Microeconomics Final

The table below shows the rate of return and R&D spending for a hypothetical firm.Refer to the above table. Assume the interest-rate cost of funds is 8 percent. What is the optimal amount of R&D expenditures?

$30 million

Answer the next question(s) based on the demand and cost schedules for a monopolistic competitor given in the table belowRefer to the above table. At the profit-maximizing level of output, marginal revenue will be:

$4 and marginal cost will be $4.

The graph depicts a monopolistically competitive firm. Refer to the above graph. At the profit-maximizing level of short-run output, this monopolistically competitive firm will be making a profit of:

$525

The next question(s) are based on the following table showing the expected rate of return, R&D spending, and interest-rate cost-of-funds for a hypothetical firm.Refer to the above data. The optimal amount of R&D would be:

$65 million

The time period for the duration of patents that begins at the time of application is:

20 years

Industry Y is dominated by five large firms that hold market shares of 20, 20, 25, 25, and 10. The Herfindahl index for this industry is:

2150

Refer to the above data. In maximizing its profit, this firm will employ:

3 units of labor

One feature of pure monopoly is that the monopolist is:

A price maker

A major characteristic of monopolistic competition is:

A relatively large number of firms selling the product

A firm will earn economic profits whenever:

Average revenue exceeds average total costs

Refer to the above graphs. The long-run equilibrium for a monopolistically competitive firm is represented by graph:

B

The demand for a productive resource is said to be "derived" because the demand for the factor:

Depends on the demand for the product it is used to make

Mutual interdependence means that:

Each firm must consider the possible reactions of rivals when establishing price policy

Which is a barrier to entry in an industry?

Economies of scale

Under conditions of pure monopoly:

Entry is blocked

The electricians union is a good example of:

Exclusive unionism

A profit-maximizing firm will:

Expand employement if marginal revenue product exceeds marginal resource cost

An example of derived demand is the demand for:

Labor used to produce autos

A profit maximizing firm should hire an input as long the:

Marginal revenue product of the input is at least as much as the cost of hiring the input

Refer to the above graph. The profit-maximizing monopolist in it will set its price at:

Price J

The goal of product differentiation and advertising in monopolistic competition is to make:

Price less of a factor and product differences more of a factor in consumer purchases.

The strength of the demand for a resource depends on the:

Productivity of the resource

An example of monopolistically competitive industry would be

Retail Clothing

Which phrase would be most characteristic of pure monopoly?

Single seller

One feature of pure monopoly is that the demand curve:

Slopes downward

Which terms would be most closely associated with the "new and better goods and services and new and better ways of producing and distributing them"?

Technological Advance

Which is most characteristic of pure monopoly?

The firm produces a good or a service for which there are no close subsitutes

The demand curve confronting a non discriminating pure monopolist is:

The same as the industry's demand curve

The long-run trend of real wages:

has been upward

A Monopsonist:

reduces the number of workers it employs so that it can pay each worker a lower wage rate

The productivity and real wages of workers in the industrially advanced economies have risen historically partly because:

workers have been able to use larger quantities of capital equipment

Refer to the above graphs. A short-run equilibrium that would produce profits for a monopolistically competitive firm would be represented by graph:

A

The characteristic most closely associated with oligopoly is

A few large producers

Refer to the above graphs. A short-run equilibrium that would produce losses for a monopolistically competitive firm would be represented by graph:

D

The demand curve faced by a monopolistically competitive firm is:

Highly elastic

The next question(s) are based on the following table showing the expected rate of return, R&D spending, and interest-rate cost-of-funds for a hypothetical firm.Refer to the above data. In a supply and demand graph, the interest-cost of funds curve would be a(n):

Horizontal line at 7 percent

One major barrier to entry under pure monopoly arises from:

Ownership of essential resources

The data below relates to a pure monopolist and the product it produces. What is the profit-maximizing output and price for this monopolist?

P=$14; Q=4

An exclusive right granted by government for twenty years to an inventor of a product is a:

Patent

An exclusive right to sell any new and useful process, machine, or product for a fixed period of time is a:

Patent

Which is a barrier to entry?

