Economics Final

Which of the following is most likely a variable input in wheat production? tractors seeds Management land

Seeds

Stereo Sound Unlimited has a monopoly over the installation of surround sound systems. If Stereo Sound Unlimited's total revenue from installing 10 sound systems is $20,000 and its total revenue from installing 11 sound systems is $18,000, what is the marginal revenue of the eleventh sound system? :-$2,000 -$1,000 $2,000 $3,800

-2,000

Assume demand is zero when price is 40, and demand is 40 ,when price is zero. If marginal cost is constant at $20 and there are no other costs, what price will a monopolist charge? 40 30 20 10

30

Assume demand is zero when price is 20, and demand is 20 ,when price is zero. If marginal cost is constant at $5 and there are no other costs, what price will a monopolist charge? 5 15 10 12.5

12.5

Assume demand is zero when price is 20, and demand is 20 ,when price is zero. If marginal cost is constant at $10 and there are no other costs, what price will a monopolist charge? 15 5 10 20

15

In 2014 Lego produced almost 20 billion bricks. If they were free, they would have had demand for 50 billion bricks. Therefore, marginal revenue for Lego bricks would be zero at 0 billion 50 billion 20 billion 25 billion

25 billion

If there are 10,000 firms and each produces 5 units, then total market production would be 50,000 units. If a cartel organized the production in the same market, a good guess at the production in the market would be: 25,000 units 50,000 units 10,000 units 5 units

25,000

If there are 10,000 firms and each produces 5 units, then total market production would be 50,000 units. If a monopolist organized the production in the same market, a good guess at the production in the market would be: 25,000 units 50,000 units 10,000 units 5 units

25,000

Oligopoly is characterised by a lot of sellers selling a lot of products A few sellers many sellers with similar products one seller that sells a different product.

A few sellers

Monopoly is characterised by many sellers with similar products A single seller selling a product with no close substitutes one seller that sells a different product. a lot of sellers selling a lot of products

A single seller selling a product with no close substitutes

In the market for wheat, if the cost of seeds increases AVC, MC and ATC will shift upward leading to a loss for the firm AVC, MC and ATC will shift upward forcing the firm to raise its prices ATC will fall leading to a profit Demand will decrease

AVC, MC and ATC will shift upward leading to a loss for the firm

Steve Fick, owner of Oregon-based Fishhawk Fisheries, cited a 35-45% increase in live crab prices, to $9/lb., due to lack of supply. To date as of last week, there had been 7.3 million pounds caught during the season, down 44% from last year at that time, according to Oregon Dungeness Crab Commission executive director Hugh Link. "It's very slow right now" Fick told Undercurrent, echoing comments from every source Undercurrent spoke with."Just about all the boats have their gear in the water now," McCarthy said. Although good prices are good for fishermen, there simply is not enough crab in the water to make fishing worth the effort, some sources said."Some of the fishermen think that the warmer water this year may have brought more predators closer to shore that normally wouldn't be here," Link explained, adding biologists have not confirmed the idea. If this scenario is modeled using a perfectly competitive market starting from a long-run competitive equilibrium, the first change would be: A decrease in demand because the prices are so high A decrease in supply a decrease in quantity demanded because price is too high. An increase in ATC because it takes more effort to catch each crab

An increase in ATC because it takes more effort to catch each crab

Doris Acharibia says her new trainees are eager to learn how to make butter from shea nuts in Ghana's northern savannah. Growing global demand for the product used in food and as a skin moisturizer has caused retail prices to increase 67 percent in 2014 for butter produced by independent sellers in Acharibia's group. That's convinced women in northern Ghana — who already grow rice, soybeans and peanuts, brew a millet drink called pito and make jewelry — to risk snake bites to harvest nuts from trees in the wild. "The price has attracted more women to the shea-butter business," the 42-year-old leader of the 875-member Talensi Area Women's Development Project said in an interview last week. The cultivation of shea is dominated by women because the nut is used as a cooking oil, she said, and in northern households, women prepare most meals. Making shea a commercial product helps women earn more. "This is what they do to look after their families," she said. To model this scenario begining from a long-run competitive equilibrium the first change should be: An increase in supply a shortage An increase in demand A decrease in average total cost

An increase in demand

ATC is

Average total cost refers to the cost per unit of output that is being produced by the firm. The Total Cost is the summation of all the costs of production.

