Micro Final 3

The total cost at the profit-maximizing output level equals A)$4,800. B)$3,300. C)$2,500. D)$1,800.

$3,300.

When a firm charges $4.95 instead of $5.00, what do economists call this pricing strategy? A)unusual pricing B)cost-plus pricing C)indirect pricing D)odd pricing

odd pricing

The network of devices directly communicating data to a computer without a person having to enter the data is known as A)Synergistic Communications. B)Big Data. C)Artificial Intelligence. D)the Internet of Things.

the Internet of Things.

If the firms in an oligopolistic industry can establish an effective cartel, the resulting output and price will approximate those of -an industry with a low four-firm concentration ratio. -a purely competitive producer. -a monopolistically competitive producer. -a pure monopoly.

a pure monopoly.

Pure monopoly refers to -any market in which the demand curve for the firm is downsloping. -a large number of firms producing differentiated product. -a single firm producing a product for which there are no close substitutes. -a standardized product being produced by many firms.

a single firm producing a product for which there are no close substitutes.

What is productive efficiency? A)a situation in which firms produce as much as possible B)a situation in which resources are allocated to their highest profit use C)a situation in which resources are allocated such that goods can be produced at their lowest possible average cost D)a situation in which resources are allocated such the last unit of output produced provides a marginal benefit to consumers equal to the marginal cost of producing it

a situation in which resources are allocated such that goods can be produced at their lowest possible average cost

Until the early 1980s, The Walt Disney Company used a pricing strategy in which visitors to its theme parks paid a low admission fee and also paid for rides. This pricing strategy is an example of A)perfect price discrimination. B)a two-part tariff. C)cost-plus pricing. D)monopoly pricing.

a two-part tariff.

Suppose James and Katherine are successful in establishing a profitable market for their "ghost restaurants" in what is a monopolistically competitive industry. In the long run, James and Katherine will most likely find it ________ to remain profitable as they face ________ competition in the "ghost restaurant" market. A)easier; less B)easier; more C)harder; less D)harder; more

harder; more

To be a natural monopoly, a firm must A)be in a government-regulated market. B)have economies of scale that are so large that it can supply the entire market at a lower cost than two or more firms. C)have significant network externalities. D)control a key resource input.

have economies of scale that are so large that it can supply the entire market at a lower cost than two or more firms.

Both individual buyers and sellers in perfect competition A)have the market price dictated to them by government. B)can influence the market price by joining with a few of their competitors. C)have to take the market price as a given. D)can influence the market price by their own individual actions.

have to take the market price as a given.

In many business situations one firm will act first, and then other firms will respond. To help analyze these types of situations economists use A)follow-the-leader-games. B)sequential games. C)bargaining games. D)retaliation games.

sequential games.

If a firm shuts down in the short run it will A)suffer a loss equal to its fixed costs. B)break even. C)declare bankruptcy. D)suffer a loss equal to its variable costs.

suffer a loss equal to its fixed costs.

The law of one price states A)that identical products should sell for the same price everywhere. B)federal and state statutes that prohibit price discrimination. C)that all customers should pay the same price. D)government regulation of prices for all firms.

that identical products should sell for the same price everywhere

Profit is the difference between A)total revenue and variable cost. B)total revenue and total explicit cost. C)marginal revenue and marginal cost. D)total revenue and total cost.

total revenue and total cost.

The expenses you encounter when you buy in one market and sell in a distant market are known as A)sunk costs. B)transactions costs. C)fixed costs. D)production costs.

transactions costs.

With creation and growth of the internet,vacationers can now book their own flights, hotels, rental cars, and other travel logistics online. If this capability resulted in creative destruction, which if the following industries would have expected to decline the most as a result? -hotels -travel agencies -airlines -tourist information

travel agencies

What is the marginal revenue of the 3rd unit? A)$6.50 B)$5.50 C)$1.83 D)$0.50

$5.50

Total revenue at the profit-maximizing level of output is A)$1,200. B)$2,500. C)$4,800. D)$6,000.

$6,000.