Patents

Answer the question(s) below on the basis of the following demand and cost data for a pure monopolist.Refer to the above table. The monopolist will realize a:

Profit of $6.50

Refer to the above graph. The profit-maximizing monopolist in it will set its output at:

Quantity V

A firm should increase the amount of R&D expenditures to:

The point where the expected return equals the cost of funds

Critics of unions argue that unions diminish efficiency and productivity by:

doing all of these: engaging in featherbedding, precipitating strikes, and causing a misallocation of labor

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

Law of diminishing returns

If the marginal revenue product (MRP) of labor is less than the wage rate:

Less labor should be employed

Which of the following describes the equilibrium condition in a purely competitive labor market?

MRP= Wage Rate

The graph depicts a monopolistically competitive firm. Refer to the above graph. This monopolistically competitive firm is:

Making economic profit in the short run

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

A unique feature of an oligopolistic industry is:

Mutual Interdependence

Occupational licensing:

Often restricts occupational entry and raises the incomes of licensees

It shows the demand schedule facing Nina, a monopolist selling baskets.Refer to the above table. What is the change in total revenue if she raises the price from $10 to $12?

+$120

Answer the next question(s) based on the demand and cost schedules for a monopolistic competitor given in the table below.Refer to the above table. What will be the economic profit or loss for this monopolistic competitor at the profit-maximizing level of output?

+$20

Assume that in a monopolistically competitive industry, firms are earning economic profit. This situation will:

Attract other firms to enter the industry because the barriers to entry are low

The reason that innovation promotes competition is because:

Firms use it to make competitors' products obsolete in the market.

The first discovery of a product or process through the use of imagination, ingenious thinking, and experimentation is:

Invention

The first working prototype of a microcomputer chip would be an example of:

Invention

Technological advance is a three-step process of:

Invention, innovation, and diffusion

Craft Unions:

only organize workers who have a particular skill

Answer the question(s) below on the basis of the following demand and cost data for a pure monopolist.Refer to the above table. Equilibrium price of the monopolist will be:

$2.25

Refer to the above data. At the profit maximizing level of employment, this firm's, total labor cost will be:

$24

It shows the demand schedule facing Nina, a monopolist selling baskets. Refer to the above table. What is the change in total revenue if she lowers the price from $20 to $18?

$30

Refer to the above data. At the profit maximizing level of employment, this firm's, total revenue will be:

$30

The next question(s) are based on the following table showing the expected rate of return, R&D spending, and interest-rate cost-of-funds for a hypothetical firm. Refer the above data. If interest-rate cost-of-funds rose to 11 percent, the optimal amount of R&D spending would be:

$45 million

The graph depicts a monopolistically competitive firm. Refer to the above graph. In the short run, this monopolistically competitive firm will set price at:

$65 and produce 35 units of output

The following table is for a purely competitive market for resources. Refer to the above table. How many more workers will the firm hire when the wage rate is $15 instead of $30?

2 Workers

The following table is for a purely competitive market for resources. Refer to the above table. At a wage rate of $23, the firm will choose to employ:

3 Workers

Answer the next question(s) based on the demand and cost schedules for a monopolistic competitor given in the table below.Refer to the above table. What output will the profit-maximizing monopolistic competitor produce?

5

The following table is for a purely competitive market for resources. Refer to the above table. At a wage rate of $11, the firm will choose to employ:

5 Workers

Marginal resource cost refers to the:

Amount by which a firm's total resource cost increases as the result of hiring one more unit of resource

Entrepreneurs differ from other innovators because they:

Bear personal financial risk

What activity receives the largest amount from business spending on research and development?

Development

The classic example of a private, unregulated monopoly is:

De Beers

In an oligopolistic market there are:

Few Sellers

Increase in the productivity of labor result partly from

Improvements in technology

Marginal Revenue product (MRP) of labor refers to the:

Increase in total revenue resulting from the hire of one more unit of labor

Which industry would be the best example of an oligopoly?

Steel

Which is an example of a privately-owned monopoly?

The De Beers diamond syndicate

What is an example of a technological breakthrough that came out of a government or university laboratory?

The Internet

Marginal resource cost is:

The increase in a firm's total cost caused by hiring one additional unit of an input.