If a monopolist is experiencing profits in the short-run, then in the long-run Demand will decrease because the price is too high. Barriers to entry will prevent new firms from entering the market, so price will not be forced down to minimum average total cost. Firms will enter the market causing a surplus which will force price down to minimum average total cost supply will fall to eliminate the profit

Barriers to entry will prevent new firms from entering the market, so price will not be forced down to minimum average total cost.

If a oligpolist is experiencing profits in the short-run, then in the long-run Firms will enter the market causing a surplus which will force price down to minimum average total cost. supply will fall to eliminate the profit. Barriers to entry will prevent new firms from entering the market, so price will not be forced down to minimum average total cost. Demand will decrease because the price is too high.

Barriers to entry will prevent new firms from entering the market, so price will not be forced down to minimum average total cost.

Why is Lego so expensive? Plastic is a rare material and super expensive, so ATC is really high. parents will spend any amount necessary to satisfy the desires of their children. Because Lego has dominance in the market and significant entry barriers, so they can price above cost and maintain those prices. Quality and safety are the top concerns for the Lego Group. To ensure the best and safest products, Lego bricks are made with the highest quality materials, which does factor into the cost. Using premium materials ensures that the product is not only safe, but that it is durable enough to hand down from generation to generation.

Because Lego has dominance in the market and significant entry barriers, so they can price above cost and maintain those prices.

Why are carbonated soft drinks (soda) so expensive? The plastic used to make the bottles is a rare material and super expensive, so ATC is really high. Because two companies with very similar products dominate the market, and over time they have established significant entry barriers, so they coordinate to keep price above cost and maintain those prices. Because quality is a high priortiy, so the two companies are always in a battle to produce the best product which increases cost and eventually prices. Soda is not expensive. You can get two litres for about a buck.

Because two companies with very similar products dominate the market, and over time they have established significant entry barriers, so they coordinate to keep price above cost and maintain those prices.

Which of the following is the best example of oligopoly? Canned Soup Broccoli Jell-o Pizza

Canned Soup

Which of the following is most likely an oligopoly? beef because there are thousands of sellers Apples because there are only a few varieties Carbonated soft drinks because Coke and Pepsi dominate the market Barbershops because it is easy to get into that market.

Carbonated soft drinks because Coke and Pepsi dominate the market

Compared to monopoly, in an oligopoly Consumer surplus and deadweight loss might be exactly the same as monopoly if the oligopolists can collude. Consumer surplus would be higher and deadweight loss would be lower Consumer surplus would be lower and deadweight loss would be lower comparisons like this are impossible.

Consumer surplus and deadweight loss might be exactly the same as monopoly if the oligopolists can collude.

Compared to competition, in monopoly comparisons like this are impossible. Consumer surplus would be lower and deadweight loss would be higher Consumer surplus would be higher and deadweight loss would be lower Consumer surplus would be lower and deadweight loss would be lower

Consumer surplus would be lower and deadweight loss would be higher

MR is twice as steep as

Demand

In the market for wheat, if people switch to a high-protein, low-carbohydrate diet and begin eating less bread, then in the short-run: Supply of wheat will fall causing the price to rise and quantity demanded to fall. The cost of producing wheat will rise. Wheat farmers will experince losses in the short-run Supply of wheat will fall causing a shortage and an increase in price. Wheat farmers will experince profits in the short-run Demand for wheat will fall causing a surplus and a reduction in price. Wheat farmers will experince losses in the short-run

Demand for wheat will fall causing a surplus and a reduction in price. Wheat farmers will experince losses in the short-run

If firms are experiencing profits in the short-run, then in the long-run Firms will enter the market causing a surplus which will force price down to minimum average total cost Firms will enter the market causing average total cost to drift up unitl it matches the price and profits are eliminated Demand will decrease because the price is too high. supply will fall to eliminate the profit

Firms will enter the market causing a surplus which will force price down to minimum average total cost

Which of the following is most likely produced in monopolistic competition? Lawn maintenance because there are dozens of firms that provide this service, and provide the exact same level of service. Broccoli because it is easy to get into that market. beef because there are thousands of sellers Apples because there are only a few varieties but each apples is similar to all the other apples.

Lawn maintenance because there are dozens of firms that provide this service, and provide the exact same level of service.

Which of the following is most likely a monopoly? eggos because this brand of frozen waffles is the best. Legos because one firm dominates this market spagghetti-os because it is spagghetti in a can. cheetos because there is no other snack quite like a cheeto.

