ECON 2306 E3 REVIEW
If the firm is maximizing profits, this firm charges a price of
$25.
In April 2010 the market share of the top six U.S. makers of cars and light trucks were General Motors (18.7 percent), Ford (17.0 percent), Toyota (16.0 percent), Honda (11.6 percent), Chrysler (9.7 percent), and Nissan (6.5 percent), and other companies made up the remaining 21.5 percent. What was the concentration ratio for the motor vehicle industry in April 2010?
78.5
Read the two statements below and then choose the answer choice that correctly describes them. Statement I: Oligopolists must sell identical products.Statement II: Oligopolists are often very large firms.
Both statements are true. ???
Industry XIndustry YFirmMarket ShareFirmMarket Share10.4010.3020.2020.3030.1030.3040.1040.0550.1050.0360.1060.02 Using concentration ratios, which is the more concentrated industry?
Industry Y with a concentration ratio of 95.
Assume that four oligopolists (Firms A, B, C, and D) begin with a common price of $20. Then Firm A reduces its price to $17. What are Firms B, C, and D likely to do, based on the theory of the kinked demand curve?
Lower their prices to $17 so that they won't lose customers ??? Leave price unchanged and earn higher profits than Firm A Raise their prices above $20 to make up for the lost volume (?)
The optimum resource mix for a firm would occur when
None of these is true.
An increase in the MRP for each unit of labor
a craft union.
Price discrimination means
charging different prices for identical goods that have identical production costs.
If labor and capital are substitute resources in production, an increase in the price of capital will
decrease the wage rate and decrease the number of workers hired.
An exclusive union affects the wage rate of its members by
decreasing the supply of labor.
If the legal minimum wage rate is set at $1 per hour instead of at the equilibrium rate
employment of inexperienced and marginal workers will tend to rise.
If the legal minimum wage rate were set at $20 per hour
employment would decline substantially.
The minimum wage is a price _____, which tends to _____ the employment of unskilled workers.
floor; decrease
A merger between Hertz Rent-a-Car and Budget Rent-a Car would be a _____ merger.
horizontal
A firm will continue hiring labor until the MRP of labor _____ the price of labor.
is equal to
The demand for a resource rises as
its productivity rises and the relative prices of substitutable resources rise.
A union composed of members with the same trade or occupation is called
means that more labor is demanded by the firm.
Monopolistic competition may lead to each of the following EXCEPT
monopoly profits in the long run.
The market structure in which the behavior of any given firm depends on the behavior of the other firms in the industry is
oligopoly.
Assume a monopolistically competitive firm is producing at an output level at which marginal revenue is $15 and marginal cost is $18. The profit-maximizing firm should
reduce output.
As new firms enter a monopolistically competitive industry where profits are being made
the market demand curve for the product decreases, thereby reducing prices and profits.
In the ALCOA Case of 1945, the courts held that
the mere possession of monopoly power is a violation of the antitrust laws.
If demand curve D2 represents a monopolistic competitor and demand curve D3 represents a monopoly, then
the monopolistic competitor has a more elastic demand curve than the monopolist.
The closer the industry concentration ratio is to 100, the more likely it is that
there is a small number of large firms.
Oligopolists have more control over prices than monopolistic competitors because
with fewer competitors, they can monitor and determine their own prices much easier
