Test 3

if the toy-making firm in the table faces a market price of $36 in the short run, it will maximize its profits by producing ________ toys:

91

the perfectly competitive market structure assumes all of the following except:

a small number of buyers and sellers

the short-run supply curve for the perfectly competitive firm is the portion of the MC curve that lies:

above the AVC curve

and example of x-inefficiency is:

an executive, at corporate expense, hiring a limousine to trade one block whenever it is raining

_______ is the change in total revenue that results from the sale of one added unit of product.

Marginal revenue

market power means the ability to:

have some control over price

a firm that is the only seller of a good with no close substitutes is a

monopolist

which of the following is a characteristic of monopoly firm:

barriers to entry

the key characteristic of monopolistic competition is:

product differentiation

one way to achieve product differentiation is through:

clever labeling, better location, advertising, all

which of the following is an example of mutual interdependence?

coca-cola introduces a new tea and wonders how Pepsi will react

with perfect price discrimination:

consumer surplus is appropriated by the monopolist

second-degree price discrimination occurs when:

consumers are charged one price for the first block of purchases and a different price for the next block of purchases

which will NOT help a monopolistically competitive firm generate brand loyalty:

copy-cat packaging

_______ is behavior where resources are expended to protect a monopoly position.

rent seeking

if the price falls below the minimum of the AVC the firm:

shut down

a firm operates in a perfectly competitive industry. at the current level of output, the marginal cost is $26 and the average cost is $23. if the firm can sell its product for $25:

the firm should decrease its output

the demand curve for a monopolist is:

the industry demand curve

if the short run, the perfectly competitive firm will continue to produce even if it experiences an economic loss if:

the market price exceeds the average variable costs

the success rate of cartels is slim because:

cheating is likely to occur due to profitability

when Doritos spends money for tv commercials, it intend to shift the:

demand curve to the right and make demand less elastic

if everyone drives cars to work, taking the bus would be extremely slow, so you would also drive your car. if everybody rides the bus to work, the roads would be empty so you drive again. driving would be classified as:

dominant strategy

regardless of what Penny does, if Buck can minimize his jail sentence by ratting on Penny, ratting would be considered:

dominant strategy

the demand curve for a perfectly competitive market is:

downward sloping

barriers to entry allow some monopolists to:

earn economic profits in the long run

the reason monopolistic competitive firms have difficulty painting a profit in the long run is that:

ease of entry into the market encourages new firms to enter and force down price

which of the filling products would be the most differentiated:

garments sold to a retail customer

a perfectly competitive firm:

has output that is so small, relative to market supply, that it cannot influence the market price

a monopolist charges a price that is _______ and produces _______ than a perfect competitor.

higher, less

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

monopolistic competition

in which of the following list are market structures ordered from the highest number of sellers to the lowest:

perfect competition, monopolistic competition, oligopoly, monopoly

the demand curve for an individual perfectly competitive firm is:

perfectly elastic

which of the following characteristics does monopolistic completion NOT have in common with the model of perfect competition?

products of individual firms are different

when firms collude, they are looking to operate as a monopoly by:

raising price and reducing output in the market

if a competitive firm can sell steel for $500 a ton, has an average variable cost of $400 a ton, and a marginal cost of $600 a ton, the firm should:

reduce output

all of the following are barriers to entry in an industry except:

relatively low marginal tax rates

an example of a natural monopoly would be which fo the following:

a residential electricity company

the trembling hand trigger game:

allows an opponent to make a mistake before employing the grim trigger game

if a perfectly competitive firm shuts down for a holiday, it must still pay its?

fixed cost

for a perfectly competitive firm, marginal revenue:

is equal to the market price

the demand curve faced by a firm in monopolistic competition is:

less elastic than the demand curve for a competitive firm

in a competitive market, price is always equal to:

marginal revenue

a constantly declining long-run average cost curve is a characteristic of what type of industrial structure?

natural monopoly

a monopoly differs from a perfectly competitive market in that:

no cost substitutes exist fro the monopolist product

Before deciding on a pricing strategy, Widgets consults with its market intelligence team to understand what discount the competitor if offering, the model that best fits this industry is:

oligopoly

charging different groups of people different prices (child, senior, adult prices) is an example of _______ price discrimination.

third degree

market structure analysis allows economist to:

predict the behavior of firms

a perfectly competitive firm is a:

price taker, because it must accept the market equilibrium price

in oligopoly all firms:

take their competitors into account when they make pricing decisions

if Dixie competes in a monopolistically competitive market, and if the firm is earning normal profit then:

P=ATC

if an oligopolist firm believes that its competitors would match a price decrease, but not match a price in crease, its demand curve is:

Kinked, being steeper below the going price

a normal profit exists when:

total revenue equals total costs

a perfectly competitive firm should continue to produce until:

MC=P

if the monopolist charges the same price to each customers, to sell an additional unit of output requires that the price be lowered on each unit sold. for the monopolist this leads to:

MR<P

which of the following is the best example of barrier to entry

a government franchise

if a market has 20 competing firms at 20% of those firms produce 80% of the sales, then the market structure would be described as:

an oligopoly

interdependence is the key characteristic of

an oligopoly

interdependence is the key characteristic of:

an oligopoly

the prisoners dilemma

is an example of how minimizing your losses can lead to an inferior outcome for all players

if a firm produces where marginal revenue exceeds marginal cost, the firm:

is not maximizing its profits

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

monopolistic competition

normal profits for competitive firm occur when:

the price equals ATC

for both the monopolist and the perfectly competitive firm:

the profit-maximizing output occurs where MR=MC

a natural monopoly could possible arise when

there are large economies of scale relative to the industry demand