ECON FINAL YAHOAHHH

Scenario: When a monopolist charges $5 for its product, it sells 250 units of the product. When it decreases the price of the product to $4, it sells 325 units of the product. Refer to the scenario above. What is the quantity effect of the price change? $150 $75 $50 $300

$300

Suppose you are a monopolist, and you have two customers, A and B. Each will buy either zero or one unit of the good you produce. A is willing to pay up to $45 for your product; B is willing to pay up to $10. You produce this good at a constant average and marginal cost of $5. If you could not engage in third-degree price discrimination, what price would you charge? $55. $15. $10. $45.

$45.

Scenario: When a monopolist charges $5 for its product, it sells 250 units of the product. When it decreases the price of the product to $4, it sells 325 units of the product. Refer to the scenario above. What is the price effect of the price change? $50 $250 $100 $75

$50

Suppose you were playing​ rock-paper-scissors as an extensive from​ game; first you choose​ rock, or​ paper, or​ scissors, and then your opponent makes a choice. Is there a​ first-mover advantage in this​ game? 1. No, if you show your move first you will lose every time. 2. Yes, first mover has an advantage by getting to pick their first choice. 3. Yes, first mover wins in this game. 4. No, first mover must play a dominant strategy which is good for mixed strategy games.

1. No, if you show your move first you will lose every time.

At a certain level of production, the marginal revenue and marginal cost of a monopolist are $8 and $6, respectively. Which of the following statements is true in this context? 1. The monopolist should expand production. 2. The profits of the monopolist are minimized. 3. The profits of the monopolist are maximized. 4. The monopolist should contract production.

1. The monopolist should expand production.

Sirius XM Satellite Radio and XM Satellite Radio were the only two satellite radio providers in the United States. The Department of Justice​ (DOJ) and the Federal Communications Commission​ (FCC) approved the merger of the two companies in 2008 even though​ Sirius-XM would then control 100 percent of the satellite radio market. Which of the following arguments do you think Sirius and XM used to convince the DOJ and the FCC to allow the merger to proceed? 1. There are many close substitutes for satellite​radio; therefore,​ Sirius-XM would not exercise market power. 2. By stopping the​merger, it would have limited the amount of variety on the radio, thereby limiting free speech. 3. Compared to the price of a​car, the satellite radio subscription was too small a part of the consumer budget to matter. 4. Satellite radio is most often used in cars and neither firm had any pricing power in the car market.

1. There are many close substitutes for satellite​radio; therefore,​ Sirius-XM would not exercise market power.

When compared to a perfectly competitive industry, in a monopoly: 1. both consumer surplus and social surplus are smaller. 2. consumer surplus is higher but social surplus is smaller. 3. both consumer surplus and social surplus are larger. 4. consumer surplus is lower but social surplus is larger.

1. both consumer surplus and social surplus are smaller.

Average total cost decreases with an increase in output because: 1. the average fixed cost decreases with an increase in output. 2. the marginal cost of production increases with an increase in output. 3. the total variable cost decreases with an increase in output. 4. diminishing marginal returns sets in after a particular level of production.

1. the average fixed cost decreases with an increase in output.

Which of the following statements is true? 1. A natural monopoly earns higher profits than a monopolistically competitive firm because it faces a horizontal market demand curve. 2. An increase in consumer demand can change a natural monopoly into a multi-seller market. 3. A natural monopoly always arises from government intervention in the market. 4. A natural monopoly earns higher profits than a monopolistically competitive firm because it faces an upward sloping market demand curve.

2. An increase in consumer demand can change a natural monopoly into a multi-seller market.

Which of the following is true of a Nash equilibrium? 1. A Nash equilibrium occurs if each player earns a zero payoff irrespective of the strategy he chooses. 2. No player can improve his payoff by changing his strategy once in Nash equilibrium. 3. A Nash equilibrium cannot occur if each player is aware of the strategies of other players. 4. A game can have only one Nash equilibrium.

