econ exam 3

monopolies are socially inefficient because the price they charge is A:above marginal cost B:above demand C: equal to demand D: equal to marginal revenue

A: above marginal cost

the nash equilibrium for this game is A: 12 units of output for firm A and 12 units of output for firm B B:12 units of out put form Firm A and 10 units of output for firm B C: 10 units of output for firm A and 10 units of output for firm B D: 10 units of output for firm A and 12 units of output for firm B

A; 12 units of output for firm A and 12 units of output for firm B

the firm's profit maximizing output level is A: 4 units B: 6 units C: 5 units D: 7 units

A; 4 units`

which of the following areas represents the consumer surplus from this profit maximizing monopolist A: ABE B: ACG C: EFG D:BCFE

A; ABE

the players in a two person game a closing between strategy X and strategy Y. If the second player chooses Strategy X, the first play's best outcome is to select X. If the second players chooses strategy Y the first players best outcome is to select X. For the first player strategy X is called a A: dominant strategy B: collusive stategy C: repeated trial strategy D: carley stategy

A; dominant strategy

if grocery store 1 sets a high price what price should grocery store 2 set? and what will grocery store 2's pay off equal A: low price, $400 B: high price; $400 C: low price;$50 D: high price; $325

A; low price and $400

the deadweight loss associated with a monopoly occurs because the monopolist A; produces an output level less than the socially optimal level B: maximizes profits C: equated marginal revenue with marginal cost D: produces an output level greater than the socially optimal

A; produces and output level less than socially optimal level

the nash equilibrium in this game is that A: both firms produce a good quality product B: acme produces a poor quality product and pinnacle produces a good quality C: both firms produce a poor quality D: acme produces a good quality product and pinnacle produces a poor

A;both firms produce a good quality product

an agreement between two duopolists to function as a monopolist usually breaks down because A: they cannot agree on the price that a monopolist would charge B: each duopolist wants a larger share of the market to capture more profit C: each duopolist wants to charger a higher price than the monopoly price D: they cannot agree on the output that a monopolist would produce

B: each duopolist wants a larger share of the market to capture more profit

suppose a firm in a competitive market earned $1000 in total revenue and had a marginal revenue of $10 for the last unit produced a sold. what is the average revenue per unit and how many units were sold A: $5 and 100 units B: $10 and 100 units C:$10 and 50 units D: $5 and 50 units

B; $10 and 100 units

in a perfectly competitive market, the process of entry and exit will end when A: total revenue is equal to average total cost B: marginal revue is equal to long run average total cost C: accounting profits is equal to zero D: average revenue is greater than marginal cost

B; marginal revenue is equal to long run average total cost

for a monopolistically competitive firm, at the profit maximizing quantity of output, A: marginal revenue exceeds marginal cost B: price exceeds marginal cost C: marginal cost exceeds average revenue D: price equals marginal revenue

B; price exceeds marginal cost

A firm in a competitive market has the following cost structure If the firm's fixed cost of production is $3 and the market price is $10 ow many units should the firm produce to maximize profit A: 1 unit B: 4 units C:2 units D:3 units

D: 3 units

which of the following areas represents the deadweight loss from this profit maximizing monopolist A: BCFE B:ABE C:ACG D:EFG

D: EFG

the deadweight loss caused by a profit maximizing monopoly amounts to A: $250 B: $750 C: $500 D$1000

C: $500

to maximize its profit, a monopolist would choose which of the following outcomes? A: 150 units of output and a price of $30 per unit B: 200 units of output and a price of $40 per unit C:100 units of output and a price of $40 per unit D; 100 units of output and a price of $20 per unit

C: 100 units of output and a price of $40 per unit

if this firm were able to perfectly price discriminate, which of the following areas would represent the profit to this perfectly discriminating monopolist? A: EFG B: BCFE C: ACG D: ABE

C: ACG

the prisoner's dilemma game A: is a situtation in which two players both have dominant strategies which lead to the highest total payoff for the two players B: has no nash equilibrium since players, after agreeing to play their dominant strategy will have an incentive to switch to another strategy C: has a nash equilibrium , but the nash equilibrium outcome is not the outcome the players would agree to if the could cooperate with eachother D: both a and c are correct