If Dale can sell her doilies at $2 each, what is the marginal product of the 5th worker? A)28 doilies B)$28 C)$56 D)14 doilies

14 doilies

The economists at the New York Fed estimate that the return the typical person receives from an investment in a college education is A)4.5 percent per year. B)12.5 percent per year. C)15 percent per year. D)more than 40 percent per year.

15 percent per year.

A United States government patent lasts A)forever. B)50 years. C)20 years. D)7 years.

20 years.

If the wage rate is $40, how many workers should Dale hire? A)6 B)5 C)4 D)3

3

The marginal product of the fourth unit of labor is A)300. B)75. C)60. D)15.

60.

What is the Nash equilibrium in this game? A)There is no Nash equilibrium. B)Both LimoZeenz and AirPorter do not offer the discount. C)LimoZeenz offers the discount, but AirPorter does not. D)AirPorter offers the discount, but LimoZeenz does not.

AirPorter offers the discount, but LimoZeenz does not.

If the government delays Gigacom's entry and Xenophone moves first, what is the likely outcome in the market? A)Both offer DSL internet service; Xenophone earns a profit of $8 million and Gigacom earns a profit of $7 million. B)Xenophone offers DSL internet service and earns a profit of $5 million while Gigacom offer internet service via cable line and earns a profit of $6.5 million. C)Both offer internet service via cable line; Xenophone earns a profit of $6 million and Gigacom earns a profit of $9 million. D)Xenophone offers internet service via cable line and earns a profit of $4 million while Gigacom offers DSL internet service and earns a profit of $4.5 million.

Both offer DSL internet service; Xenophone earns a profit of $8 million and Gigacom earns a profit of $7 million.

If the firm is charging a price of $12 per unit A)it is selling 700 units. B)it is not selling any output. C)it is making a profit. D)it breaks even.

it is not selling any output.

What is a factor market? A)It is a market where producers buy consumption and capital goods. B)It is a market where financial instruments are traded. C)It is a market where resources used to produce final goods are traded. D)It is a market where stocks and bonds are traded.

It is a market where resources used to produce final goods are traded.

What is the amount of profit if the firm produces Q2 units? A)It is equal to the vertical distance c to Q2. B)It is equal to the vertical distance c to g. C)It is equal to the vertical distance g to Q2. D)It is equal to the vertical distance c to g multiplied by Q2 units.

It is equal to the vertical distance c to g.

What is allocative efficiency? A)It refers to a situation in which resources are allocated fairly to all consumers in a society. B)It refers to a situation in which resources are allocated such that the last unit of output produced provides a marginal benefit to consumers equal to the marginal cost of producing it. C)It refers to a situation in which resources are allocated such that goods can be produced at their lowest possible average cost. D)It refers to a situation in which resources are allocated to their highest profit use.

It refers to a situation in which resources are allocated such that the last unit of output produced provides a marginal benefit to consumers equal to the marginal cost of producing it.

How will an increase in population affect the labor market? A)It will cause a decrease in the quantity of labor demanded. B)It will shift the market supply curve. C)It will increase the supply of jobs. D)It will increase the opportunity cost of leisure.

It will shift the market supply curve.

If the government delays Gigacom's entry and Xenophone moves first, is a threat by Gigacom that it will provide DSL service if Xenophone provides cable service a credible threat? A)No, because as a second mover, it has no choice but to abide by the choices of the first mover. B)Yes, because Gigacom's DSL service will drive Xenophone out of business. C)No, because Gigacom will lose $4.5 million in profits if it carries out its threat. D)Yes, Xenophone stands to lose $3 million in profit.

No, because Gigacom will lose $4.5 million in profits if it carries out its threat.

Is there a dominant strategy for AirPorter and if so, what is it? A)Yes, AirPorter should offer the mid-week discount. B)Yes, AirPorter's dominant strategy is to collude with LimoZeenz. C)Yes, AirPorter should not offer the mid-week discount. D)No, its outcome depends on what LimoZeenz does.

No, its outcome depends on what LimoZeenz does.

What is the output (Q) that maximizes profit and what is the price (P) charged? A)P = $55; Q = 5 cases B)P = $50; Q = 6 cases C)P = $45; Q = 7 cases D)P = $40; Q = 8 cases

P = $50; Q = 6 cases

The firm's profit-maximizing price is A)P1. B)P2. C)P3. D)P4.

