econ final

Refer to Table 17-26. Pursuing its own best interests, Firm A will concede that taking their prescription drug causes liver failure a. only if Firm B concedes that taking its drug causes liver failure. b. only if Firm B does not concede that taking its drug causes liver failure. c. regardless of whether Firm B concedes that taking its drug causes liver failure. d. None of the above. In pursuing its own best interests, Firm A will in no case concede that taking its prescription drug causes liver failure.

None of the above. In pursuing its own best interests, Firm A will in no case concede that taking its prescription drug causes liver failure.

Refer to Table 13-11. What is the variable cost of producing 0 posters? a. $0 b. $10 c. $100 d. $1

a. $0

Refer to Table 13-7. What is the value of B? a. $100 b. $200 c. $50 d. $25

a. $100

Scenario 13-5 Suppose that Emily opens a restaurant. She receives a loan from a bank for $200,000. She withdraws $100,000 from her personal savings account. The interest rate on the loan is 6%, and the interest rate on her savings account is 2%. Refer to Scenario 13-5. Emily's implicit cost of capital is a. $2,000. b. $4,000. c. $14,000. d. $12,000.

a. $2,000.

Refer to Figure 16-4. At the profit-maximizing, or loss-minimizing, output level, the firm in this figure has total costs of approximately a. $21,000. b. $18,000. c. $12,000. d. $24,000.

a. $21,000.

Refer to Table 17-27. If both countries follow a dominant strategy, the value of trade flow benefits for the United States will be a. $65 b. b. $140 b. c. $35 b. d. $130 b.

a. $65 b.

Refer to Table 13-15. What is variable cost when output equals 30 units? a. $90 b. $4 c. $40 d. $130

a. $90

Refer to Table 13-9. What is the marginal product of the third worker? a. 60 units b. 40 units c. 20 units d. 80 units

a. 60 units

Refer to Table 17-4. If there are exactly two sellers of gasoline in Mauston and if they collude, then which of the following outcomes is most likely? a. Each seller will sell 125 gallons and charge a price of $5. b. Each seller will sell 250 gallons and charge a price of $5. c. Each seller will sell 175 gallons and charge a price of $3. d. Each seller will sell 125 gallons and charge a price of $2.5.

a. Each seller will sell 125 gallons and charge a price of $5.

Which of the following statements is not correct? a. Monopolistic competition is similar to oligopoly because both market structures are characterized by barriers to entry. b. Monopolistic competition is similar to perfect competition because both market structures are characterized by many sellers. c. Monopolistic competition is similar to monopoly because in each market structure the firm can charge a price above marginal costs. d. Monopolistic competition is similar to perfect competition because both market structures are characterized by free entry.

a. Monopolistic competition is similar to oligopoly because both market structures are characterized by barriers to entry.

Refer to Figure 15-3. Which panel could represent the demand curve facing the soybean industry? a. Panel A b. Panel B c. Panel C d. Panel D

a. Panel A

Profit-maximizing firms enter a competitive market when existing firms in that market have a. average total costs less than market price. b. total revenues that exceed fixed costs. c. total revenues that exceed total variable costs. d. average total costs that exceed average revenue.

a. average total costs less than market price.

The oligopoly price will be greater than marginal cost but less than the monopoly price when a. each oligopolist individually chooses a quantity to produce to maximize profit. b. the oligopolists collude by jointly choosing a quantity to produce and maintaining their agreement. c. each oligopolist's objective is minimization of average total cost, rather than maximization of profit. d. the oligopolists collude by jointly choosing a price to charge and maintaining their agreement.

a. each oligopolist individually chooses a quantity to produce to maximize profit.

Competitive markets are characterized by a. free entry and exit by firms. b. a small number of buyers and sellers. c. the interdependence of firms. d. unique products.

a. free entry and exit by firms.

