Microeconomics

P $13 12 11 10 9 8 Q 10 14 19 25 30 35 TC $15 25 45 75 115 165 Refer to the above table. Given the demand and cost schedules, what is the profit-maximizing price for this monopolist?

$10

In the above figure, at what price does a perfectly competitive firm make zero economic profit?

$12 per unit

A monopoly sells 5 units of output at $20. If the MR of the 6th unit is $14, then the price of the 6th unit is

$19.

A patent provides legal protection for an invention for

20 years.

If the average product of 20 workers is 100 bushels of wheat and the average product of 21 workers of wheat is 99 bushels of wheat, then the marginal product of the 21st worker was

79 bushels of wheat.

The above figure shows a firm in monopolistic competition. At the profit maximizing level of output, excess capacity for the firm is equal to

8 units per day.

Which of the following statements concerning a monopolist is FALSE?

A monopolist will charge the highest price at which any individual will purchase the product.

In the long-run equilibrium for a perfectly competitive market

All of the answers are correct.

Perfect competition implies that

All of the answers down below are correct all firms are price takers. there are many firms in the market. all firms are producing the same identical product.

Some economists note the classic prisoner's dilemma as one of the first examples of strategic game theory. Refer to the above figure. The figure gives the payoff matrix for two individuals who are being accused of robbing a bank together. Which of the following is the outcome of the dominant strategy without cooperation?

Both confess.

Refer to the above figure. Ajax and Greenco are oligopolists. Above you are given the payoff matrix for the two firms giving the payoff associated with different pricing strategies. What is the best strategy for Greenco if Ajax decides on charging a low price?

Low price.

In the above figure, what would happen to the monopolistically competitive industry in the long run?

More producers would enter the market, and the share of the market to this firm would fall, which would cause the demand curve to shift leftward until there is zero economic profit.

advertise heavily in order to differentiate their product.

Yes, competition from overseas firms can substantially limit domestic firms' market power.

An association of producers that fixes common prices and output quotas is known as a

a cartel

Which of the following is most likely to be a monopolistically competitive fi

a fast food restaurant

If the price elasticity of demand for U.S. automobiles is higher in Europe than it is in the United States, and transport costs are zero, a price-discriminating monopolist would charge

a higher price for autos in the United States than in Europe.

A realtor in the real estate market is an example of

a platform in a matchmaking market.

If the producer of an information product engages in marginal cost pricing, it earns

an economic loss.

Managers in oligopoly firms must

anticipate the reaction of rival firms

The existence of economies of scale is one reason oligopolies exist because

as output increases average total cost decreases leading to large-scale firms.

In the long run, a firm in a monopolistically competitive industry has its price equal to its

average total cost.

When the average physical product is falling,

average variable costs are rising.

Suppose the manager of a restaurant notices that when she has too many waiters on the floor for a shift that the waiters get in each other's way and fewer dinners are served. This is an example of

diminishing marginal product.

When a player in a game adopts a strategy which always yields the highest benefit regardless of what the other player does, that player is using a(n)

dominant strategy.

A monopolist is producing at an output level at which ATC = $5, P = $6, MC = $4, and MR = $3. We can conclude that

economic profit could be increased by producing less.

In the above figure, the long-run cost curve between points A and B illustrates

economies of scale.

As firms enter a perfectly competitive market, the price

falls and the existing firms' economic profits decrease.

One difference between perfect competition and monopolistic competition is that

firms in monopolistic competition face a downward-sloping demand curve.

Summing all of the costs that do not change as output varies yields

fixed costs.

As the quantity of labor increases while the amount of other inputs are held constant, marginal product of labor will

initially increase and then decrease.

The planning curve for a firm is the

long-run average cost curve.

A firm will expand the amount of output it produces as long as its

marginal revenue exceeds its marginal cost.

In a perfectly competitive market, which of the following determines the market price?

market demand and a firm's supply

When marginal revenue equals marginal cost, a perfectly competitive firm is

maximizing its profit.

The marginal productivity of labor will eventually decrease as more workers are employed because

on the average each worker will have fewer inputs to work with.

Stephanie listens to punk rock because her friends do. This is

positive market feedback.

In monopolistic competition, a firm has some ability to affect the price for its product because of

product differentiation.

If firms in a monopolistically competitive industry experience short-run losses,

some firms exit the industry, causing the demand curves for the remaining firms to shift to the right until they earn a normal profit.

In the long run, if firms in a perfectly competitive market are incurring economic losses, then

some firms will leave the market and the price will rise.

Economists generally define the short run as being

that period of time in which at least one of the firm's inputs, usually plant size, is fixed.

In a monopolistically competitive market, a firm should advertise to the point at which

the additional revenue generated by one more dollar of advertising just equals the extra dollar cost of advertising.

Marginal revenue is equal to price for a firm in a perfectly competitive market and is defined as

the change in total revenue that results from a one-unit increase in the quantity sold.

The market for lawn services is perfectly competitive. Larry's Lawn Service cannot increase its total revenue by raising its price because ________.

the demand for Larry's services is perfectly elastic

Because consumers value differentiated products or product variety,

the inefficiency due to excesss capacity is offset.

The price elasticity of demand for a monopolist's product depends on

the number and similarity of substitutes.

A monopolist produces in the elastic segment of its demand curve because when it lowers the price,

the percentage change increase in quantity demanded is greater than the percentage change decrease in price and total revenue increases.

All of the following are true regarding oligopoly EXCEPT

there is no competition.

In the above table, diminishing marginal product occurs after employing the Input of Labors 0 1 2 3 4 5 Product 0 30 68 110 140 135

third worker.

A natural monopoly

usually arises when there are large economies of scale.

All of the following are considered a barrier to entry into a market EXCEPT

when firms can only earn a normal rate of return in a market.