Final Econ
Refer to Figure 15-4. What is the profit-maximizing/loss-minimizing output level? A) 600 units B) 800 units C) 940 units D) 1,160 units
A) 600 units
Refer to Figure 15-2. If the firm's average total cost curve is ATC1, the firm will A) suffer a loss. B) break even. C) make a profit. D) face competition.
C) make a profit
Producing a differentiated product occurs in which of the following industries? A) oligopoly, monopolistic competition and perfect competition B) oligopoly only C) monopolistic competition and oligopoly D) monopolistic competition only
C) monopolistic competition and oligopoly
If the demand curve for a firm is downward-sloping, its marginal revenue curve A) is the same as the demand curve. B) will lie above the demand curve. C) will lie below the demand curve D) is horizontal
C) will lie below the demand curve
Which of the following characteristics is not common to monopolistic competition and perfect competition? A) Entry barriers into the industry are low B) The market demand curve is downward- sloping C)Firms take market prices as given. D)Firms act to maximize profit.
C)Firms take market prices as given.
Refer to Table 16-3. If Julie charges $10 per hour, what is the value of the consumer surplus received by Dawn? A) $2 B) $10 C) $12 D) $22
A) $2
Refer to Figure 15-4. What is the amount of the monopoly's profit? A) $2,700 B) $4,200 C) $10,400 D) $12,600
A) $2,700
Refer to Figure 16-2. Suppose Plato Playhouse price discriminates. Which of the following statements is true? A) By charging two different prices, the theatre company essentially allows those willing to pay higher prices to subsidize those who are not. B) Plato Playhouse will earn higher profits if it charges a single price an average of the two prices instead of charging two different prices to the two different groups of customers. C) By charging two different prices, the theatre company has redistributed some profits from those who can pay higher prices to those who cannot, thereby improving equity. D) By charging two different prices, the theatre company has redistributed some profits from those who can pay higher prices to those who cannot, thereby increasing economic efficiency
A) By charging two different prices, the theatre company essentially allows those willing to pay higher prices to subsidize those who are not.
Which of the following is a characteristic shared by a perfectly competitive firm and a monopoly? A) Each maximizes profits by producing a quantity for which marginal revenue equals marginal cost. B) Each maximizes profits by producing a quantity for which price equals marginal cost. C) Each must lower its price to sell more output. D) Each sets a price for its product that will maximize its revenue.
A) Each maximizes profits by producing a quantity for which marginal revenue equals marginal cost.
Refer to Table 14-3. Which of the following statements is true? A) The Nash equilibrium is a noncooperative, dominant strategy equilibrium. B) There is no Nash equilibrium in this game because each party pursues its dominant strategy. C) The Nash equilibrium is a collusive equilibrium. D) The Nash equilibrium is a cooperative equilibrium.
A) The Nash equilibrium is a noncooperative, dominant strategy equilibrium.
Refer to Figure 16-2. Suppose Plato Playhouse charges a single price of Pd for each performance. Which of the following statements is true? A) The company is selling more than the profit-maximizing quantity in the non-student market and less than the profit-maximizing quantity in the student market. B) The company is selling less than the profit-maximizing quantity in both markets. C) The company is selling less than the profit-maximizing quantity in both markets but it is maximizing its revenue. D) The company is selling less than the profit-maximizing quantity in the non-student market and more than the profit-maximizing quantity in the student market.
A) The company is selling more than the profit-maximizing quantity in the non-student market and less than the profit-maximizing quantity in the student market.
Refer to Table 14-2. Is the current strategy in which each firm charges the high price and earns a profit of $10,000 a Nash equilibrium? If not, why and what is the Nash equilibrium? A) Yes, the current situation is a Nash equilibrium. B) No, it is not a Nash equilibrium because each firm can do better by charging the high price. The Nash equilibrium occurs when each firm charges the high price and earns a profit of $10,000. C) No, the current situation is not a Nash equilibrium. The Nash equilibrium for each firm is to have the other charge a high price and for the firm in question charge a low price. D) No, the current situation is not a Nash equilibrium; it is a dominant strategy equilibrium. There is no Nash equilibrium in this game.