Competitive firms have a. horizontal demand curves, and they can sell as much output as they desire at the market price. b. horizontal demand curves, and they can sell only a limited quantity of output at each price. c. downward-sloping demand curves, and they can sell as much output as they desire at the market price. d. downward-sloping demand curves, and they can sell only a limited quantity of output at each price.

a. horizontal demand curves, and they can sell as much output as they desire at the market price.

If duopolists individually pursue their own self-interest when deciding how much to produce, the profit-maximizing price they will charge for their product will be a. less than the monopoly price. b. equal to the perfectly competitive market price. c. possibly less than or greater than the monopoly price. d. greater than the monopoly price.

a. less than the monopoly price.

Refer to Figure 13-1. Suppose the production function shifts from TP1 to TP2. Such a shift in the total product curve is most likely due to an increase in the firm's a. productivity. b. costs of production. c. market share. d. product price.

a. productivity.

As firms exit a monopolistically competitive market, profits of remaining firms a. rise, and product diversity in the market decreases. b. decline, and product diversity in the market decreases. c. decline, and product diversity in the market increases. d. rise, and product diversity in the market increases.

a. rise, and product diversity in the market decreases.

A similarity between monopoly and monopolistic competition is that in both market structures a. sellers are price makers rather than price takers. b. there are only a few buyers but many sellers. c. there are a small number of sellers. d. strategic interactions among sellers are important.

a. sellers are price makers rather than price takers.

Competitive firms that earn a loss in the short run should a. shut down if P < AVC. b. raise their price. c. lower their output. d. All of the above are correct.

a. shut down if P < AVC.

Very often, the reason that players can solve the prisoners' dilemma and reach the most profitable outcome is that a. the players play the game not once but many times. b. self interest results in the Nash equilibrium which is the best outcome for the players. c. the game becomes more competitive. d. each player tries to capture a large portion of the market share.

a. the players play the game not once but many times.

The assumption of a fixed number of firms is appropriate for analysis of a. the short run but not the long run. b. the long run but not the short run. c. both the short run and the long run. d. neither the short run nor the long run.

a. the short run but not the long run.

The paradoxical nature of oligopoly can be demonstrated by the fact that, even though the monopoly outcome is best for the oligopolists, a. they have incentives to increase production above the monopoly outcome. b. they collude to set the output level equal to the Nash equilibrium level of output. c. they do not behave as profit maximizers. d. self-interest juxtaposes the profits earned at the Nash equilibrium.

a. they have incentives to increase production above the monopoly outcome.

In the long run, each firm in a competitive industry earns a. zero economic profits. b. zero accounting profits. c. positive economic profits. d. positive, negative, or zero economic profits.

a. zero economic profits.

Refer to Table 17-2. If this market for water were perfectly competitive instead of monopolistic, what would be the price for water? a. $4 b. $0 c. $6 d. $12

b. $0

Refer to Figure 16-3. At the profit-maximizing level of output, what is this firm's total cost of production? a. $1,200 b. $1,400 c. $1,600 d. $1,875

b. $1,400

Refer to Table 17-13. When this game reaches a Nash equilibrium, annual profit will grow by a. $0.6 million for HomeMax and by $3.2 million for Lopes. b. $1.5 million for HomeMax and by $1.0 million for Lopes. c. $3.4 million for HomeMax and by $0.4 million for Lopes. d. $2.5 million for HomeMax and by $2.0 million for Lopes.

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

Refer to Figure 14-7. Suppose the price of the good is $175. If the firm produces and sells 514 units of output, its profit is approximately a. $26,025. b. $25,750. c. $24,995. d. $25,550.

b. $25,750.

Refer to Table 14-6. What is the total revenue from selling 4 units? a. $257 b. $480 c. $120 d. $317

b. $480

Refer to Table 14-4. For this firm, the marginal revenue is a. $15. b. $5. c. $10. d. $0.

b. $5.

Refer to Figure 16-11. The profit for this firm is a. $375. b. $500. c. $1000. d. $1250.

b. $500.