2. No player can improve his payoff by changing his strategy once in Nash equilibrium.

Which of the following statements correctly identifies a similarity between monopoly and perfect competition? 1. Firms face an upward sloping demand curve and a downward sloping marginal revenue curve in both the market structures. 2. Production is expanded until marginal revenue equals marginal cost in both the market structures. 3. Entry is restricted in both market structures. 4. Price equals marginal cost in both market structures.

2. Production is expanded until marginal revenue equals marginal cost in both the market structures.

Some economists believe the threat of unfair monopolies is greater today than when the Sherman Act was first enacted. They argue that modern software can gain monopoly status and establish a barrier to entry through​ ____________. 1. greater costs in applying for patents and copyrights 2. network externalities. 3. increased access to venture capital money. 4. the ability to raise money from the stock market.

2. network externalities.

A​ first-mover advantage occurs if​ __________. 1. the first mover to act in a strategic game reaches the Nash equilibrium. 2. the first mover to act in a sequential game gets a benefit from doing so. 3. the first mover to act in a sequential game reaches the dominant strategy equilibrium. 4. the first mover to act in a strategic game reaches the dominant strategy equilibrium.

2. the first mover to act in a sequential game gets a benefit from doing so.

Which of the following statements correctly differentiates between a monopoly and a perfectly competitive firm? 1. A perfectly competitive firm faces a horizontal demand curve, whereas a monopoly faces an upward sloping demand curve. 2. A perfectly competitive firm sets its product price above its marginal cost, whereas a monopoly sets its product price equal to its marginal cost. 3. A perfectly competitive firm sets its product price at its marginal cost, whereas a monopoly sets the price above its marginal cost. 4. A perfectly competitive firm faces an upward sloping demand curve, whereas a monopoly faces a horizontal demand curve.

3. A perfectly competitive firm sets its product price at its marginal cost, whereas a monopoly sets the price above its marginal cost.

Which of the following statements is true? 1. A prisoners' dilemma game is an example of a zero-sum game. 2. In any game, the best response of a player is also her dominant strategy. 3. The best response of a player is not always her dominant strategy. 4. A prisoners' dilemma game is an example of an extensive-form game.

3. The best response of a player is not always her dominant strategy.

As this chapter explains, a monopoly is an industry structure where only one firm provides a good or service that has no close substitutes. This question explores the last part of this definition further. In​ 1947, the United States government charged the DuPont Company with a violation of the Sherman Act. The government argued that DuPont was monopolizing the cellophane market. At trial, the government showed that DuPont produced nearly 75 percent of all of the cellophane sold in the United States each year.​ Nonetheless, the U.S. Supreme Court ruled in favor of DuPont and dismissed the case. Which of the following is a likely argument used by DuPont to convince the Supreme Court that it did not violate the Sherman​ Act? 1. As a​monopoly, DuPont was beneficial to the community since it hired many workers and paid high salaries. 2. Cellophane is a small part of​ consumers' consumption, so monopoly pricing has not caused any harm to consumers. 3. There are many close substitutes for cellophane such as aluminum foil and waxed​paper, so DuPont did not have significant market power. 4. Since DuPont only produced 75 percent of all​cellophane, not 100​ percent, it is a​ price-taker with no pricing power.

3. There are many close substitutes for cellophane such as aluminum foil and waxed​paper, so DuPont did not have significant market power.

An industry is deemed concentrated when ___________. 1. each firm in that industry has a small market share 2. most of the firms in that industry earn zero economic profits in the long run 3. a few firms account for a large fraction of total sales in that industry 4. all the firms in that industry charge a price lower than the average cost of production

3. a few firms account for a large fraction of total sales in that industry

The price chosen by a monopolist: 1. is dependent on the production of other firms. 2. maximizes social surplus. 3. is independent of the production of other firms. 4. maximizes consumer surplus.

3. is independent of the production of other firms.

