Final

In a purely competitive industry, each firm:

can easily enter or exit the industry.

Which is a barrier to entry?

Patents

Which is a characteristic of monopolistic competition?

Relatively easy entry

The cornerstone of antitrust legislation is the:

Sherman Act.

Which of the following is not one of the causes of the unequal distribution of income in the United States?

The dispersion of market power

Which assumption is part of the model of monopolistic competition?

There is no collusion among firms.

Monopolistically competitive firms have a:

downward-sloping demand curve.

Other things being equal, the demand for a factor of production will be less elastic if the demand for the final product it produces is:

inelastic.

A Lorenz curve showing perfect equality in the distribution of income:

is a straight line with a 45-degree angle.

Compared to the purely competitive firm, a pure monopoly:

is able to use barriers to entry and maintain positive economic profits in the long run.

A nondiscriminating monopolist will find that marginal revenue:

is less than average revenue or price.

A single buyer is called a(n):

monopsonist.

One feature of pure monopoly is that the demand curve:

slopes downward.

Average revenue is:

total revenue divided by the quantity of output.

Why is the demand for labor referred to as a "derived" demand?

It is based on the demand for the output labor produces

Many people believe that monopolies charge any price they want to without affecting sales. Instead, the output level for a profit-maximizing monopoly is determined by:

Marginal cost = Marginal revenue.

Which will not directly be a determinant of the price elasticity of demand for labor?

The price of labor

The characteristic most closely associated with oligopoly is:

a few large producers.

Exclusive unionism has the economic effect of:

decreasing the supply of labor.

One of the major causes of income inequality is the difference in:

education.

When the distribution of income is adjusted for noncash transfers, the income distribution shows:

greater equality.

In the short run, a monopolist's profits:

may be positive, negative, or zero.

A government payment in the form of goods and services rather than money is a(n):

noncash transfer.

In pure competition, the marginal revenue of a firm always equals:

product price

The difference between the 45-degree line and the Lorenz curve shows the:

degree of income inequality.

In pure competition, price is determined where the industry:

demand and supply curves intersect.

A purely competitive firm does not try to sell more of its product by lowering its price below the market price because:

it can sell all it wants to at the market price.

A positive effect of advertising for society is that it:

provides useful information to reduce search cost for consumers.

Taxes and transfer payments:

reduce the degree of income inequality.

A technological improvement that causes an increase in the marginal product of a resource will:

increase the demand for the resource.

The demand curve faced by a monopolistically competitive firm:

is more elastic than the monopolist's demand curve.

A firm should always continue to operate at a loss in the short run if:

it can cover its variable costs and some of its fixed costs.

Other things being equal, the elasticity of demand for labor will be greater the:

larger the number of close substitute resources available.

The marginal revenue product of labor in a competitive market decreases as a firm increases the quantity of labor used because of the:

law of diminishing returns.

A progressive income tax would cause the after-tax Lorenz curve, compared with the before-tax Lorenz curve, to be

less bowed to the southeast.

When compared with the purely competitive industry with identical costs of production, a monopolist will produce:

less output and charge a higher price.

When the supply curve of labor is upward sloping, the marginal cost curve of labor facing the monopsonist:

lies above the supply curve of labor.

The greater the degree of inequality in the size distribution of income, the more bowed will be the Lorenz curve toward the:

lower right-hand corner.

Compared to a purely competitive firm, a monopsonist will pay:

lower wage rates and hire fewer workers than the purely competitive firm.

A characteristic of a purely competitive labor market would be:

many firms competing in hiring workers.

In the short run the individual competitive firm's supply curve is the segment of the:

marginal cost curve lying above the average variable cost curve.

In pure competition, the average revenue of a firm always equals:

marginal revenue

A firm should increase the quantity of output as long as its:

marginal revenue is greater than its marginal cost.

A unique feature of oligopolies, when compared with other industry types, is:

mutual interdependence.

If monopolistically competitive firms in an industry are making an economic profit, then:

new firms will enter the industry and product demand will decrease for the existing firms.

Price discrimination is:

only illegal if used to lessen or eliminate competition.

One major barrier to entry under pure monopoly arises from:

ownership of essential resources.

If a firm is a price taker, then the demand curve for the firm's product is:

perfectly elastic.

At the profit-maximizing level of output, a monopolist will always operate where:

price is greater than marginal cost.

Economic theory predicts a monopolist will discontinue production in the short run if:

price is less than average variable cost.