A) Yes, the current situation is a Nash equilibrium.
Refer to Table 14-3. Is there a dominant strategy for Saudi Arabia and, if so, what is it? A) Yes, the dominant strategy is to produce a low output. B) Yes, it has a dominant strategy depending on what Nigeria does. C) No, there is no dominant strategy. D) Yes, the dominant strategy is to produce a high output.
A) Yes, the dominant strategy is to produce a low output.
A monopolist faces A) a downward-sloping demand curve. B) a horizontal demand curve. C) a perfectly inelastic demand curve. D) a perfectly elastic demand curve.
A) a downward-sloping demand curve.
An oligopolistic industry is characterized by all of the following except A) firms pursuing aggressive business strategies, independent of rivals' strategies. B) production of standardized products. C) existence of entry barriers. D) the possibility of reaping long run economic profits.
A) firms pursuing aggressive business strategies, independent of rivals' strategies.
For a monopolistically competitive firm, marginal revenue A) is less than the price. B) is greater than the price. C) and price are unrelated D) equals the price.
A) is less than the price
In the short run, a profit-maximizing firm's decision to produce should be guided by whether A) its total revenue covers its variable cost B)its marginal profit is maximized C)it makes a profit D)its total revenue exceeds its fixed cost
A) its total revenue covers its variable cost
Monopolistically competitive firms have downward-sloping demand curves. In the long run, monopolistically competitive firms earn zero economic profits. These two characteristics imply that in the long run A) monopolistically competitive firms have excess capacity. B) monopolistically competitive firms earn economic profits. C) monopolistically competitive markets achieve allocative efficiency. D) monopolistically competitive markets achieve productive efficiency.
A) monopolistically competitive firms have excess capacity.
Refer to Figure 15-2. If the firm's average total cost curve is ATC3, the firm will A) suffer a loss. B) break even. C) make a profit. D) face competition.
A) suffer a loss.
Which of the following undermines a firm's ability to engage in price discrimination? A) the inability to prevent resale of the product from one market segment to another B) buyers having different elasticities of demand for the product C) the seller's ability to segment the total market D) the seller's market power
A) the inability to prevent resale of the product from one market segment to another
Firms price discriminate A) to increase profits. B) to take advantage of customers. C) to reduce the quantity sold so as to reduce production costs. D) to increase total economic surplus.
A) to increase profits.
Figure: 13.12 If the diagram represents a typical firm in the designer watch market, what is likely to happen in the long run? A)Some firms will exit the market causing the demand to increase for firms remaining in the market B)Firms will have to raise their prices to cover costs of production. C)Inefficient firms will exit the market and new cost efficient firms will enter the market. D)The firms that are making losses will be purchased by their more successful rivals.
A)Some firms will exit the market causing the demand to increase for firms remaining in the market
Every firm that has the ability to affect the price of the good or service it sells will A)have a marginal revenue curve that lies below its demand curve. B)have a perfectly elastic demand curve. C)earn a short-run profit but break even in the long run D) shut down in the short run
A)have a marginal revenue curve that lies below its demand curve
If a firm faces a downward-sloping demand curve? A)it must reduce its price to sell more units. B)it will always make a profit. C)the demand for its product must be inelastic. D)it can control both price and quantity sold.
A)it must reduce its price to sell more units
A monopolistically competitive firm maximizes profit where A)price > marginal cost B)total revenue > marginal cost C)price = marginal revenue D) marginal revenue > average revenue
A)price > marginal cost
For allocative efficiency to hold A)price must equal the marginal cost of the last unit produced. B)price must equal marginal revenue of the last unit sold. C)average variable cost is minimized in production. D)average total cost is minimized in production.