At the profit-maximizing level of production of a monopolist, ____________. 1. marginal revenue exceeds marginal cost 2. marginal revenue is less than marginal cost 3. marginal revenue equals marginal cost 4. both marginal revenue and marginal cost are negative

3. marginal revenue equals marginal cost

The Department of Justice filed a lawsuit against Microsoft claiming it was engaging in unfair practices by​ ____________. 1. keeping the software code behind its operating system secret from users and competitors. 2. producing less than the efficient amount of its operating system and charging above the competitive market price 3. monopolizing the market by bundling its operating system with its Internet Explorer browser. 4. selling its operating system at different prices to different people based on consumer characteristics.

3. monopolizing the market by bundling its operating system with its Internet Explorer browser.

If a monopolist owns or controls a key resource necessary for production, it is a source of: 1. legal market power. 2. regulated market power. 3. natural market power. 4. restricted market power.

3. natural market power.

In a zero-sum game, __________. 1. each player earns a zero payoff irrespective of the strategy one chooses 2. each player has a dominant strategy 3. one player's loss is another player's gain 4. each player chooses a pure strategy

3. one player's loss is another player's gain

If a monopoly engages in first-degree price discrimination: 1. the deadweight loss is maximized. 2. consumer surplus is maximized. 3. social surplus is maximized. 4. producer surplus is minimized.

3. social surplus is maximized.

Which of the following statements is true? 1. A monopoly is a price taker because it faces a downward sloping demand curve. 2. A perfectly competitive firm is a price taker because it faces a downward sloping demand curve. 3. A perfectly competitive firm is a price maker because it faces a downward sloping demand curve. 4. A monopoly is a price maker because it faces a downward sloping demand curve.

4. A monopoly is a price maker because it faces a downward sloping demand curve.

Which of the following is true of a payoff matrix? 1. It does not represent all the costs and benefits associated with the choices of the players. 2. It shows the payment made to each factor of production for the production of a good. 3. It is the representation of only the best response of each player. 4. It takes into account all relevant costs and benefits associated with each action of the players.

4. It takes into account all relevant costs and benefits associated with each action of the players.

Which of the following best describes network externalities? 1. They are the benefits received by other firms from the actions taken by a monopolist. 2. They occur when a firm hires an outside company to help lower its costs. 3. They are the benefits to a firm from increasing its online presence. 4. They occur when a​ product's value increases as more consumers begin to use it.

4. They occur when a​ product's value increases as more consumers begin to use it.

Two firms are thinking of entering a new market. If one enters it will be successful but if a second enters both will suffer very large losses. Is there a​ first-mover advantage in this​ game 1. No. The firm that goes first can enter and the firm that goes second will have no incentive to enter. 2. Yes. The firm that goes first can choose not to enter and therefore incur large losses. 3. No. The firm that goes first can choose not to enter and the firm that goes second will therefore incur large loses. 4. Yes. The firm that goes first can enter and the firm that goes second will have no incentive to enter.

4. Yes. The firm that goes first can enter and the firm that goes second will have no incentive to enter.

Perfect price discrimination occurs when: 1. a firm charges wealthier buyers a lower price. 2. a firm charges the same buyer different prices at different points of time. 3. a firm charges different buyers according to the characteristic of their purchase. 4. a firm charges each buyer exactly their willingness to pay

4. a firm charges each buyer exactly their willingness to pay

A strategy is called a mixed strategy if it involves choosing ___________. 1. one particular action for a situation 2. an action that yields zero payoff to the player 3. an action that yields a higher payoff to the opponent 4. different actions randomly

4. different actions randomly

A Nash equilibrium occurs if ____________. 1. each player chooses his or her dominant strategy 2. each player chooses only a mixed strategy 3. each player chooses only a pure strategy 4. each player chooses strategies that are mutual best responses

4. each player chooses strategies that are mutual best responses

A best response is ___________. 1. an action choice that results in equal payoffs to all the players in a game 2. an action choice that always results in a zero payoff to the opponent 3. one player's optimal action choice irrespective of the action of the other player 4. one player's optimal action choice taking the other player's action as given

4. one player's optimal action choice taking the other player's action as given

Suppose that a goalie is playing a mixed strategy between diving to the left and the right. A player decides which strategy to employ when playing a game with mixed strategies by choosing​ ____________. 1. based on the dominant strategy. 2. the Fibonacci sequence. 3. based on the Nash equilibrium. 4. randomly.