Refer to Table 14-12. What is the average revenue when 4 units are sold? a. $68 b. $80 c. $400 d. $0

b. $80

Which of the following statements is correct for a monopolist? (i)The firm maximizes profits by equating marginal revenue with marginal cost. (ii)The firm maximizes profits by equating price with marginal cost. (iii)Demand equals marginal revenue. (iv)Average revenue equals price. a. (i), (ii), (iii), and (iv) b. (i) and (iv) only c. (i), (ii), and (iv) only d. (i), (iii), and (iv) only

b. (i) and (iv) only

Refer to Table 15-19. If a monopolist faces a constant marginal cost of $5, how much output should the firm produce in order to equate marginal revenue with marginal cost? a. 3 units b. 4 units c. 5 units d. 6 units

b. 4 units

Refer to Table 16-4. What is this firm's profit-maximizing level of output? a. 0 units of output b. 4 units of output c. 5 units of output d. 3 units of outpu

b. 4 units of output

Which of the following is a characteristic of a natural monopoly? a. Fixed costs are typically a small portion of total costs. b. Average total cost declines over large regions of output. c. The product sold is a natural resource such as diamonds or water. d. All of the above are correct.

b. Average total cost declines over large regions of output.

Refer to Figure 15-4. The marginal cost curve for a monopoly firm is depicted by curve a. A. b. D. c. B. d. C.

b. D.

Refer to Figure 16-4. Which of the following will occur in the long run in this industry? a. This firm will incur losses. b. Firms will enter this industry. c. Firms will exit this industry. d. This firm will continue to earn positive economic profits.

b. Firms will enter this industry.

The theory of oligopoly provides another reason that free trade can benefit all countries because a. increased competition leads to larger deadweight losses. b. as the number of firms within a given market increases, the price of the good decreases. c. as the number of firms within a given market increases, the profit of each firm increases. d. All of the above are correct.

b. as the number of firms within a given market increases, the price of the good decreases.

Refer to Figure 16-9. Efficient scale is reached a. at 100 units. b. beyond 133.33 units. c. between 100 and 133.33 units. d. at 133.33 units.

b. beyond 133.33 units.

The exit of existing firms from a competitive market will a. decrease market supply and decrease market price. b. decrease market supply and increase market price. c. increase market supply and decrease market price. d. increase market supply and increase market price.

b. decrease market supply and increase market price.

When adding another unit of labor leads to an increase in output that is smaller than the increases in output that resulted from adding previous units of labor, the firm is experiencing a. diminishing labor. b. diminishing marginal product. c. diminishing output. d. negative marginal product

b. diminishing marginal product.

The difference between accounting profit and economic profit is a. marginal product. b. implicit costs. c. explicit costs. d. total revenue.

b. implicit costs.

Refer to Table 17-13. Pursuing its own best interest, Lopes will a. not increase the size of its store and parking lot regardless of the decision made by HomeMax. b. increase the size of its store and parking lot regardless of the decision made by HomeMax. c. increase the size of its store and parking lot only if HomeMax does not increase the size of its store and parking lot. d. increase the size of its store and parking lot only if HomeMax also increases the size of its store and parking lot.

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

Refer to Table 13-4. Suppose that Charles's math tutoring company has a fixed cost of $50 per month for his cell phone. Each worker costs Charles $60 per day. As output increases from 45 to 70 students, Charles's total cost curve a. decreases and gets flatter. b. increases and gets steeper. c. decreases but gets steeper. d. increases but gets flatter.

b. increases and gets steeper.

When firms have an incentive to exit a competitive market, their exit will a. necessarily raise the costs for the firms that remain in the market. b. raise the profits of the firms that remain in the market. c. lower the market price. d. shift the demand for the product to the left.

b. raise the profits of the firms that remain in the market.