C: has a nash equilibrium but the nash equilibrium outcome is not the outcome the players would agree to if they could cooperate with eachother

the dominant strategy for Acme is to A: produce a good quality product, a pinnacle has no dominant strategy B: produce a poor quality product and the dominant stategy for pinnacle is to produce a poor quality product C: produce a good quality product and the dominant strategy for pinnacle is to produce a good quality product D: neither firm has a dominant strategy

C: produce a good quality product and the dominant strategy for pinnacle is to produce a good quality product

in the long run, all of a firm's costs are variable. In this case the exit criterion for a profit maximizing firm is to shut down if A: price is greater than average total cost B: average revenue is greater than marginal cost C: price is less than average total cost D: average revenue is greater than average fixed cost

C; price is less than average total cost

which of the following conditions is characteristic of a monopolistically competitive firm in long run equilibrium A: P>AR and P=MR B: P<ATC and AR>MR C: ATC>AR and MR=MC D: P>MC and AR=ATC

D: P>MC and AR=ATC

a profit maximizing firm in a competitive market is maximizing profit and is able to sell its product for $7. at its current level of out put the firms average total cost is $10. the firm's marginal cost curve crosses its marginal revenue curve at an output level of 9 units. the firm is earning a A; loss of more than $27 B: a profit of more than $27 C: profit of exactly $27 D; a loss of exactly $27

D: a loss o exactly $27

suppose when a monopolist produces 50 units its average revenue is $8 per unit, its marginal revenue is $4 per unit, its marginal cost is $4 per unit, and its average total cost is $3 per unit. What can we conclude about this monopolist A: the monopolist is not currently maximizing its profits; it should produce fewer units a charger a higher price to maximize profit B: the monopolist is not currently maximizing profits; it should produce more units and charge a lower price to maximize profit C:: the monopolist is currently maximizing profits and its total profits are $200 D: the monopolist is currently maximizing profits and its total profits are $250

D the monopolist is currently maximizing profits and its total profits are $250

supposed a profit maximizing firm in a competitive market produces rubber bands. When the market price for rubber bands rises above the minimum of its average variable cost, but still lies below the minimum of average total cost, in the short run the firm will A:earn both economic and accounting profits B: shut down C: raise the price of its product D: experience losses but will continue to produce rubber bans

D. experience losses but will continue to produce rubber bands

if the market price is $10 what is the firm's economic profit? A: $50 B: $30 C:$9 D:$15

D: $15

if grocery store 2 sets a low price what price should grocery store 1 set? and what will grocery store 1 pay off equal? A: low price, $50 B: high price, $50 C: high price, $400 D: low price $250

D: low price, $250

which of the following is not a difference between monopolies and perfectly competitive markets? A: monopolies charge a price higher than marginal cost while perfectly competitive firms charge a price equal to marginal cost B: monopolies can earn profits in the long run while perfectly competitive firms break even C: monopolies face downward sloping demand curves while perfectly competitive firms face horizontal demand curves D: monopolies choose to produce the quantity at which marginal revenue equals marginal cost while perfectly competitive firms do not

D: monopolies chose to produce the quantity at which marginal revenue equals marginal cost while perfectly competitive firms do not

when a competitive firm doubles the quantity of output it sells its A: marginal revenue doubles B; average revenue doubles C: profits must increase D: total revenue doubles

D: total revenue doubles

a firm in a monopolistically competitive market is similar to a monopoly in the sense that (I) they both face downward sloping demand curves (ii) they both charge a price that exceeds marginal cost (iiI) free entry and exit determines the long run equlibrium A: (I), (ii) and (iii) B: (I) only c: (ii) only D: (I) and (ii) only

D; (I) and (ii)

which of the following outcomes represent the nash equilibrium in this game? A; q=3 for firm A and q=2 for firm B B: q=2 for firm A and q=3 for firm B C: there is no nash equilibrium in this game since neither player has a dominant strategy D: both a and b are correct

D; both a and b