MC = ATC c. P < MR d. All of the above are correct.

a. P > MC

Which of the following may eliminate some or all of the inefficiency that results from monopoly pricing? a. The government can regulate the monopoly. b. The monopoly can be prohibited from price discriminating. c. The monopoly can be forced to operate at a point where its marginal revenue is equal to its marginal cost. d. None of the above would eliminate any inefficiency associated with a monopoly.

a. The government can regulate the monopoly.

Which of the following expressions is correct? a. accounting profit = total revenue - explicit costs b. economic profit = total revenue - implicit costs c. economic profit = total revenue - explicit costs d. Both a and b are correct.

a. accounting profit = total revenue - explicit costs

In a two-person repeated game, a tit-for-tat strategy starts with a. cooperation and then each player mimics the other player's last move. b. cooperation and then each player is unresponsive to the strategic moves of the other player. c. noncooperation and then each player pursues his or her own self-interest. d. noncooperation and then each player cooperates when the other player demonstrates a desire for the cooperative solution.

a. cooperation and then each player mimics the other player's last move.

If government regulation sets the maximum price for a natural monopoly equal to its marginal cost, then the natural monopolist will a. earn economic losses. b. earn economic profits. c. earn zero economic profits. d. produce a lower quantity of output than is socially optimal.

a. earn economic losses

If firms are competitive and profit maximizing, the price of a good equals the a. marginal cost of production. b. fixed cost of production. c. total cost of production. d. average total cost of production.

a. marginal cost of production.

In a perfectly competitive market, a. no one seller can influence the price of the product. b. price exceeds marginal revenue for each unit sold. c. average revenue exceeds marginal revenue for each unit sold. d. All of the above are correct.

a. no one seller can influence the price of the product.

For a monopolistically competitive firm, at the profit-maximizing quantity of output, a. price exceeds marginal cost. b. marginal revenue exceeds marginal cost. c. marginal cost exceeds average revenue. d. price equals marginal revenue.

a. price exceeds marginal cost.

In monopolistic competition as well as in monopoly, a. price exceeds marginal revenue for each firm. b. profit is zero in a long-run equilibrium for each firm. c. entry and exit by firms are unrestricted. d. there are at most a few firms in each market.

a. price exceeds marginal revenue for each firm.

Economic profit a. will never exceed accounting profit. b. is most often equal to accounting profit. c. is always at least as large as accounting profit. d. is a less complete measure of profitability than accounting profit.

a. will never exceed accounting profit.

Which of the following statements is correct? a. Assuming that explicit costs are positive, economic profit is greater than accounting profit. b. Assuming that implicit costs are positive, accounting profit is greater than economic profit. c. Assuming that explicit costs are positive, accounting profit is equal to economic profit. d. Assuming that implicit costs are positive, economic profit is positive.

b. Assuming that implicit costs are positive, accounting profit is greater than economic profit.

Which of the following statements is not correct? a. Both monopolistically competitive and perfectly competitive firms can earn economic profits in the short run. b. Both monopolies and monopolistically competitive firms can earn economic profits in the long run. c. Firms in perfect competition, monopolistic competition, and monopoly maximize profits by producing where marginal revenue equals marginal cost. d. Only competitive firms produce the welfare-maximizing level of output.

b. Both monopolies and monopolistically competitive firms can earn economic profits in the long run

Which of the following is not an example of price discrimination by a firm? a. children's meals at a restaurant b. a natural gas company charging customers a higher rate in the winter than in the summer c. a senior citizens' discount d. coupons in the Sunday newspaper

b. a natural gas company charging customers a higher rate in the winter than in the summer

Which of the following is a characteristic of monopolistic competition? a. ownership of a key resource by a single firm b. free entry c. identical product d. patents

b. free entry

A production function describes a. how a firm maximizes profits. b. how a firm turns inputs into output. c. the minimal cost of producing a given level of output. d. the relationship between cost and output.

b. how a firm turns inputs into output.

Firms may experience diseconomies of scale when a. they are too small to take advantage of specialization. b. large management structures are bureaucratic and inefficient. c. there are too few employees, and managers do not have enough to do. d. average fixed costs begin to rise again.

b. large management structures are bureaucratic and inefficient.

The lower the concentration ratio, the a. more control an individual firm has to set prices. b. more competitive the industry. c. less competitive the industry. d. Both a and c are correct.

b. more competitive the industry

The paradoxical nature of oligopoly can be demonstrated by the fact that, even though the monopoly outcome is best for the oligopolists, a. they collude to set the output level equal to the Nash equilibrium level of output. b. they have incentives to increase production above the monopoly outcome. c. they do not behave as profit maximizers. d. self-interest juxtaposes the profits earned at the Nash equilibrium.

b. they have incentives to increase production above the monopoly outcome.

Which of the following statements about costs is correct? a. When marginal cost is less than average total cost, average total cost is rising. b. The total cost curve is U-shaped. c. As the quantity of output increases, marginal cost eventually rises. d. All of the above are correct.

c. As the quantity of output increases, marginal cost eventually rises.

The fundamental reason that marginal cost eventually rises as output increases is because of a. economies of scale. b. diseconomies of scale. c. diminishing marginal product. d. rising average fixed cost.

c. diminishing marginal product.

The long-run supply curve for a competitive industry may be upward sloping if a. there are barriers to entry. b. firms that enter the industry are able to do so at lower average total costs than the existing firms in the industry. c. some resources are available only in limited quantities. d. accounting profits are positive.

c. some resources are available only in limited quantities

7. Which of these curves is the competitive firm's short-run supply curve? a. the average variable cost curve above marginal cost b. the average total cost curve above marginal cost c. the marginal cost curve above average variable cost d. the average fixed cost curve

c. the marginal cost curve above average variable cost

When a firm's only variable input is labor, then the slope of the production function measures the a. quantity of labor. b. quantity of output. c. total cost. d. marginal product of labor.

d. marginal product of labor.

Imperfectly competitive firms are characterized by a. horizontal demand curves. b. standardized products. c. a large number of small firms. d. price making ability.

d. price making ability.