Refer to Table 13-9. The average variable cost of producing 240 units is a. $0.80. b. $0.32. c. $0.19. d. $0.13.

c. $0.19.

Refer to Table 17-3. Suppose that Maria and Miguel work together in order to operate as a profit-maximizing monopolist. What price will they charge for milk? a. $14 b. $10 c. $12 d. $8

c. $12

Refer to Table 15-1. What is the marginal revenue for the monopolist for the sixth unit sold? a. $3 b. $17 c. $5 d. $11

c. $5

Suppose that a firm operating in perfectly competitive market sells 100 units of output. Its total revenues from the sale are $500. Which of the following statements is correct? a. (iii) only b. (i) only c. (i), (ii), and (iii) d. (i) and (ii) only

c. (i), (ii), and (iii)

Refer to Table 16-7. If the firm has a constant marginal cost of $7 per unit, how many units should the firm produce to maximize profit? a. 4 units b. 5 units c. 3 units d. 6 units

c. 3 units

Refer to Table 17-14. If both players choose their best strategies, player A will earn a payoff of a. 6. b. 0. c. 4. d. 2.

c. 4.

Refer to Table 17-2. Suppose that Abby and Brad work together to operate as a profit-maximizing monopolist. How many gallons of water will be produced and sold? a. 8 gallons b. 5 gallons c. 6 gallons d. 4 gallons

c. 6 gallons

Refer to Table 17-21. If Paul chooses Turn, what will John choose to do and what will John's payoff equal? a. Drive Straight, 0 b. Turn, 10 c. Drive Straight, 20 d. Turn, 5

c. Drive Straight, 20

Refer to Table 17-19. What is grocery store 2's dominant strategy? a. Grocery store 2 should set a low price when grocery store 1 sets a low price, and grocery store 2 should set a high price when grocery store 1 sets a high price. b. Grocery store 2 does not have a dominant strategy. c. Grocery store 2 should always set a low price. d. Grocery store 2 should always set a high price.

c. Grocery store 2 should always set a low price.

Refer to Figure 14-13. If the price is $3.50 in the short run, what will happen in the long run? a. Nothing. The price is consistent with zero economic profits, so there is no incentive for firms to enter or exit the industry. b. Because the price is below the firm's average variable costs, the firms will shut down. c. Individual firms will earn negative economic profits in the short run, which will cause some firms to exit the industry. d. Individual firms will earn positive economic profits in the short run, which will entice other firms to enter the industry.

c. Individual firms will earn negative economic profits in the short run, which will cause some firms to exit the industry.

Which of the following is an example of a barrier to entry? a. Mark charges a lower price to students than to faculty for his tattoo services. b. Matthew offers free samples of his latest flavored coffee drink to entice customers to buy a cup. c. John obtained a copyright for the song he wrote and recorded. d. Luke charges a higher hourly price to business students than to liberal arts students for his economics tutoring.

c. John obtained a copyright for the song he wrote and recorded.

Refer to Table 17-15. Which of the following statements regarding this game is true? a. Player A has a dominant strategy, but player B does not have a dominant strategy. b. Both players have a dominant strategy. c. Neither player has a dominant strategy. d. Player A does not have a dominant strategy, but player B does have a dominant strategy.

c. Neither player has a dominant strategy.

Which of the following conditions is characteristic of a monopolistically competitive firm in short-run equilibrium? a. P > AR b. MR > MC c. P > MC d. All of the above are correct.

c. P > MC

Refer to Figure 15-5. Profit on a typical unit sold for a profit-maximizing monopoly would equal a. P1-P6. b. P2-P3. c. P2-P5. d. P2-P4.

c. P2-P5.

Refer to Table 17-8. If there are two suppliers of water, Victor and Sami, and if they have successfully formed a cartel, then what would be the price and the market quantity? a. The price would be $6 per bottle and the market quantity would be 800 bottles. b. The price would be $4 per bottle and the market quantity would be 1200 bottles. c. The price would be $7 per bottle and the market quantity would be 600 bottles. d. The price would be $5 per bottle and the market quantity would be 1000 bottles.

c. The price would be $7 per bottle and the market quantity would be 600 bottles.

