past tests chpt 10 & test 3

Kings Inc. produces 250 sweaters per week. The average variable cost per sweater is $3.75 and average fixed costs are $1.50 per sweater. Total cost per week is:

$1,312.50

a monopolist participates in price discrimination when they charge:

a lower price to consumers whose demand is more elastic

Which of the following occurs in the long run?

a new movie theater is built

False statement

all costs are fixed costs in the long run

true statement about cartels

an individual member of a cartel could increase its profits by dropping its price below the established price

interdependence is the key characteristic of

an oligopoly

When the keep in calling cell phone company is at full capacity, it incurs costs of 230,000. During the december shutdown period, when no cell phones are produced, it incurs costs of $76,000. One can conclude that:

at full capacity, variable costs are $154,000

____ is found by dividing total output by the number of workers employed to produce that output.

average product

a monopolistic competitor is likely a perfectly competitive firm in the long run because

both firms will earn a normal profit

The best-response method assumes that each player will:

choose his or her best payoff taking into account the self-interest actions of all other players

the ___ measures the share of industry sales controlled by the industry's n largest firms

concentration ratio

Second-Degree price discrimination

consumers are charged one price for the first block of purchases and a different price for the next block of purchases

Characteristics do monopolistically competitive markets and perfectly competitive markets share

differentiated products

Barriers to entry allow some monopolists to

earn economic profits in the long run

Profits in excess of both explicit and implicit costs are:

economic profits

what of the following characteristics does monopolistic competition have in common with the model of perfect competition

entry and exit are easy, individuals firms earn normal profits in the long run, each firm has an insignificantly small market share

if a perfectly competitive firm can sell a bushel of soybeans for $25 per bushel and it has an average variable cost of $20 per bushel, and the marginal cost is $22 per bushel, it should

expand output

Herbert challenged the assumption that

firms always act to maximize profits

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

first-degree price discrimination

characteristic of monopolistic competition

free to entry and exit, product differentiation, price maker

a perfectly competitive firm in the short-run will make profit as long as price is

greater than average total cost

statements about perfect competitor

if an individual firm raises price, it will lose business, always a price taker, sells a homogenous commodity

True statement about monopolies

if price falls below the minimum AVC, the monopolist shuts down its plant

what situation is prisoners dilemma likely to be avoided

if the game is repeated over and over under the same conditions

what actions can help increase the stability of a cartel

increasing government protection

If each of your first seven employees adds more to output than the new worker hired, you are experiencing:

increasing marginal returns

When a new worker hired adds more to total output than the previous worker hired, you have:

increasing marginal returns

the prisoners dilemma

is an example of how minimizing your losses can lead to an inferior outcome for all players

price discrimination is more likely in the case of services than in the case of goods because:

it is easier to resell goods than services

if an oligopolistic firm believes that its competitors would match a price decrease, but not match a price increase, its demand curve is:

kinked, being steeper below the going price

the demand curve faced by a firm in monopolistic competition is

less elastic than then demand curve for a competitive

if a firm is producing an output level greater than the equilibrium output level in a perfectly competitive industry, this statement is false

marginal cost will equal price

The fact that Ticketmaster has an exclusive right to sell tickets to certain events gives it

market power

Focal point strategies are typically used when there is:

more than one Nash equilibrium

Not true statement

normal profits are the same as accounting profits

Explicit Costs, ex.

office supplies, lease payments, insurance

Before deciding on a pricing strategy, worldwide widgets consults with its market intelligence team to understand what discounts the Gargantuan Gizmo company is offering. the model that best fits this industry is:

oligopoly

In which market structure can mutual interdependent decision-making occur?

oligopoly

a handful of firms that exhibit mutually interdependent decision-making are characteristics of what type of market structure

oliogopoly

Rate of return regulation will often create an incentive for a natural monopoly to

pad costs

if the firms price is equal to marginal revenue and average revenue, the market structure of the firm is:

perfect competition

basic setups to a "game"

players, the outcome, strategies

In the Long run, for a monopolistically competitive firm:

price is greater than marginal cost

What should the perfectly competitive firm in the short run do under this situation: minimum AVC < P < minimum ATC?

produce that output where P=MC

Economists explicitly assume that the primary objective of firms is to maximize

profits

The Sherman act makes it illegal to:

restrain trade

When ford offers a rental agency lower prices if it buys a fleet of new vehicles, it is practicing:

second-degree price discrimination

Ownership in corporations is issued in the form of:

shares of stock

In the Short run, an example of a variable cost is:

the cost of labor

the stability of a cartel is enhanced if

the participating members have similar cost structures

Normal profits for a competitive firm occur when

the price equals average total cost

____ is a noncooperative game where players cannot communicate or collaborate in making their decisions about weather or not to confess

the prisoners dilemma

if output falls below equilibrium in a perfectly competitive market then,

the public interest will suffer

one way to achieve product differentiation is through:

these are all ways to achieve product differentiation

Nintendo lowers the price of its product by $10, and sony responds by lowering the price of its own product by $10. the next month nintendo raises the price of its product by $15, and sony responds by raising the price of its own product by $15. this is an example of what type of game strategy?

tit-for-tat

a strategy in which a firm takes the same action that the other firm did in the last period is a:

tit-for-tat strategy

the notion that individuals and firms are compelled to retaliate or punish others for engaging in noncooperative actions, but leaving the door open for future reconciliation, referred to as

tit-for-tat strategy

what equation calculates a monopolistically competitive firm's profit

(P-ATC)xQ

Not an equation

ATC=VC/Q

For a perfectly competitive firm, economic profit is zero when:

Price=minimum ATC

suppose a firm produces 20 units of output. at that level, ATC is 70, P=50, MR and MC= 30. the firm is experiencing a loss of

$400

at 500 units of output, total cost is $100,000 and fixed cost is $50,000, what does variable costs equal at 500 units?

$50,000

which of the following individuals won a nobel prize for his work on game theory?

John Nash

The perfectly competitive firms short run supply curve is the

MC curve above the AVC curve

a monopolist will maximize its profits when it produces the quantity of output where

MR=MC

Sun's pizza lowered its price on a one topping pizza. Taylor lowered its price on a one-topping pizza. Sun created a secret sauce for the combination pizza. The strategy used by taylor is known as:

Tit-for-Tat