Microeconomics test 3
All of the following can be sed to compute average profit EXCEPT
Marginal profit - Marginal cost
A firms total profit can be calculated as all of the following EXCEPT
Marginal profit times quantity sold
What is a prisoners dilemma?
A game in which players act in rational, self-interested ways that leave everyone worse off
Which one of the following about a monopoly is FALSE
A monopoly must have some kind of government privilege or government imposed barrier to maintain its monopoly
Which of the following statements are true about advertising by a monopolistically competitive firm?
Advertising could make the monopolistic competitors demand more inelastic, but advertising has no effect on a perfect competitors demand
The Clayton Act prohibited
Any merger if its effect was to substantially lessen corruption or create a monopoly
Which of the following is NOT an example of a monopolistically competitive market?
Automobile producers
Microsoft hires marketing and sales specialists to decide what prices it should set for its products, whereas a wealthy corm farmer in Iowa, who sells his output in the world commodity market, does not. Why is this so?
Because Microsoft could potentially lose sales if it sets prices indiscriminately
Why does a monopoly cause a deadweight loss?
Because it does not produce some output for which marginal benefit exceeds marginal cost
The De Beers company, one of the longest lived monopolies, is facing increasing competition. One source of competition comes from people who might resell their previously owned diamonds. Why is De Beers worried that people might resell their previously owned diamonds?
Because previously owned diamonds would be a close substitute to newly mined diamonds and therefore reduce De Beers market power
A market comprised of only two firms is called a
Duopoly
A local electricity-generating company has a monopoly that is protected by an entry barrier that takes the form of
Economies of scale
An oligopolistic industry is characterized by all of the following except
Firms pursuing aggressive business strategies, independent from rivals strategies
A monopolistically competitive firm will
Have some control over its price because its product is differentiated
Perfect competition is characterized by all of the following except
Heavy advertising by individual sellers
All of the following are characteristics of game theory EXCEPT
Independence between players
A firm hat has the ability to control to some degree the price of a product it sells
Is a price maker
If total revenue exceeds fixed costs, a firm
May or may not produce in the short run, depending on whether total revenue covers variable costs
If, in a perfectly competitive industry, the market price facing a firm is above the average total cost at the output where MR=MC then
New firms are attracted to the industry
Firms do NOT have market power in which of the following market structures?
Perfect competition only
Which of the following is true for a firm with a downward sloping demand curve for its product?
Price = Average revenue but its greater than marginal revenue
All of the following are examples of oligopolistic markets except
Seafood restaurant chains
The key characteristics of a monopolistically competitive market structure include
Sellers selling similar but differentiated products
If price exceeds average variable cost but is less than average total cost, a firm
Should stay in business a little longer until its fixed costs expire
Brand management refers to
The efforts to maintain the differentiation of a product over time
A four-firm concentration ratio measures
The fraction of an industry's sales accounted for by the 4 largest firms
If the long-run average cost curve is U-shaped the optimal scale of production from societies viewpoint is
The minimum efficient scale
What is the incentive for a firm to join a cartel?
To be able to earn larger profits than if it was not part of the cartel
The prisoners dilemma illustrates
Why firms will not cooperate if they behave strategically