Legos because one firm dominates this market

In monopolized markets, marginal revenue is less than price equal to marginal cost the same as price a horizonatal line at minimum atc

Less than price

LRCE is?

Long Run Competitive equilibrium (AKA your graphs)

Which of the following is most likely a fixed input in wheat production? management water seeds fertilizer

Management

Monopolistic competition is characterised by a lot of sellers selling a lot of products Many Sellers with similar products many sellers with identical products one seller that sells a different product.

Many Sellers with similar products

In a market characterized by monopolistic competition, if price is $30 which of the following must be true? ATC must be under $30 Marginal revenue is 30 and marginal cost must be less than $30. Marginal Revenue and Marginal Cost must be under $30 Marginal revenue must be zero

Marginal Revenue and Marginal Cost must be under $30

In a monopolized market, if price is $30 which of the following must be true ATC must be under $30 Marginal Revenue and Marginal Cost must be under $30 Marginal revenue is 30 and marginal cost must be less than $30. Marginal revenue must be zero

Marginal Revenue and Marginal Cost must be under $30

MC is

Marginal cost is the increase or decrease in total production cost if output is increased by one more unit.

In a market operated by a cartel, if price is $30 which of the following must be true? Marginal revenue must be zero Marginal Revenue and marginal cost must be under $30 Marginal revenue is 30 and marginal cost must be less than $30. ATC must be under $30

Marginal revenue is 30 and marginal cost must be less than $30.

A market characterized by a many independent sellers with differentiated products is known as: perfect competition Cartel oligoply Monopolistic competition

Monopolistic competition

The main difference between monopolistic competition and monopoly is: the monopoly has many firms with differentiated products Monopoly is a single firm in the market, and in monopolistic competition, there are many small firms Monopoly is a single firm in the market, and in monopolistic competition, there are few firms in the monopoly, firms will compete and drive price down to cost

Monopoly is a single firm in the market, and in monopolistic competition, there are many small firms

A market characterized by a few interdependent sellers is known as: Cartel Monopolistic competition Oligopoly perfect competition

Oligopoly

If P > ATC, then a profit maximizing, monopolistically competitive firm earns ________ economic profits. positive negative zero either positive or negative

Positive

Compared to competition, in monopoly Prices will be lower and production will be lower. Prices will be higher and production will be lower. comparisons like this are impossible. Prices will be higher and production will be higher.

Prices will be higher and production will be lower.

A perfectly competitive market is a hypothetical extreme. Producers in a number of industries do, however, face many competitor firms selling highly similar goods, in which case they must often act as price takers. What market is often used as an example?

Produce

Which of the following is most likely a perfectly competitive market? crackers tomatoes Pencils Marshmallows

Tomatoes

in a monopolized market, price is determined by: the government the seller the supply curve the simultaneous interaction of many buyers and many sellers

The seller

The main difference between a standard monopoly and a natural monopoly is that for a natural monopoly: Control of the market typically results from sole control of a natural resource. The Debeers Diamond monopoly is a great example. government and public support force prices to be unnaturally high. increasing marginal costs result from congestion in the production process. This is not the case in a standard monopoly. There are usually significant economies of scale which typically result from low variable costs and high fixed costs

There are usually significant economies of scale which typically result from low variable costs and high fixed costs

The distinguishing characteristic of monopolistic competition is a single firm in the market with no close substitute. many sellers with identical products all trying to become the single seller. a small firm with some control over price A single firm in the market that out-competes its rivals.

a small firm with some control over price

At the point where marginal cost equals average total cost, average total cost will be at its maximum. decreasing. increasing. at its minimum.

at its minimum.

AFC is

average fixed cost is the fixed costs of production (FC) divided by the quantity (Q) of output produced.

In the short run a firm's lowest cost level of output is the minimum point on its ________ cost curve. average total total variable average fixed marginal

average total

AVC is

average variable cost is a firm's variable costs (labour, electricity, etc.) divided by the quantity of output produced

If marginal cost is above average variable cost, then average variable cost is increasing average variable cost is constant. average variable cost is decreasing. marginal cost must be decreasing.

average variable cost is increasing

Economic growth may occur when a society acquires new resources. a society learns to produce more using existing resources. the society begins to produce the combination of goods society wants most. both a society acquires new resources and a society learns to produce more using existing resources.

both a society acquires new resources and a society learns to produce more using existing resources.