A)price must equal the marginal cost of the last unit produced.
Assuming that the total market size remains constant, a monopolistically competitive firm earning profits in the short run will find the demand for its product decreasing in the long run because A)some of its customers have switched to purchasing the products of new entrants in the market B) as the firm raises its price in the long run, it will lose some customers to new entrants in the market C)new entrants into the market are more likely to have cutting edge products. D)its costs of production rises.
A)some of its customers have switched to purchasing the products of new entrants in the market
Refer to Figure 15-4. What is the amount of the monopoly's total cost of production? A) $21,600 B) $17,700 C) $9,340 D) $7,800
B) $17,700
Refer to Figure 15-4. What is the amount of the monopoly's total revenue? A) $21,600 B) $20,400 C) $19,740 D) $7,800
B) $20,400
Refer to Table 16-3. Suppose Julie's marginal cost of providing this service is constant at $7 and she charges $7. How many hours will be purchased and what is her total revenue? A) 5 hours; total revenue = $35 B) 4 hours; total revenue = $28 C) 3 hours; total revenue = $21 D) 2 hours; total revenue = $14
B) 4 hours; total revenue = $28
Figure 13.18 Which of the following statements is true? A) Da represents the long-run demand curve facing a monopolistic competitor in a constant cost industry while Db depicts the demand curve in the short run B) Da represents the long-run demand curve facing a perfect competitor while Db depicts the long run demand curve facing a monopolistic competitor C)Da represents the long run supply curve in a perfect competitive, constant-cost industry, while Db depicts the long run demand curve facing a monopolistic competitor in decreasing-cost industry D) Da represents the long-run demand curve facing a monopolistic competitor in a constant cost industry while Db depicts the long-run demand curve in an increasing -cost industry
B) Da represents the long-run demand curve facing a perfect competitor while Db depicts the long run demand curve facing a monopolistic competitor
Which of the following is true for a monopolistically competitive firm in long-run equilibrium? A) P=ATC and P=MC B) P=ATC and MR=MC C) P>ATC and P>MR D)P>MR and MC=ATC
B) P=ATC and MR=MC
Only one of the following statements is correct. The statements compare perfectly competitive (PC) markets and monopolistically competitive (MC) markets. Which statement is correct? A) Allocative efficiency is achieved in both PC and MC markets. Productive efficiency is achieved only in PC markets. B) Productive efficiency and allocative efficiency are both achieved in PC markets. Neither is achieved in MC markets. C) Allocative efficiency is achieved only in PC markets. Productive efficiency is achieved only in MC markets. D) Productive efficiency is achieved in both PC and MC markets. Allocative efficiency is achieved only in MC markets.
B) Productive efficiency and allocative efficiency are both achieved in PC markets. Neither is achieved in MC markets.
Refer to Figure 15-2. To maximize profit, the firm will produce A) Q1. B) Q2. C) Q3. D) Q4.
B) Q2
Which of the following is a necessary condition for successful price discrimination? A) Buyers must have identical inelastic demands. B) The seller must possess market power. C) Transaction costs must be zero. D) The buyer must possess market power.
B) The seller must possess market power
Refer to Table 14-3. Is there a dominant strategy for Nigeria and, if so, what is it? A) No, there is no dominant strategy. B) Yes, the dominant strategy is to produce a high output. C) Yes, it has a dominant strategy depending on what Saudi Arabia does. D) Yes, the dominant strategy is to produce a low output.
B) Yes, the dominant strategy is to produce a high output.
Compared to a monopolistic competitor, a monopolist faces A) a more elastic demand curve at higher prices and a more inelastic demand curve at lower prices. B) a more inelastic demand curve. C) a demand curve that has a price elasticity coefficient of zero. D) a more elastic demand curve.
B) a more inelastic demand curve.
Refer to Figure 15-2. If the firm's average total cost curve is ATC2, the firm will A) suffer a loss. B) break even. C) make a profit. D) face competition.
