econ final exam

For a pure monopoly to sell a quantity of 10 units, the price must be $8. Marginal revenue (MR) at this output level will be _____. > $8 and < $16 < $8 = $8 > $16

< $ 8

Why might it be a bad idea to engage in first-degree price discrimination? The information needed can be costly and can lead to decreased profits for the company. The information needed does not exist and scarce resources should not be used searching for it. Price discrimination is illegal and can lead to lawsuits and lost customers. Price discrimination in any form is not viable for most companies as a way to increase profits.

The information needed can be costly and can lead to decreased profits for the company.

Under oligopoly, if one firm in an industry significantly increases advertising expenditures to capture a greater market share, it is most likely that other firms in that industry will pursue a strategy to reduce advertising expenditures to maintain profits. decide to increase advertising expenditures even if it means a reduction in profits. make no changes in advertising expenditures because advertising is effective in the short run, but not the long run. increase the price of the product to improve profits and then increase advertising expenditures.

decide to increase advertising expenditures even if it means a reduction in profits.

Which set of characteristics below best describes the basic features of monopolistic competition? easy entry, many firms, and standardized products barriers to entry, few firms, and differentiated products easy entry, many firms, and differentiated products easy entry, few firms, and standardized products

easy entry, many firms , and differentiated products

which characteristic would best be associated with perfect competition few sellers price takers nonprice competitoin product differentiation

price takers

Which of the following statements is correct? Both perfectly competitive and monopolistic firms are price takers. Both perfectly competitive and monopolistic firms are price makers. A perfectly competitive firm is a price taker, while a pure monopoly is a price maker. A perfectly competitive firm is a price maker, while a pure monopoly is a price taker.

A perfectly competitive firm is a price taker, while a pure monopoly is a price maker.

Which statement concerning monopolistic competition is false? rev: 05_15_2018 In the long run P = AC > MC. Firms may experience losses in the short run. Firms differentiate their products, but the products are relatively substitutable. Firms may experience positive economic profits in the long run.

Firms may experience positive economic profits in the long run

Which type of price discrimination results in the highest profits for firms? First-degree price discrimination Second-degree price discrimination Third-degree price discrimination Regular price discrimination

First degree price discrimination

Which of the following statements about price discrimination is correct? Successful price discrimination will provide the firm with lower total profits than if it did not discriminate. Successful price discrimination will provide the firm with more total profits than if it did not discriminate. Successful price discrimination will generally result in a lower level of output than would be the case under a single-price pure monopoly. Successful price discrimination occurs when there are differences in the costs of producing for different groups of buyers.

Successful price discrimination will provide the firm with more total profits than if it did not discriminate.

in perfect competition, the demand faced by a single firm is perfectly elastic, because the firm produces a differentiated product. inelastic, because the firm produces a differentiated product. elastic, because many other firms produce the same standardized product. inelastic, because many other firms produce the same standardized product.

elastic, because many other firms produce the same standardized product.

n monopolistic competition, which of the following would make an individual firm's demand curve less elastic? the purchase of more efficient machinery an increase in the price of the firm's product increased brand loyalty toward the firm's product an increase in the number of rival firms

increased brand loyalty toward the firm's product

Suppose that a pure monopoly calculates that at its present output level, marginal revenue is $1 and marginal cost is $2. The monopoly could maximize profits or minimize losses by ____. increasing price and increasing output increasing price and decreasing output decreasing price and leaving output unchanged leaving price unchanged and decreasing output

increasing price and decreasing output

The marginal revenue curve faced by a perfectly competitive firm lies below the firm's demand curve. is downward sloping, because price must be reduced to sell more output. is horizontal at the market price. has all of these characteristics.

is horizontal at the market price.

A perfectly competitive firm does not try to raise its price above the market price because its competitors would not permit it. it would not be able to sell its output. this would be considered unethical price chiseling. its demand curve is inelastic, so total revenue will decline.

it would not be able to sell its output

A perfectly competitive firm's output is currently such that its marginal revenue is $5 and marginal cost is $4. Assuming profit maximization, the firm should cut price and increase output. raise price and decrease output. leave price unchanged and increase output. leave price unchanged and decrease output.

leave price unchanged and increase output

one defining characteristi cof pure monopoly is that the monopoly is a price taker monopoly uses advertising monopoly produces a product with no close substitutes entry into the industry is relatively easy, but exit is difficult

monopoly produces a product with no close substitutes

Clara produces and sells tomatoes in a perfectly competitive market. This implies that Clara's marginal revenue generated from selling an additional unit of tomatoes is always equal to price. average cost. variable cost. profit per unit.

price

Which statement about oligopoly is false? Oligopolistic firms recognize their interdependence. Prices in oligopoly are predicted to fluctuate widely and frequently. A few firms play an important role in the sale of a product. One firm's behavior is a function of what its rivals do.

prices in oligopoly are predicted to fluctuate widely and frequently

Which of the following is a characteristic of monopolistic competition? standardized product a relatively small number of firms absence of nonprice competition relatively easy entry

relatively easy entry

Which of the following best approximates a pure monopoly? The foreign exchange market The Kansas City wheat market The only bank in a small town The soft drink market

the only bank in a small town

If a firm operating in a perfectly competitive industry is confronted with an equilibrium market price of $5, its marginal revenue may be either greater or less than $5. will also be $5. will be less than $5. will be greater than $5

will also be $5