Walter used to work as a high school teacher for $40,000 per year but quit in order to start his own painting business. To invest in his painting business, he withdrew $20,000 from his savings, which paid 3 percent interest, and borrowed $30,000 from his uncle, whom he pays 3 percent interest per year. Last year Walter paid $25,000 for supplies and had revenue of $60,000. Walter asked Tyler the accountant and Greg the economist to calculate his painting business's profit. a. Tyler says his profit is $35,000, and Greg says he lost $5,900. b. Tyler says his profit is $25,900, and Greg says his profit is $66,500. c. Tyler says his profit is $34,100, and Greg says he lost $6,500. d. Tyler says his profit is $34,100, and Greg says his profit is $34,100.

c. Tyler says his profit is $34,100, and Greg says he lost $6,500.

Marginal cost is equal to average total cost when a. average fixed cost is rising. b. average variable cost is falling. c. average total cost is at its minimum. d. marginal cost is at its minimum.

c. average total cost is at its minimum.

Which of the following is an example of a monopolistically competitive industry? a. tennis balls b. cable television c. movies d. computer operating systems

c. movies

For a profit-maximizing monopolistically competitive firm, marginal revenue exceeds marginal cost in a. the long run but not in the short run. b. the short run but not in the long run. c. neither the short run nor the long run. d. both the short run and the long run.

c. neither the short run nor the long run.

Refer to Table 17-20. If Nadia chooses to clean, then Maddie will a. not clean, and Maddie's payoff will be 10. b. clean, and Maddie's payoff will be 7. c. not clean, and Maddie's payoff will be 50. d. clean, and Maddie's payoff will be 30.

c. not clean, and Maddie's payoff will be 50.

Refer to Figure 16-5. Which of the panels depicts a firm in a monopolistically competitive market earning positive economic profits? a. panel d b. panel a c. panel c d. panel b

c. panel c

Suppose a monopolist is able to charge each customer a price equal to that customer's willingness-to-pay for the product. Then the monopolist is engaging in a. arbitrage pricing. b. marginal cost pricing. c. perfect price discrimination. d. voodoo economics.

c. perfect price discrimination.

A rational pricing strategy for a profit-maximizing monopolist is a. synergy pricing. b. price segregation. c. price discrimination. d. average cost pricing.

c. price discrimination.

Refer to Figure 17-3. In pursuing his own self-interest, Hector will a. clean whether or not Bart cleans. b. clean only if Bart cleans. c. refrain from cleaning whether or not Bart cleans. d. clean only if Bart refrains from cleaning.

c. refrain from cleaning whether or not Bart cleans.

Refer to Figure 17-4. The dominant strategy for Ed is to a. shovel, and the dominant strategy for Aaron is to refrain from shoveling. b. refrain from shoveling, and the dominant strategy for Aaron is to shovel. c. refrain from shoveling, and there is no dominant strategy for Aaron. d. shovel, and the dominant strategy for Aaron is to shovel.

c. refrain from shoveling, and there is no dominant strategy for Aaron.

Which of these types of costs can be ignored when an individual or a firm is making decisions? a. opportunity costs b. marginal costs c. sunk costs d. variable costs

c. sunk costs

Refer to Figure 16-4. Assume the firm in the figure is currently producing 20 units of output and charging $925. The firm a. will increase its profits if it raises its price and reduces its production level. b. is maximizing profits. c. will increase its profits if it lowers its price and expands its production level. d. will increase its profits if it raises its prices and expands its production level.

c. will increase its profits if it lowers its price and expands its production level.