B) break even.
Which of the following are necessary condition(s) for successful price discrimination? a. zero transaction cost b. a perfectly competitive market structure c. an imperfectly competitive market structure d. at least two different markets with different price elasticities of demand e. at least two different markets with different price elasticities of supply A) a, b, and d only B) c and d only C) a, c, d and, e only D) a and c only
B) c and d only
Refer to Figure 16-2. What is the price charged in the two markets? A) price in the student market = Pd; price in the non-student market = Pe B) price in the student market = Pc; price in the non-student market = Pe C) price in the student market = price in the non-student market = Pb D) price in the student market = price in the non-student market = Pa
B) price in the student market = Pc; price in the non-student market = Pe
Refer to Figure 16-2. What is the quantity sold to each group of customer and what is the total quantity sold? A) quantity sold to students=Qb; quantity sold to non-students=Qb; total sales=Qa B) quantity sold to students=Qc; quantity sold to non-students=Qe; total sales=Qe+Qc C) quantity sold to students=Qc; quantity sold to non-students=Qd; total sales=Qd+Qc D) quantity sold to students=Qc; quantity sold to non-students=Qb; total sales=Qb+Qc
B) quantity sold to students=Qc; quantity sold to non-students=Qe; total sales=Qe+Qc
Which of the following is true for a firm with a downward-sloping demand curve for its product? A)Price, average revenue, and marginal revenue are all equal. B)Price equals average revenue but is greater than marginal revenue. C)Price equals average revenue but is less than marginal revenue. D)Price, average revenue, and marginal revenue are all different.
B)Price equals average revenue but is greater than marginal revenue
Table 13.4 Victoria's profit-maximizing output is where A)Q=5; P=$5 B)Q=4; P=$6 C) Q=6; P=$4 D) Q=3; P=$7
B)Q=4; P=$6
In the long run, what happens to the demand curve facing a monopolistically competitive firm that is earning short-run profits? A)The demand curve will shift to the right and became more elastic. B)The demand curve will shift to the left and became more elastic. C)The demand curve will shift to the left and became less elastic. D)The demand curve will shift to the right and became less elastic.
B)The demand curve will shift to the left and became more elastic.
Figure 13.14 Which of the following statements describes the firm depicted in the diagram? A) The firm is making no economic profit and will exit the industry B)The firm is in the long-run equilibrium and is breaking even C)The firm achieves productive efficiency by producing at Q0 D)The firm is suffering an economic loss by producing at Q0 but will break even it increases its output to Q1
B)The firm is in the long-run
Which of the following statements is true? A) The marginal revenue of a monopolistically competitive firm will be always be positive B)The marginal revenue of a monopolistically competitive firm will be positive at high price and negative at low prices C)Because the demand curve for a monopolistically competitive firm is downward-sloping its marginal revenue will be negative D)The marginal revenue of a monopolistically competitive firm will be positive at low prices and negative at high prices
B)The marginal revenue of a monopolistically competitive firm will be positive at high price and negative at low prices
You have just opened a new Italian restaurant in your hometown where there are three other Italian restaurants. Your restaurant is doing a brisk business and you attribute your success to your distinctive northern Italian cuisine using locally grown organic produce. What is likely to happen to your business in the long run? A)our competitors are likely to change their menus to make their products more similar to yours B)Your success will invite others to open competing restaurants and ultimately your profits will be driven to zero C)If you continue to maintain consistent quality, you will be able to earn profits indefinite D)If your success continues, you will be likely to establish a franchise and expand your market size
B)Your success will invite others to open competing restaurants and ultimately your profits will be driven to zero
If a typical monopolistically competitive firm is making short-run losses, then A)other more competitive firms will enter the market B)as some firms leave, the remaining firms will experience an increase in the demand for their products C)the industry will eventually cease to exist D)as some firms leave, the demand for the products of the remaining firms will become more elastic
B)as some firms leave, the remaining firms will experience an increase in the demand for their products
For productive efficiency to hold A)average variable cost is minimized in production. B)average total cost is minimized in production. C)price must equal marginal revenue of the last unit sold. D)price must equal the marginal cost of the last unit produced.