4. randomly.

Suppose the government grants an individual or company the exclusive right to intellectual property. In this​ case, the government is granting a copyright. Which of the following is not likely covered by a​ copyright? A new song. A photocopier. A work of Art. A photograph.

A photocopier.

Which of the following statements are true regarding the profit-maximizing price charged by a​ monopolist? It occurs at the quantity where MR​= MC It occurs along the elastic part of the demand curve It is greater than MC All of the above.

All of the above.

Suppose that a player has a dominant strategy. Would she choose to play a mixed strategy​ (such as playing two strategies each with probability​ 50-50)? Why or why​ not? Yes, because a mixed strategy would involve choosing a single action. Yes, a mixed strategy would be optimal if one of its actions were the dominant strategy. No, because a mixed strategy would not use preassigned probabilities for the various actions. No, because it would involve choosing actions other than the dominant strategy.

No, because it would involve choosing actions other than the dominant strategy.

Chevron and BP are bidding against each other for new oil drilling leases in the Gulf of Mexico. The bids will be simultaneous with the high bidder as the winner. Chevron decides to hire you as a consultant to help it use game theory to make the best decision on how much to bid. What must you, as the consultant, construct for Chevron before you can determine if there is a dominant strategy equilibrium? Three-by-three Extensive-form game tree. Table with numerical probabilities. Payoff matrix.

Payoff matrix.

Which of the following market structures provides socially efficient outcomes? Oligopoly Monopoly Monopolistic competition Perfect competition

Perfect competition

Which of the following is not a characteristic of​ monopoly? Market power. A single seller. Produces identical goods. Price-maker

Produces identical goods.

Scenario: When a monopolist charges $5 for its product, it sells 250 units of the product. When it decreases the price of the product to $4, it sells 325 units of the product. Refer to the scenario above. What is the change in total revenue due to the price reduction? The total revenue increases by $50. The total revenue decreases by $175. The total revenue decreases by $105. The total revenue increases by $25.

The total revenue increases by $50.

Chevron and BP are bidding against each other for new oil drilling leases in the Gulf of Mexico. The bids will be simultaneous with the high bidder as the winner. Chevron decides to hire you as a consultant to help it use game theory to make the best decision on how much to bid. What elements must be known to set up a simultaneous move​ game? Group of answer choices Name of third​ player, the​ payoffs, the move order. The move​ order, the​ players, the strategies. The​ payoffs, the move​ order, the players. The​ players, the​ strategies, the payoffs.

The​ players, the​ strategies, the payoffs.

A pure strategy involves​ ____________. choosing ethical actions over Nash strategies. choosing ethical actions over dominant strategies. choosing one particular action for a situation. choosing different actions randomly.

choosing one particular action for a situation.

Which of the following is an example of a good produced under perfect competition? Bottled water Cars Patented software Corn

corn

Everything else remaining unchanged, if a new seller enters a market to compete with an existing monopoly that is enjoying economies of scale, it will lead to: higher profits for the existing firm. higher profits for both firms. higher market power for the existing firm. lower profits for the existing firm

lower profits for the existing firm

Which of the following is not one of the sources of natural market​ power? The presence of economies of scale network externalities. Controlling a key resource. Owning a firm in a small community.

network externalities.

A monopolist faces an average total cost of $6 when it produces 200 units of its product. If it sells the 200 units at $8 per unit, ________. the monopolist incurs a loss of $400 the monopolist incurs a loss of $200 the monopolist makes a profit of $200 the monopolist makes a profit of $400

the monopolist makes a profit of $400

In recent years, some online firms have offered different consumers different prices for the same good. These firms use the consumer's IP address to find what city they are in and then charge a higher price to people in wealthier cities. This type of pricing behavior is​ ____________. third-degree price discrimination first-degree price discrimination. location discrimination second-degree price discrimination.

third-degree price discrimination