MicroEcon Final USF

Herfindahl-Hirschman Index

(A^2+B^2+C^2....)

All of these conditions are required for successful price discrimination EXCEPT that sellers must: A)be in an industry with no barriers to entry. B)be able to separate the market into different consumer groups based on their elasticities of demand. C)be able to prevent arbitrage. D)have some market power.

A)be in an industry with no barriers to entry.

In a monopoly, the price of a good/service is always... A)greater than marginal revenue B)equal to marginal revenue C)less than marginal revenue D)less than the average total cost

A)greater than marginal revenue

What is the correct market structures in order from the highest number of sellers to the lowest? A)perfect competition, monopolistic competition, oligopoly, monopoly B)perfect competition, oligopoly, monopolistic competition, monopoly C)oligopoly, perfect competition, monopoly, monopolistic competition D)monopoly, oligopoly, monopolistic competition, perfect competition

A)perfect competition, monopolistic competition, oligopoly, monopoly

Which statement about a monopolist is NOT correct? A)The monopolist faces an upward-sloping industry demand curve. B)A monopolist is protected by barriers to entry. C)A monopolist is the sole supplier of a product, good, or service. D)The monopolist faces a demand curve of the entire market for that good.

A)the monopolist faces an upward-sloping industry demand curve.

For firms in perfect competition, profit maximization will always occur where A)TC = MR. B)MC = P. C)AVC = P. D)TC = P.

B)MC=P

The reason a monopoly imposes a deadweight loss on society is that: A)there is a gain in profitability to firms that would have been in the industry had there been no monopoly. B)consumers are denied output for which they are willing to pay more than the cost of producing it. C)the government is concerned about the negative impact of a monopoly on consumers. D)antitrust litigation is a large expense for government budgets to finance.

B)consumers are denied output for which they are willing to pay more than the cost of producing it.

Firms in all market structures experience some type of control over price, EXCEPT firms whose market structure is A)monopolistic competition. B)perfect competition. C)an oligopoly. D)a monopoly.

B)perfect competition

X-inefficiency results from A)deregulation. B)protection from competitive pressures. C)rent-seeking behavior. D)competitive markets.

B)protection from competitive pressures.

All of these are barriers to entry into an industry EXCEPT A)governmental restrictions. B)relatively high marginal tax rates. C)a patent. D)economies of scale.

B)relatively high marginal tax rates

In the short run: A)firms can never earn economic profits. B)the number of firms can change. C)at least one factor of production is fixed. D)firms can never suffer losses.

C)at least one factor of production is fixed

_____ in an industry can be so large that demand is able to support only one firm. A)Economies of scope B)Elasticity C)Economies of scale D)Diseconomies of scale

C)economies of scale

A price taker is a firm that A)has the ability to control the price it charges. B)takes the maximum price that each and every consumer is willing to pay. C)has no control over the market price. D)takes bribes.

C)has no control over the market price.

Which of these regulatory systems for a natural monopoly results in a normal profit for the firm? A)a price cap set above the firm's ATC B)marginal cost pricing rule C)a price cap set below the firm's ATC D)average cost pricing rule

D)average cost pricing rule

If a firm experiences a decrease in average total cost as its size increases, it is experiencing: A)network effects. B)rent-seeking behavior. C)x-inefficiency. D)economies of scale.

D)economies of scale

Suppose a water utility company charges a residential customer $1.50 per 1,000 gallons for the first 30,000 gallons of water used and $1.00 per 1,000 gallons for any amounts used in excess of 30,000 gallons of water. The water utility is practicing _____ price discrimination. A)first-degree B)perfect C)third-degree D)second-degree

D)second-degree

Which act made monopolization or an attempt to monopolize a felony? A)Federal Trade Commission Act B)Hart-Scott-Rodino Act C)Clayton Act D)Sherman Act

D)sherman act

Charging different groups of people different prices (such as children's prices and seniors' prices versus regular prices) is an example of _____ price discrimination. A)fourth-degree B)first-degree C)second-degree D)third-degree

D)third-degree

Normal profit is equal to A)marginal revenue. B)zero accounting profit. C)marginal cost. D)zero economic profit.

D)zero economic profit

Sherman Act

First federal action against monopolies, it was signed into law by Harrison and was extensively used by Theodore Roosevelt for trust-busting. However, it was initially misused against labor unions

perfect price discrimination

Occurs when a firm charges the maximum amount that buyers are willing to pay for each unit.

fourth degree price discrimination

This occurs when the price consumers pay is the same, but the firm incurs different costs

Perfect Competition

a market structure in which a large number of firms all produce the same product

Economies of Scale

a proportionate saving in costs gained by an increased level of production.

Monopoly

a situation where there is a single seller in the market.

rent-seeking behavior

actions taken by households or firms to preserve economic profits

third degree price discrimination

charging different prices to different demographic market segments

first degree price discrimination

charging each individual customer a different price based on their willingness to pay

Barriers to Entry

factors that can prevent or impede newcomers into a market or industry sector, and so limit competition.

second degree price discrimination

practice of charging different prices per unit for different quantities of the same good or service

Monopolist

the only producer of a good that has no close substitutes

Which statement about the relationship between a firm's demand curve under perfect competition and a monopoly is TRUE? A)Under perfect competition, the demand curve is perfectly elastic; under a monopoly, the demand curve has elastic, unit-elastic, and inelastic portions. B)Under a monopoly, the demand curve is perfectly elastic; under perfect competition, the demand curve has elastic, unit-elastic, and inelastic portions. C)The demand curve for a monopoly is always inelastic, and the demand curve for a firm in perfect competition is always elastic. D)The demand curve for a monopoly is always elastic, and the demand curve for a firm in perfect competition is always inelastic.

A)under perfect competition, the demand curve is perfectly elastic; under a monopoly, the demand curve has elastic, unit-elastic, and inelastic portions.

X-inneficiency

occurs when a firm produces output at a higher cost than is necessary to produce it