Microeconomics Unit 3 Exam

The difference between the total amount that people would have been willing to pay for the total quantity produced and consumed in a market and what they actually pay at the market clearing price is called:

consumer surplus

Typically a mix of informational and persuasive advertising is used for:

credence goods

All of the following are characteristics of a perfectly competitive market except:

high barriers to entry and exit.

A monopolist charges a price that is _______________ and produces ______________ than a perfect competitor,

higher ; less

Which of the following is NOT a feature of a monopolistic competitor?

homogeneous product

Perfect competition is a market structure:

in which individual buyers and sellers have no effect on the market price.

The monopolist should never produce in the:

inelastic segment of its demand curve because further lowering of the price reduces total revenue

The type of product sold by a monopolistically competitive business:

is differentiated

A perfectly competitive firm is selling 300 units of output at $4 each. At this level of output total fixed cost is $100 and total variable cost is $500. The firm:

is earning a profit, but not necessarily the maximum profit.

The demand curve facing the perfectly competitive firm is:

is perfectly elastic.

Marginal revenue:

is the change in total revenues resulting in a change in output.

In a monopoly market structure, the firm (the monopolist) always:

is the whole industry.

For a perfectly competitive firm facing the short-run break even price:

it has an economic profit of zero.

The goal of advertising is to:

reduce the price elasticity of demand for the firm's product

In a monopolistically competitive market entry into the industry is:

relatively easy

Assume that a monopoly is producing at profit maximizing output level. If the firm's total fixed costs decrease, the firm:

should continue to produce at the same level.

The demand curve faced by the monopolist

slopes downward

Which of the following is NOT a cause for an oligopoly to exist?

structural dependence

The perfectly competitive demand curve has:

a slope of 0.

An increasing cost industry will have:

an upward sloping supply curve in the long run.

Economies of scale:

are commonplace and often a barrier to entry in oligopolistic market structures

Under what conditions are profits maximized?

at the rate of output at which marginal revenue equals marginal cost

In the long run a monopolistically competitive firm will produce to the point at which

average total costs are higher than the minimum possible ATC

If the monopolist is producing at an output rate at which P=ATC:

It's economic profit will be zero

An association of producers such as OPEC that agrees to set common pricing or output goals is referred to as:

a cartel.

The portion of consumer surplus that would have existed in a perfectly competitive market but is unobtainable by anyone in society under a monopoly is known as:

a deadweight loss

A decreasing cost industry will have:

a downward sloping supply curve in the long run.

The joining of firms that are producing or selling a similar product is

a horizontal merger

Monopolistic competition means:

a large number of firms producing differentiated products

A firm that faces a downward sloping demand curve is :

a price searcher

Which of the following is most likely to be the subject of informational advertising?

a search good

In the long run, all firms in a perfectly competitive industry:

break even.

Marginal revenue is:

change in total revenue / change in output.

All of the following are characteristics of an oligopoly EXCEPT:

diseconomies of scale over all ranges of output

The demand curve for a perfectly competitive industry is:

downward-sloping.

The motive that drives firms to enter or exit and industry is:

economic profit.

Legal or governmental restrictions that give monopolistic advantages to a firm include all of the following EXCEPT:

economies of scale

In the long run the economic profits of a monopolistically competitive firm:

equal zero

When a perfectly competitive firm experiences zero economic profits:

firms have no incentive to enter or exit the industry.

The perfectly competitive firm's total revenue curve is:

linear and upward sloping, has a constant slope, and has a positive slope.

All of the following are barriers to entry in an industry EXCEPT:

low marginal tax rates

A situation in which the price charged is equal to society's opportunity cost is known as:

marginal cost pricing.

A firm that is the only seller of a good with no close substitutions is a(n):

monopolist

A market situation in which a large number of firms produce similar but not identical products is:

monopolistically competitive

A monopolistic competitor would face a demand curve with a:

negative slope

Strategic dependence is found in:

oligopolistic market structures

A market structure characterized by a small number of interdependent sellers is called a(n):

oligopoly

Selling a product at different prices when the price difference is unrelated to costs is a practice known as:

price discrimination

For a monopolistically competitive firm

price is greater than marginal revenue for all levels of production

A firm that can determine the price-output combination in order to maximize profits is known as a:

price searcher.

A firm in a perfectly competitive industry is a:

price taker.

Price discrimination exists when:

prices a firm charges different buyers differs but costs do not

The rate of production that maximizes the positive difference between total revenues and total costs is the:

profit-maximizing rate of production.

A firm will practice price discrimination when it believe that by doing so it will be able to increase total:

profits

The higher the concentration ratio is in an industry, the more likely it is that:

the industry has an oligopoly

Which of the following is closest to a perfectly competitive market?

the market for broccoli

An example of direct marketing is:

the use of personalized advertising by using mailing lists.

Public goods are not produced perfectly competitive markets because:

these markets would be inefficient.

The goal of the perfectly competitive firm is:

to maximize total profits.