P3.

What is the monopolistic competitor's profit maximizing price? A)P1 B)P2 C)P3 D)P4

P4

Consider a typical firm in a perfectly competitive industry which is incurring short-run losses. Which of the diagrams in the figure shows the effect on the industry as it transitions to a long-run equilibrium? A)Panel A B)Panel B C)Panel C D)Panel D

Panel A

Consider a typical firm in a perfectly competitive industry that makes short-run profits. Which of the diagrams in the figure shows the effect on the industry as it transitions to a long-run equilibrium? A)Panel A B)Panel B C)Panel C D)Panel D

Panel B

What is always true at the quantity where a firm's average total cost equals average revenue? A)The firm's revenue is maximized. B)The firm's profit is maximized. C)The firm breaks even. D)Marginal cost equals marginal revenue.

The firm breaks even.

What is the monopolistic competitor's profit maximizing output? A)Q1 units B)Q2 units C)Q3 units D)Q4 units

Q2 units

Suppose the market price of doilies rises to $3. What happens to the curve given in the diagram? A)Nothing, because labor's productivity has not changed. B)There will be a movement along the curve. C)The curve shifts to the right. D)We cannot answer the question without knowing if Dale would want to hire more workers.

The curve shifts to the right.

Which of the following would cause an increase in the equilibrium wage? A)The supply of labor increases more than the demand for labor. B)The supply of jobs increases less than the demand for jobs. C)The supply of labor increases and the demand for labor decreases. D)The demand for labor increases faster than the supply of labor.

The demand for labor increases faster than the supply of labor.

Which of the following is a characteristic of an oligopolistic market structure? A)It is easy for new firms to enter the industry. B)Each firm sells a unique product. C)There are few dominant sellers. D)Each firm need not react to the actions of rivals.

There are few dominant sellers.

Which of the following summarizes the impact of immigration growth on the labor market? A)There will be an increase in the demand for labor. As a result, the wage rate will rise and the quantity of workers supplied will decrease. B)This will increase the labor supply, reduce the equilibrium wage and increase the quantity of labor demanded. C)There will be an increase in both the demand for labor and the supply of labor. As a result, the equilibrium wage will not change. D)There will be an increase in the demand for jobs. This will result in an increase in the equilibrium wage rate and a movement along the labor supply curve.

This will increase the labor supply, reduce the equilibrium wage and increase the quantity of labor demanded.

Is there a dominant strategy for LimoZeenz and if so, what is it? A)Yes, LimoZeenz should not offer the mid-week discount. B)No, its outcome depends on what AirPorter does. C)Yes, LimoZeenz dominant strategy is to collude with AirPorter. D)Yes, LimoZeenz should offer the mid-week discount.

Yes, LimoZeenz should not offer the mid-week discount.

Which of the following will not shift the demand curve for labor? -a change in the wage rate -an increase in the price of the product that labor is helping to produce -the use of a larger stock of capital with the labor force -the adoption of a more efficient method of combining labor and capital in the production process

a change in the wage rate

Which of the following statements best illustrates the concept of derived demand? -a decline in the demand for shoes will cause the demand for leather to decline -a decline in the price of margarine will reduce the demand for butter -when the price of gasoline goes up, the demand for motor oil will decline -as income goes up, the demand for farm products will increase by a smaller relative amount

a decline in the demand for shoes will cause the demand for leather to decline

The term oligopoly indicates -a one-firm industry. -a few firms producing either a differentiated or a homogeneous product. -many producers of a differentiated product. -an industry whose four-firm concentration ratio is low.

a few firms producing either a differentiated or a homogeneous product.

A decrease in the wage rate causes A)a rightward shift of the firm's labor demand curve. B)an increase in the quantity of labor demanded. C)a leftward shift of the firm's labor demand curve. D)a decrease in labor's productivity.

an increase in the quantity of labor demanded.

Economists would describe the U.S. automobile industry as -purely competitive. -an oligopoly. -monopolistically competitive. -a pure monopoly.

an oligopoly.