B)average total cost is minimized in production.
A monopolistically competitive firm that earns an accounting profit in the short run A)must also earn an economic profit in the short run. B)could earn an economic profit, break even or suffer an economic loss in the short run. C)does not earn enough to earn an economic profit in the short run D)could earn an economic profit or break even, but could not suffer an economic loss in the short run
B)could earn an economic profit, break even or suffer an economic loss in the short run.
Long-run equilibrium under monopolistic competition and perfect competition is similar in that A)price equals marginal revenue. B)firms break even. C)firms produce at the minimum point of their average cost curves. D)price equals marginal cost.
B)firms break even.
If a monopolistically competitive firm breaks even, the firm A)should advertise its product to stimulate demand. B)is earning an accounting profit and will have to pay taxes on that profit. C)is earning zero accounting and zero economic profit. D)should expand production.
B)is earning an accounting profit and will have to pay taxes on that profit.
Tabe 13.4 Victoria's profit-maximizing output is where A)marginal revenue and marginal cost both equal $4. B)marginal revenue and marginal cost both equal $3. C)marginal cost is at its minimum value. D)total profit equals $3.
B)marginal revenue and marginal cost both equal $3.
The entry and exit of firms in a monopolistically competitive market guarantee that A)firms can earn economic profits in the short run. B)price equals average total cost in the long run. C)marginal revenue equals marginal cost and average total cost is minimized. D)firms can earn economic profits in the long run.
B)price equals average total cost in the long run.
A major difference between monopolistic competition and perfect competition is A)the barriers to entry in the two markets. B)that products are not standardized in monopolistic competition unlike in perfect competition. C)the number of sellers in the markets. D)the degree by which the market demand curves slope downwards.
B)that products are not standardized in monopolistic competition unlike in perfect competition
A monopolistically competitive firm earning profits in the short run will find the demand for its product decreasing and becoming more elastic in the long run as new firms move into the industry until A)the firm exists the market B)the firm's demand curve is tangent to its average total cost curve C)the firm's demand curve is perfectly elastic D)the original firm is driven into bankruptcy
B)the firm's demand curve is tangent to its average total cost curve
At Victoria's profit-maximizing output A)profit equals $2. B)total revenue equals $24 and total cost equals $20. C)total revenue equals $21 and total cost equals $17. D)total revenue equals $25 and total cost equals $22.
B)total revenue equals $24 and total cost equals $20.
Refer to Figure 15-2. The firm's profit-maximizing price is A) P1. B) P2. C) P3. D) P4.
C) P3.
Refer to Table 16-3. Suppose Julie's marginal cost of providing this service is constant at $7 and she charges $7. What is the value of the consumer surplus enjoyed by her customers? A) $39 B) $28 C) $11 D) $0
C) $11
Figure 13.7 Which of the following is the area that represents the profit or loss experiences by the firm? A)A loss represented by the rectangle P2 uw P0 B) An accounting profit equal to P1 vw P0 C) A loss represented P2 uv P1 D) A loss represented by the rectangle P1 vw P0
C) A loss represented P2 uv P1
Refer to Figure 15-4. What is likely to happen to this monopoly in the long run? A) It will expand its output to take advantage of economies of scale so as to further increase its profit. B) New firms will enter the market to eliminate its profits. C) As long as there are entry barriers, this firm will continue to enjoy economic profits. D) It will be regulated by the government because of its excess profits.
C) As long as there are entry barriers, this firm will continue to enjoy economic profits.
