Final Exam - BECO

The long-run market supply curve in a competitive market will

typically be more elastic than the short-run supply curve.

What is the shape of the marginal cost curve for this firm?

upward-sloping

A seller's opportunity cost measures the

value of everything she must give up to produce a good

A firm that shuts down temporarily has to pay

its fixed costs but not its variable costs

If marginal cost is rising

marginal product must be falling.

When this game reaches a Nash equilibrium, annual profit will grow by

$1.5 million for HomeMax and by $1.0 million for Lopes.

What is the value of F?

$150

How large would a corrective tax need to be to move this market from the equilibrium outcome to the socially optimal outcome?

$4

If the market price is $1,000, the producer surplus in the market is

$400

How much consumer surplus will be derived from the purchase of this product at the monopolistically competitive price?

$450

If the supply curve is S', the demand curve is D, and the equilibrium price is $150, what is the producer surplus?

$625

What price will the monopolistically competitive firm charge in this market?

$70

At which number of workers does diminishing marginal product begin?

2

What is the marginal product of the Second worker?

200 units

The socially optimal quantity of output is

5 units

In order to maximize profits, the firm will produce

5 units of output because marginal revenue equals marginal cost.

A monopolistically competitive industry is characterized by

A monopolistically competitive industry is characterized by

Which of the following will cause an increase in consumer surplus?

A technological improvement in the production of the good

A membership at a gym that always has space in classes and on machines is an example of the type of good represented by Box

B

The distinction between efficiency and equality can be described as follows:

Efficiency refers to maximizing the size of the pie; equality refers to distributing the pie fairly among members of society.

Which of the following is not a characteristic of a competitive market?

Entry is limited.

The overuse of antibiotics leads to the development of antibiotic-resistant diseases. Therefore, the socially optimal quantity of antibiotics is represented by point

Q2 .

The socially optimal quantity would be

Q2 .

A profit-maximizing monopoly will produce an output level of

Q3 .

The average fixed cost curve

always declines with increased levels of output

Marginal cost is equal to average total cost when

average total cost is at its minimum

Market failure associated with the free-rider problem is a result of

benefits that accrue to those who don't pay.

Efficient scale is reached

beyond 133.33 units

For a firm, marginal revenue minus marginal cost is equal to

change in profit

Goods that are rival in consumption but not excludable would be considered

common resources

The social cost of a monopoly is equal to its

deadweight loss.

The price ceiling causes quantity

demanded to exceed quantity supplied by 90 units.

Monopoly firms face

downward-sloping demand curves, so they can sell only the specific price-quantity combinations that lie on the demand curve.

A firm's opportunity costs of production are equal to its

explicit costs + implicit costs.

Competitive markets are characterized by

free entry and exit by firms

The equilibrium quantity in markets characterized by oligopoly is

higher than in monopoly markets and lower than in perfectly competitive markets

Two home-improvement stores (Lopes and HomeMax) in a growing urban area are interested in expanding their market share. Both are interested in expanding the size of their store and parking lot to accommodate potential growth in their customer base. The following game depicts the strategic outcomes that result from the game. Increases in annual profits (in millions of dollars) of the two home-improvement stores are shown in the following figure. Refer to Table 17-6. Pursuing its own best interest, Lopes will

increase the size of its store and parking lot regardless of the decision made by HomeMax.

Two home-improvement stores (Lopes and HomeMax) in a growing urban area are interested in expanding their market share. Both are interested in expanding the size of their store and parking lot to accommodate potential growth in their customer base. The following game depicts the strategic outcomes that result from the game. Increases in annual profits (in millions of dollars) of the two home-improvement stores are shown in the following figure. Pursuing its own best interest, HomeMax will

increase the size of its store and parking lot regardless of the decision made by Lopes.

When the price falls from P2 to P1 , consumer surplus

increases by an amount equal to B+C.

When an externality is present, the market equilibrium is

inefficient, and the equilibrium does not maximize the total benefit to society as a whole.

If the government imposes a price ceiling at $15, it would be

nonbinding if market demand is Demand A and binding if market demand is Demand B

A good is excludable if

people can be prevented from using it

Selling the same good at different prices to different customers is known as

price discrimination

The deadweight loss associated with a monopoly occurs because the monopolist

produces an output level less than the socially optimal level

The intersection of a firm's marginal revenue and marginal cost curves determines the level of output at which

profit is maximized

According to the Coase theorem, private parties can solve the problem of externalities if

property rights are clearly defined

Markets fail to allocate resources efficiently when

property rights are not well established

Rent control

serves as an example of a price ceiling.

In some cases, tradable pollution permits may be better than a corrective tax because

the government can set a maximum level of pollution using permits

A monopolistically competitive firm chooses

the quantity of output to produce, but the price of its output is determined by demand.

Efficiency in a market is achieved when

the sum of producer surplus and consumer surplus is maximized

As the number of firms in an oligopoly increases,

the total quantity of output produced by firms in the market gets closer to the socially efficient quantity.

If a price ceiling is not binding, then

there will be no effect on the market price or quantity sold

The maximum price that a buyer will pay for a good is called

willingness to pay

If the price a consumer pays for a product is equal to a consumer's willingness to pay, then the consumer surplus relevant to that purchase is

zero