One key difference between an oligopoly market and a competitive market is that oligopolistic firms a. sell completely unrelated products while competitive firms do not. b. are price takers while competitive firms are not. c. sell their product at a price equal to marginal cost while competitive firms do not. d. can affect the profit of other firms in the market by the choices they make while firms in competitive markets do not affect each other by the choices they make.

d. can affect the profit of other firms in the market by the choices they make while firms in competitive markets do not affect each other by the choices they make.

In a prisoners' dilemma game, a. repeated play will always result in a better outcome for both players than when the game is played only once. b. the tit-for-tat strategy in repeated play requires players to always select the opposite strategy as their opponent. c. the solution when playing the game once will be the same as the solution when the players play the game repeatedly, since agreements cannot be maintained in a prisoners' dilemma. d. if the players play the game repeatedly, the players can achieve a higher payoff, on average, than when they play the game only once.

d. if the players play the game repeatedly, the players can achieve a higher payoff, on average, than when they play the game only once.

Scenario 13-8 Wanda owns a lemonade stand. She produces lemonade using five inputs: water, sugar, lemons, paper cups, and labor. Her costs per glass are as follows: $0.01 for water, $0.02 for sugar, $0.03 for lemons, $0.02 for cups, and $0.10 for the opportunity cost of her labor. She can sell 300 glasses for $0.50 each. Refer to Scenario 13-8. What are Wanda's total economic costs per glass? a. $0.08 b. $0.02 c. $0.10 d. $0.18

d. $0.18

Refer to Table 13-13. What is the average fixed cost for the month if 9 instructional modules are produced? a. $811.11 b. $150.00 c. $108.00 d. $120.00

d. $120.00

Suppose that a firm in a competitive market is currently maximizing its short-run profit at an output of 50 units. If the current price is $9, the marginal cost of the 50th unit is $9, and the average total cost of producing 50 units is $4, what is the firm's profit? a. $450 b. $0 c. $200 d. $250

d. $250

Refer to Figure 14-3. If the market price is $10, what is the firm's total revenue? a. $30 b. $35 c. $15 d. $50

d. $50

A profit-maximizing monopolist charges a price of $12. The intersection of the marginal revenue and marginal cost curves occurs where output is 10 units and marginal cost is $6. Average total cost for 10 units of output is $5. What is the monopolist's profit? a. $120 b. $60 c. $100 d. $70

d. $70

Refer to Table 15-7. What is the total revenue from selling 8 pairs of shoes? a. $800 b. $90 c. $695 d. $720

d. $720

A firm that is a natural monopoly a. is not likely to be concerned about new entrants eroding its monopoly power. b. is taking advantage of economies of scale. c. would experience a higher average total cost if more firms entered the market. d. All of the above are correct.

d. All of the above are correct.

Refer to Figure 14-7. In the long run, the firm will exit the market if the price of the good is a. $75. b. $85. c. $95. d. All of the above are correct.

d. All of the above are correct.

On a 100-acre farm, a farmer is able to produce 3,000 bushels of wheat when he hires 2 workers. He is able to produce 4,400 bushels of wheat when he hires 3 workers. Which of the following possibilities is consistent with the property of diminishing marginal product? a. The farmer is able to produce 5,600 bushels of wheat when he hires 4 workers. b. The farmer is able to produce 5,400 bushels of wheat when he hires 4 workers. c. The farmer is able to produce 5,200 bushels of wheat when he hires 4 workers. d. Any of the above could be correct.

d. Any of the above could be correct.

Refer to Figure 13-5. Which curve is most likely to represent marginal cost? a. A b. B c. C d. D

d. D

Which of the following statements is correct regarding a firm's decision-making? a. The decision to shut down and the decision to exit are both short-run decisions. b. The decision to shut down and the decision to exit are both long-run decisions. c. The decision to exit is a short-run decision, whereas the decision to shut down is a long-run decision. d. The decision to shut down is a short-run decision, whereas the decision to exit is a long-run decision.

d. The decision to shut down is a short-run decision, whereas the decision to exit is a long-run decision.

