Econ Test 3

An agreement among firms over production and price is called

Collusion

Unregulated scalpers creating a nuisance to others in the Grove is which type of market failure?

Externalities

In a competitive labor market,

Firms can always hire another worker at a wage rate

Health insurance markets only attracting unhealthy enrollees is which type of market failure?

Imperfect Information

In order to sell more of its product, a monopolist must

Lower its price

For a Monopolist that sets its own price, its

Marginal revenue is less than the price of the produce

The additional revenue produced when one additional unit of labor is hired is referred to as the ________ of labor.

Marginal revenue product

Firms choose the number of workers that

Maximizes profit

Societies with Free Market Economies should break up Monopolies into smaller firms because

Monopolies produce less than the socially efficient level of production.

One key difference between an oligopoly market and a competitive market is that oligopolistic firms

are strategically interdependent while competitive firms are not.

The fundamental source of monopoly market power arises from

barriers to entry

Oligopoloies would prefer to

collude

Society prefers that oligopolies

compete

A profit-maximizing monopolist will produce the level of output at which

marginal revenue is equal to marginal cost

If a profit-maximizing monopolist faces a downward-sloping market demand curve, its

marginal revenue is less than the price of the product

When an industry is a natural monopoly,

one large firm leads to lower average cost

The Socially Optimal level of production is

(D & MC meet)

To maximize profit, this monopolist will produce at

(MC & MR - Quantity - Q*)

To maximize profit, the monopolist will charge a price of

(MR & MC Quantity hits Demand - Price - P*)

This profit-maximizing monopoly's profit is equal to

(P-ATC)xQ*

In markets characterized by oligopoly,

1. The oligopolies are best off cooperating and behaving like a monopolist 2. The market output is concentrated among a few firms 3. Collective profits are greater when firms collude rather than compete 4. Firms can earn economics profits in the Long-Run

The price for Land is

1. pure economic rent to the suppliers 2. demand determined 3. equal to the marginal revenue product of that land

Which of the following is an assumption made about a competitive labor market?

A firm can always hire another worker at the wage rate

Which of the following is an assumption about a competitive labor market?

A firm can always hire another worker at the wage rate.

Which of the following is NOT a difference in the Long-Run Equilibrium between Monopolistic Competition versus Perfect Competition?

Above a Normal Rate of Return profits in Monopolistic Competition

When firms have agreements among themselves on the quantity to produce and the price at which to sell output, we refer to their forms of organization as a

Cartel

Breaking up Monopolies into smaller firms is

Potentially Efficient

Which of the following could be a reason that Monopolistic Competition could be more efficient than Perfect Competition?

The Product Variety Externality in Monopolistic Competition

A firm is under-employing labor from society's point of view if

The additional revenue from the last worker is greater than their market wage

The Marginal Revenue Product is

The additional revenue generated from the last worker

A market failure occurs when

a free market outcome is economically inefficient

When an industry is a natural monopoly, (small firm -> high cost) (big firm -> low cost)

a large number of small firms leads to a higher average cost

The demand for Land is

determined by the additional revenue that can be generated from that land

Monopolistic competition differs from perfect competition because in monopolistically competitive markets,

each of the sellers offers a somewhat different product.

The Nash Equilibrium is

for both firms to charge a low price

A deadweight loss in a market

is the dollar value of potential benefits not achieved due to inefficiency in that market

Which of these is not an example of a market failure?

profit maximization

A Prisoner's Dilemma in any game where

the best collective action for the group is not achieved due to someone's personal incentives

A firm's labor demand curve is

the downward-sloping portion of its marginal revenue product of labor curve

A government-created monopoly arises when

the government gives a firm the exclusive right to sell some good or service

In order to maximize its profit, a firm that demands labor in a perfectly competitive market will hire additional units of labor as long as ...

the marginal revenue product of labor is greater than the wage rate

In markets characterized by oligopoly

the oligopolists are best off cooperating and behaving like a monopolist.

At the output level corresponding to the socially efficient quantity of a good,

the value of the last unit to a consumer equals the opportunity cost of the resources used to produce it

At any quantity at which the demand curve lies above MC

the value of the last unit to some consumer is greater than the cost of producing it