Other things equal, in which of the following cases would economic profit be the greatest? -an unregulated, non-discriminating monopolist. -a regulated monopolist charging a price equal to marginal cost. -an unregulated monopolist that is able to engage in price discrimination. -a regulated monopolist charging a price equal to average total cost.

an unregulated monopolist that is able to engage in price discrimination.

o have a monopoly in an industry there must be A)an inelastic demand for the industry's product. B)barriers to entry so high that no other firms can enter the industry. C)a public franchise, making the monopoly the exclusive legal provider of a good or service. D)a patent or copyright giving the firm exclusive rights to sell a product for 20 years.

barriers to entry so high that no other firms can enter the industry.

In the long run, the entry of new firms in an industry A)benefits consumers by forcing prices down to the level of total cost. B)harms consumers by forcing prices up above the level of total cost C)benefits consumers by forcing prices down to the level of average cost. D)harms consumers by forcing prices up above the level of average cost

benefits consumers by forcing prices down to the level of average cost.

The collection and analysis of massive amounts of data, with the goal of measuring aspects of people's behavior is referred to as A)the Internet of Things. B)mega processing. C)big data D)marginal utility.

big data.

One reason why airlines charge business travelers and leisure travelers different prices is A)business travelers often have inflexible schedules and have to travel on a particular day. The opposite is true for leisure travelers. B)business travelers fly according to schedules that are planned months in advance. Many leisure travelers buy their tickets at the last minute. C)business travelers fly more often than most leisure travelers. As a result, their employers are able to bargain with airlines for lower fares than leisure travelers pay. D)business travelers usually travel alone. Leisure travelers often fly with friends and family members; therefore, they have a more inelastic demand for airline tickets than business travelers.

business travelers often have inflexible schedules and have to travel on a particular day. The opposite is true for leisure travelers.

Suppose you have worked at a local sandwich shop for six months and now you plan to ask your manager for a raise. How can you convince your manager that you are worth more money than you are currently being paid? A)by convincing him that you are a dedicated worker and ready to take on more responsibilities at the shop B)by threatening to quit if he refuses to give you a raise C)by explaining to him how difficult it is for you to save enough money to go to college D)by showing your manager that your marginal revenue product has increased since your last wage increase

by showing your manager that your marginal revenue product has increased since your last wage increase

When firms price their products by adding a percentage markup to their average costs of production, this is called A)cost-plus pricing. B)average cost pricing. C)rounding up. D)break-even pricing.

cost-plus pricing.

The most profitable price for a monopolist is A)found where the profit-maximizing quantity hits the demand curve. B)the highest price a consumer is willing to pay for the monopolist's product. C)a price that maximizes the quantity sold. D)the price at which demand is unit elastic.

found where the profit-maximizing quantity hits the demand curve.

Consumers who will pay high prices to be among the first to own certain new products are called A)gullible. B)savvy consumers. C)naive consumers. D)early adopters.

early adopters.

Which of the following products allows the seller to identify different groups of consumers (segment the market) at virtually no cost? A)iPhones B)early bird dinner specials C)books sold online D)a pair of Bose speakers

early bird dinner specials

What characteristic of a competitive market has made the "long run pretty short" in the market for iPhone apps? A)blocked entry B)few firms in the market C)ease of entry D)identical products

ease of entry

The primary force encouraging the entry of new firms into a purely competitive industry is -a desire to provide goods for the betterment of society. -normal profits earned by firms already in the industry. -government subsidies for start-up firms. -economic profits earned by firms already in the industry.

economic profits earned by firms already in the industry.

A merger between the Ford Motor Company and General Motors would be an example of a A)vertical merger. B)horizontal merger. C)conglomerate merger. D)trust.

horizontal merger.

Increases in the productivity of labor result partly from -the law of diminishing returns -reductions in wage rates -increases in the quantity of labor -improvements in technology

improvements in technology

The long-run supply curve for a perfectly competitive, constant-cost industry A)is found by adding up the marginal cost curves for all firms in the industry. B)is upward-sloping. C)is downward-sloping. D)is horizontal.

is horizontal.