Refer to Table 16-3. Suppose Julie's marginal cost of providing this service is constant at $7 and she charges $7 per hour. What is her marginal revenue? A) It coincides with the figures in the table; $12 for the first hour, $10 for the second, $9 for the third and $8 for the fourth. B) It is $7 for the first hour and starts declining thereafter. C) It is constant at $7. D) It is $7 for the first hour and starts increasing thereafter.
C) It is constant at $7.
Excess capacity is a characteristic of monopolistically competitive firms. What does excess capacity mean? A) It means that firms hire more than the minimum number of workers needed to produce the profit-maximizing level of output. B) It means that firms produce with inefficient combinations of resources. C) It means that firms do not produce the output level that corresponds to the minimum point on their average total cost curves. D) It means that firms build plants that are not large enough to achieve minimum efficient scale.
C) It means that firms do not produce the output level that corresponds to the minimum point on their average total cost curves.
Refer to Table 14-2. For each firm, is there a better outcome than the current situation in which each firm charges the low price and earns a profit of $10,000? A) Yes, the firms can implicitly collude and agree to charge a higher price. B) Yes, each firm can implicitly agree to increase output and not to deviate from a low price. C) No, there is no incentive for each firm to consider any other strategy. D) No, any other strategy hurts consumers.
C) No, there is no incentive for each firm to consider any other strategy.
Which of the following will not happen as a consequence of a monopolistically competitive firm suffering economic losses in the short run? A)The firm will exit the industry if it continues to suffer economic losses. B)The firm will break even if its stays in business in the long run. C)In the long run the firm will be able to charge a price that is greater than its average total cost. D)The firm's demand curve will shift to the right if it stays in business in the long run.
C)In the long run the firm will be able to charge a price that is
In contrast with perfect competition, excess capacity characterizes monopolistic competition. Excess capacity is due to which of the following? A)Monopolistically competitive markets have low barriers to entry B)Monopolistically competitive firms produce where marginal revenue is equal to marginal cost C)Monopolistically competitive firms face downward-sloping demand curves. In the long run, firms produce where their demand curves are tangent to their long-run average total cost curves D)Monopolistically competitive firms produce at the minimum point on their average total cost curves
C)Monopolistically competitive firms face downward-sloping demand curves. In the long run, firms produce where their demand curves are tangent to their long-run average total cost curves
You are planning to open a new Italian restaurant in your hometown where there are three other Italian restaurants. You plan to distinguish your restaurant your competitors by offering northern Italian cuisine and using locally grown organic produce. What is likely to happen in the restaurant market in your hometown after you open? A)While the demand curves facing your competitors becomes more elastic, your demand curve will be inelastic B)Your competitors are likely to change their menus to make their products more similar to yours C)The demand curve facing each restaurant owner becomes more elastic D)the demand curve facing each restaurant owner shifts to the right
C)The demand curve facing each restaurant owner becomes more elastic
Why do most firms in monopolistic competition typically make zero profit in the long run? A)because firms do not produce at their minimum efficient scale B)because firms produce differentiated products C)because the lack of entry barriers would compete away profits D)because the total market is not large enough to accommodate so many firms
C)because the lack of entry barriers would compete away profits
The demand curve of a monopolistically competitive firm A)is horizontal because the firm must cut its price to sell more. B)is perfectly elastic. C)is downward-sloping because it must cuts its price to sell more D)is downward-sloping because it sells an identical product
C)is downward-sloping because it must cuts its price to sell more
If firms in a monopolistically competitive industry are making profits in the short run A)some firms will ultimately exit the industry. B)barriers to entry will be erected to keep out rivals. C)new firms will enter the market. D)they will resort to advertising wars to help sustain these profits.
C)new firms will enter the market.
A monopolistically competitive firm maximizes profit in the short run by producing where A)price is less than marginal revenue B)price is less than average revenue C)price is greater than marginal cost D)price is less than marginal cost
C)price is greater than marginal cost
If price exceeds average variable cost but is less than average total cost, a firm A)should shut down. B)should further differentiate its product. C)should stay in business for a while longer until its fixed costs expire. D)is making some profit but less than maximum profit.