A change in income, preferences, or prices of other goods or services leads to a ________ that causes a ________. change in demand; movement along the demand curve change in quantity demanded; movement along the demand curve change in demand; shift of the demand curve change in quantity demanded; shift of the demand curve

change in demand; shift of the demand curve

If oligopolists can work together to lower quantity and raise price, then the result is: unfair efficient collusive competitive

collusive

Compared to competition, in oligopoly... prices will be higher and production will be lower, because there are significant barriers to entry in oligopoly. comparisons like this are difficult unless you know whether the oligopolists are likely to be able to collude. Prices will be lower and production will be higher because the few firms will be in cut-thorat competiton for market share. Prices will be higher and production will be lower, because there are only a few firms instead of many.

comparisons like this are difficult unless you know whether the oligopolists are likely to be able to collude.

Industries in which firms are suffering losses are likely to ________ in the long run. expand contract neither expand nor contract, as firms must earn an economic profit to stay in business expand or contract depending on the normal rate of return

contract

Average total cost (ATC) is calculated by

dividing total cost by the total quantity produced

The price elasticity of demand for bottled water in Texas is -2, and the price elasticity of demand for bottled water in California is -0.5. In other words, demand in Texas is ________, and demand in California is ________. elastic; inelastic inelastic;elastic elastic; unit elastic inelastic; unit inelastic

elastic; inelastic

A firm in a perfectly competitive market has no control over price because The government imposes price ceilings on the products produced in perfectly competitive industries. there is free entry and exit from the industry. every firm's product is a perfect substitute for every other firm's product. the market demand for products produced in perfectly competitive industries is perfectly elastic.

every firm's product is a perfect substitute for every other firm's product.

The main difference between a collusive oligopoly and a monopoly is: In the oligopoly, price will be lower because there are few firms instead of just one. in the oligopoly, market profit is split among participants. the monopoly has many firms with differentiated products. in the oligopoly, firms will compete and drive price down to cost.

in the oligopoly, market profit is split among participants.

collusive oligopoly is (an)

industry containing few producers (oligopoly), in which producers agree among one another as to pricing of output and allocation of output markets among themselves.

The marginal cost curve intersects the average variable cost curve at the ________ value of the average variable cost curve. maximum minimum zero average

minimum

If a monopolistically competitive is experiencing profits in the short-run, then in the long-run Demand will decrease because the price is too high. Firms will enter the market causing a surplus which will force price down to minimum average total cost supply will fall to eliminate the profit new firms will enter the market and existing firms will imitate, so price will be forced down to average total cost.

new firms will enter the market and existing firms will imitate, so price will be forced down to average total cost.

A form of industry structure characterized by a few firms each large enough to influence market price is perfect competition. monopolistic competition. oligopoly. monopoly.

oligopoly

If a firm in monopolistic competition is making profits in the short-run, then in the long-run: the firm will expand and earn larger and larger profits. other firms will imitate the firm, causing their cost to increase until price is equal to average cost profits will continue because barriers to entry are high. other firms will imitate the firm, causing their demand to decrease until price is reduced to average cost

other firms will imitate the firm, causing their demand to decrease until price is reduced to average cost

Which of the following is the best example of oligopoly? paper towels green beans auto repair Apples

paper towels

Fixed costs usually include

rent, buildings, machinery, etc

Which of the following is most likely a perfectly competitive market? toilet paper macaroni soda squash

squash

Suppose that consumption of oat bran is found to reduce cholesterol and improve health. The result is that: A) the demand for oat bran increases. B) the demand for oat bran decreases. C) the supply of oat bran increases. D) Both A and C are correct.

the demand for oat bran increases.

A natural monopoly is a type of monopoly that exists due to

the high start-up costs or powerful economies of scale of conducting a business in a specific industry.

The distinguishing characteristic of oligopoly is many sellers with similar products seller independence a lot of sellers selling a lot of products the inter-dependence of sellers

the inter-dependence of sellers

In perfect competition the long-run, refers to changes in: the year of production the level of production the number of firms the quality of production

the number of firms

Variable costs may include

wages, utilities, materials used in production, etc.

if a firm is in monopolistic competition, then their marginal revenue: will be less than the price will be the same as price will be above the price will be the same as marginal cost no matter how much is produced.

will be the same as marginal cost no matter how much is produced.