Which of these assumptions is often realistic for a firm in the short run? a. The firm can vary both the size of its factory and the number of workers it employs. b. The firm can vary neither the size of its factory nor the number of workers it employs. c. The firm can vary the size of its factory but not the number of workers it employs. d. The firm can vary the number of workers it employs but not the size of its factory.

d. The firm can vary the number of workers it employs but not the size of its factory.

Which of the following is not an example of price discrimination by a firm? a. a senior citizens' discount b. children's meals at a restaurant c. coupons in the Sunday newspaper d. a natural gas company charging customers a higher rate in the winter than in the summer

d. a natural gas company charging customers a higher rate in the winter than in the summer

Which of the following expressions is correct? a. economic profit = accounting profit + explicit costs b. accounting profit = total revenue - implicit costs c. economic profit = total revenue - implicit costs d. accounting profit = economic profit + implicit costs

d. accounting profit = economic profit + implicit costs

In a duopoly situation, the logic of self-interest results in a total output level that a. equals the output level that would prevail in a competitive market. b. falls short of the monopoly level of output. c. equals the output level that would prevail in a monopoly. d. exceeds the monopoly level of output, but falls short of the competitive level of output.

d. exceeds the monopoly level of output, but falls short of the competitive level of output.

Refer to Figure 14-2. If the market price is Pd, in the short run the firm will earn a. zero economic profits. b. positive economic profits. c. negative economic profits but will try to remain open. d. negative economic profits and will shut down.

d. negative economic profits and will shut down.

Refer to Figure 16-7. If a firm in a monopolistically competitive market was producing the level of output depicted as Qd in panel (d), it would a. be minimizing its losses. b. be operating at excess capacity. c. be losing market share to other firms in the market. d. not be maximizing its profit.

d. not be maximizing its profit.

Total revenue equals a. price/quantity. b. marginal revenue - marginal cost. c. output - input. d. price x quantity.

d. price x quantity.

A key characteristic of a competitive market is that a. government antitrust laws regulate competition. b. firms have price setting power. c. firms minimize total costs. d. producers sell nearly identical products.

d. producers sell nearly identical products.

Consider a game of the "Jack and Jill" type in which a market is a duopoly and each firm decides to produce either a "high" quantity of output or a "low" quantity of output. If the two firms successfully reach and maintain the cooperative outcome of the game, then a. both the combined profit of the firms and total surplus are maximized. b. neither the combined profit of the firms nor total surplus is maximized. c. the combined profit of the firms is not maximized but total surplus is maximized. d. the combined profit of the firms is maximized but total surplus is not maximized.

d. the combined profit of the firms is maximized but total surplus is not maximized.

For cartels, as the number of firms (members of the cartel) increases, a. the monopoly outcome becomes more likely. b. the easier it becomes to observe members violating their agreements. c. the more concerned each seller is about its own impact on the market price. d. the magnitude of the price effect decreases.

d. the magnitude of the price effect decreases.

In perfect competition as well as in monopolistic competition, a. entry and exit by firms are restricted. b. marginal revenue is equal to price for each firm. c. profit is positive in a long-run equilibrium for each firm. d. there are many firms in a single market.

d. there are many firms in a single market.

Additional firms often do not try to compete with a natural monopoly because a. they fear retaliation in the form of pricing wars from the natural monopolist. b. the natural monopoly does not make a large profit. c. they are unsure of the size of the market in general. d. they know they cannot achieve the same low costs that the natural monopolist enjoys

d. they know they cannot achieve the same low costs that the natural monopolist enjoys

Profit is defined as a. average revenue minus average total cost. b. net revenue minus depreciation. c. marginal revenue minus marginal cost. d. total revenue minus total cost.

d. total revenue minus total cost.

Refer to Table 13-8. What is the shape of the marginal cost curve for this firm? a. U-shaped b. constant c. downward-sloping d. upward-sloping

d. upward-sloping