Monopolistic competition is characterized by firms:

producing differentiated products.

Demand and marginal revenue curves are downward sloping for monopolistically competitive firms because:

product differentiation allows each firm some degree of monopoly power.

As the area between the Lorenz curve and diagonal gets larger, the Gini ratio:

rises to reflect greater inequality.

The kinked demand model of noncollusive oligopoly assumes that:

rivals will ignore price increases and match price cuts.

The demand for labor will most likely increase when the price of a:

substitute input decreases, provided the output effect is greater than the substitution effect.

Suppose capital is readily substitutable for labor and that the price of capital falls. We can conclude that the:

substitution effect will tend to reduce the demand for labor.

One difference between monopolistic competition and pure competition is that:

there is some control over price in monopolistic competition.

Marginal revenue product is the increase in:

total revenue from the use of an additional unit of a resource.

In pure competition, a profit-maximizing firm will equate the marginal revenue product of labor with the:

wage rate.

A firm's demand curve for labor:

will shift to the left if the price of the output the labor is producing should fall.

Under pure monopoly, a profit-maximizing firm will produce:

In the elastic range of its demand curve

When a purely competitive industry is in long-run equilibrium, which statement is true?

Price and average total cost are equal.

Which characteristic would best be associated with pure competition?

Price taker

Which is a feature of a purely competitive market?

Products are standardized or homogeneous.

Which statement is correct?

Pure monopolists do not always realize economic profits.

If oligopolistic firms facing similar cost and demand conditions successfully collude, price and output results in this industry will be most accurately predicted by which of the following models?

Pure monopoly model

Which is true of price discrimination?

Successful price discrimination will provide the firm with more profit than if it did not discriminate.

A major characteristic of monopolistic competition is:

a relatively large number of firms selling the product.

The wages and salaries that people earn differ partly because of differences in:

ability.

Monopolists are said to be allocatively inefficient because:

at the profit-maximizing output, the marginal benefit to society from increasing output is greater than the marginal cost to society.

Which would be a significant cause of income inequality in the United States?

Discrimination

Complete income equality using the Gini ratio would be reflected by a value of:

0.

Which of the following Gini ratios would indicate the least amount of income inequality?

0.20

Complete income inequality using the Gini ratio would be reflected by a value of:

1.

Which would decrease a firm's demand for a particular resource?

A decrease in the productivity of the resource

Which cannot be a characteristic of an oligopolistic industry?

A perfectly elastic firm demand curve

In long-run equilibrium, a profit-maximizing firm in a monopolistically competitive industry produces the quantity of output where:

AC = P, MR = MC < P.

Which would be considered part of wealth?

Corporate stock holdings

Successful price discrimination requires that:

buyers with inelastic demand be charged higher prices than buyers with elastic demand.

When firms in an industry reach an agreement to fix prices, divide up market share, or otherwise restrict competition, they are using the strategy of:

collusion.

Mutual interdependence means that each firm in an oligopolistic industry:

considers the reactions of its rivals when it determines its price policy.

Critics of the minimum wage contend that imposing a wage higher than the equilibrium wage in a competitive industry would:

decrease the number of workers employed in that industry.

The Lorenz curve is a graph that shows the:

degree of income inequality.

The economic incentive for price discrimination depends on:

differences among buyers' demand elasticities.

A cause of the unequal distribution of income in the United States is:

differences in preferences and risks.

The elasticity of demand for labor varies:

directly with labor's share of the total cost of the product.

The Gini ratio is determined by:

dividing the area between the Lorenz curve and the diagonal by the total area below the diagonal.

Price is constant or "given" to the individual firm selling in a purely competitive market because:

each seller supplies a negligible fraction of total supply.

In the short run, the monopolistically competitive firm will experience:

economic profits or losses, but in the long run only a normal profit.

As the area between the Lorenz curve and diagonal gets smaller, the Gini ratio:

falls to reflect greater equality.

In an oligopolistic market there are:

few sellers.

If a purely competitive firm is in short-run equilibrium and its marginal cost exceeds its average total cost, we can conclude that:

firms will enter the industry in the long run.

If firms are losing money in a purely competitive industry, then in the long run this situation will shift the industry:

supply curve to the left, and the market price will increase.

If the price of a good increases, then in the market for labor that is used to make this product:

the marginal revenue product (MRP) of labor will increase.

One defining characteristic of pure monopoly is that:

the monopolist produces a product with no close substitutes.