C)should stay in business for a while longer until its fixed costs expire
If a store like hhgregg has higher costs than a comparable Best Buy store, the only way it can have higher profits is if A)its marginal revenue is lower than Best Buy's. B)it sells the quantity associated with its minimum average total cost. C)the demand for its goods is higher than Best Buy's. D)it has more locations than Best Buy.
C)the demand for its goods is higher than Best Buy's.
Refer to Table 16-3. Suppose Julie's marginal cost of providing this service is constant at $7 and she decides to charge each customer according to his or her willingness to pay. What is the value of consumer surplus by her customers? A) $39 B) $28 C) $11 D) $0
D) $0
Refer to Figure 15-4. What is the price charged for the profit-maximizing output level? A) $13 B) $21 C) $27 D) $34
D) $34
Refer to Table 16-3. If Julie charges $10 per hour, how many hours of pet sitting services will be purchased and by whom? 73) A) 3 hours (1 hour each by Arun, Bernice and Cara) B) 1 hour by Cara only C) 1 hour by Dawn only D) 2 hours (1 hour by Cara and 1 hour by Dawn)
D) 2 hours (1 hour by Cara and 1 hour by Dawn)
Refer to Table 16-3. Suppose Julie's marginal cost of providing this service is constant at $7 and she decides to charge each customer according to his or her willingness to pay. What is Julie's total revenue and how many hours of service will be purchased? A) 5 hours and her total revenue =$35 B) 1 hour and her total revenue =$7 C) 4 hours and her total revenue = $28 D) 4 hours and her total revenue = $39
D) 4 hours and her total revenue = $39
Refer to Table 14-3. What is the Nash equilibrium in this game? A) In the Nash equilibrium both Saudi Arabia and Nigeria produce a high output and earn a profit of $60 million and $20 million respectively. B) In the Nash equilibrium both Saudi Arabia and Nigeria produce a low output and earn a profit of $100 million and $20 million respectively. C) There is no Nash equilibrium. D) In the Nash equilibrium Saudi Arabia produces a low output and earns a profit of $80 million and Nigeria produces a high output and $30 million respectively.
D) In the Nash equilibrium Saudi Arabia produces a low output and earns a profit of $80 million and Nigeria produces a high output and $30 million respectively.
Refer to Table 16-3. Suppose Julie's marginal cost of providing this service is constant at $7 and she charges each customer according to his or her willingness to pay instead of a uniform price of $7. Which of the following statements is true? A) Julie's customers are better off because their consumer surplus has increased. B) Julie's has converted the producer surplus (from a uniform price) into consumer surplus. C) Julie is worse off because the demand for her services is reduced. D) Julie has converted the consumer surplus (from a uniform price) into economic profit.
D) Julie has converted the consumer surplus (from a uniform price) into economic profit.
Figure 13.14 It is possible to lower the average cost of production by expanding output beyond Q0 to Q1. Why wouldn't a firm expand its output to Q1? A) The firm wants to maximize accounting profit rather than economic profit B)The firm's marginal revenue would be negative at Q1 C)Demand is not sufficient for consumers to buy Q1 D) The firm would suffer an economic loss at Q1 while it will break even at Q0
D) The firm would suffer an economic loss at Q1 while it will break even at Q0
Price discrimination is possible in which of the following market structures? a. perfect competition b. monopoly c. oligopoly d. monopolistic competition A) a, b, c, and d B) c and d only C) b and c only D) b, c, and d only
D) b, c, and d only
A monopoly differs from monopolistic competition in that A) a monopoly faces a perfectly inelastic demand curve while a monopolistic competitor faces an elastic demand curve. B) a monopoly can never make a loss but a firm in monopolistic competition can. C) a monopoly has market power while a firm in monopolistic competition does not have any market power. D) in a monopoly there are significant entry barriers but there are low barriers to entry in a monopolistically competitive market structure.