Arbitrage A)is the act of buying an item at a low price, bundling it with another and selling the new package at a much higher price. B)is any act of buying and selling that results in the seller earning an above normal profit. C)is the act of buying an item at a low price and reselling the item at a higher price. D)is the act of selling an item on consignment and collecting a huge portion of the proceeds to compensate for the seller's time.

is the act of buying an item at a low price and reselling the item at a higher price.

Price discrimination A)is the practice of charging different prices to different customers based on the different costs of supplying the product to different customers. B)is the practice of charging different prices to different customers when the price differences cannot be attributed to variations in cost. C)is the practice of giving preferential treatment to certain groups of customers based on their long-standing relationship to the producer. D)is the practice of charging different prices to different customers based on a seller's personal preferences and prejudices.

is the practice of charging different prices to different customers when the price differences cannot be attributed to variations in cost.

The firm represented in the diagram A)makes zero economic profit. B)makes zero accounting profit. C)should exit the industry. D)should expand its output to take advantage of economies of scale.

makes zero economic profit.

Monopolistic competition means -a market situation where competition is based entirely on product differentiation and advertising. -a large number of firms producing a standardized or homogeneous product. -many firms producing differentiated products. -a few firms producing a standardized or homogeneous product

many firms producing differentiated products.

A competitive firm in the short run can determine the profit-maximizing (or loss-minimizing) output by equating -price and marginal revenue. -marginal revenue and marginal cost. -price and average total cost -price and average fixed cost.

marginal revenue and marginal cost.

A firm's demand for labor curve is also called its A)marginal factor cost of labor curve. B)marginal revenue product of labor curve. C)marginal benefit of labor curve. D)marginal valuation curve.

marginal revenue product of labor curve.

Concentration ratios measure the -geographic location of the largest corporations in each industry. -degree to which product price exceeds marginal cost in various industries. -number of firms in an industry. -percentage of total industry sales accounted for by the largest firms in the industry.

percentage of total industry sales accounted for by the largest firms in the industry.

For which of the following firms is patent protection of vital importance? A)pharmaceutical firms B)auto makers C)furniture producers D)software firms

pharmaceutical firms

The reason that the "fast-casual" restaurant market is monopolistically competitive rather than perfectly competitive is because A)barriers to entry are very low. B)entry into the market is blocked. C)products are differentiated. D)there are many firms in the market.

products are differentiated.

Major League Baseball teams are similar to other firms in that they use factors of production to produce a product (baseball games). An example of capital used by teams to produce their products is A)the land on which baseball games are played. B)the ballparks where the games are played. C)the money teams earn from television contracts and ticket sales. D)the labor of baseball players.

the ballparks where the games are played.

Marginal revenue is A)the change in total revenue divided by the change in total cost. B)the change in total revenue divided by the change in the quantity of output. C)total revenue divided by the total quantity of output. D)the change in profit divided by the change in the quantity of output.

the change in total revenue divided by the change in the quantity of output.

The larger the number of firms in an industry A)the more intense the rivalry among firms. B)the easier it is to implicitly collude to fix prices. C)the larger the potential number of market segments. D)the greater the need for a price enforcement mechanism

the more intense the rivalry among firms.

Economic rent, or pure rent, is -a payment for the use of those resources whose supply is perfectly elastic -the price paid for the use of land and other nonreproducible goods -a payment for resources used in the production of "free goods" -a payment made for the use of housing, factory buildings, or capital goods

the price paid for the use of land and other nonreproducible goods

The minimum point on the average variable cost curve is called A)the point of diminishing returns. B)the loss-minimizing point. C)the break-even point. D)the shutdown point.

the shutdown point.

In monopsony, -the employer is a "wage taker" -each firm employs a small portion of the total supply of labor -the wage rate paid by the employer varies directly with the number of workers employed -the workforce is highly mobile

the wage rate paid by the employer varies directly with the number of workers employed

Suppose the prevailing price is $20 and the firm is currently producing 1,350 units. In the long-run equilibrium, the firm represented in the diagram A)will reduce its output to 750 units. B)will continue to produce the same quantity. C)will reduce its output to 1,100 units. D)will cease to exist.

will reduce its output to 1,100 units.