D) in a monopoly there are significant entry barriers but there are low barriers to entry in a monopolistically competitive market structure.
A characteristic found only in oligopolies is A) products that are slightly different. B) independence of firms. C) break even level of profits. D) interdependence of firms.
D) interdependence of firms.
Unlike a perfectly competitive firm, for a monopolistically competitive firm A)marginal revenue= marginal cost at the profit-maximizing output B)price ≠ marginal cost for all output levels C) price ≠ average revenue for all outputs levels D) price ≠ marginal revenue for all output levels
D) price ≠ marginal revenue for all output levels
If firms in a monopolistically competitive market are earning economic profits, which of the following scenarios best reflect the change a representative firm experiences as the market adjusts to its long-run equilibrium? A)Demand increases and becomes less elastic. B)Demand decreases and becomes less elastic. C)Demand increases and becomes more elastic. D)Demand decreases and becomes more elastic.
D)Demand decreases and becomes more elastic.
Is a monopolistically competitive firm productively efficient? A)Yes, because price equals average total cost. B)Yes, because it produces where marginal cost equals marginal revenue. C)No, because price is greater than marginal cost. D)No, because it does not produce at minimum average total cost.
D)No, because it does not produce at minimum average total cost.
Figure 13.7 Which of the following statements describes the best course of action for the firm depicted in the diagram? A)The firm should minimize its losses by producing Qy units and charging a price of P2 B)The firm should exist the industry because its price is less than its average total cost C)The firm should minimize its losses by producing Qy units and charging a price of P0 D)The firm should minimize its losses by producing Qy units and charging a price of P1
D)The firm should minimize its losses by producing Qy units and charging a price of P1
Table 13.4 Based on the data in the table, which of the following statements is true? A)Vistoria should advertise more in order to increase the demand for plastic vials B)Victoria could be either a monopolistically competitive or a perfectly competitive firm C)Victoria should shut down temporarily D)The table summarizes Victoria's short-run rather than long-run market for plastic vials
D)The table summarizes Victoria's short-run rather than long-run market for plastic vials
Which of the following statements is true about monopolistically competitive firms? A)Unlike perfectly competitive firms, monopolistically competitive face perfectly inelastic demands curves B)Like perfectly competitive firms, monopolistically competitive firms are not able to raise prices without losing all of their customers because they face competition from firms selling similar products C)Like perfectly competitive firms, monopolistically competitive firms maximize their profits by settling price equals to marginal cost D)Unlike perfectly competitive firms, monopolistically competitive firms are able to raise their prices without losing all their customers
D)Unlike perfectly competitive firms, monopolistically competitive firms are able to raise their prices without losing all their customers
A monopolistically competitive firm that is earning profits will, in the long run, experience all of the following except A)new rivals entering the market. B)demand for the firm's product becomes more elastic. C)a decrease in demand for its product. D)a decrease in the number of rival products.
D)a decrease in the number of rival products.
A monopolistically competitive firm will A)produce an output level that is productively and allocatively efficient. B)always produce at the minimum efficient scale of production. C)charge the same price as its competitors do. D)have some control over its price because its product is differentiated.
D)have some control over its price because its product is differentiated
Figure 13.18 The diagram demonstrates that A)in the long run, the monopolistic competitor produces the minimum-cost output level Qa but in the shirt run its output of Qb is not cost minimizing B)in the short run, the monopolistic competitor produces an output Qb but in the long run after it adjusts its capacity, it will produce the allocatively efficient output Qa C)it is possible for a monopolistic competitor to produce the productively efficient output level, Qa if it is willing to lower its price from Pb to Pa D)t is not possible for a monopolistic competitor to produce the productively efficient output level, Qa because of products differentiation
D)t is not possible for a monopolistic competitor to produce the productively efficient output level, Qa because of products differentiation
