Chapter 6-7 (Micro)
Which of the following may characterize a monopoly?
Substantial market power.
The marginal utility for a good is computed as quantity.
The change in total utility divided by the change in quantity.
If demand is price-elastic, then
The elasticity number E is greater than 1.
Refer to Figure 24.3. Which of the following statements is true about the price elasticity of demand at price P3?
The price elasticity is elastic.
Refer to Figure 24.3. Which of the following statements is true about the price elasticity of demand at price P2?
The price elasticity is unitary.
According to the law of demand, ceteris paribus,
The quantity demanded increases at lower prices.
Average total cost is equal to
Total cost divided by quantity produced.
If marginal utility is negative, then
Total utility will decrease with additional consumption.
Refer to Figure 20.2. Suppose the areas 0P1AB and 0P2CD are equal. We can conclude that the price elasticity of demand between point A and point C is
Unitary elastic.
A firm cannot maintain above-normal profits over the long run
Unless barriers to entry exist.
In Table 19.2, diminishing marginal utility occurs
With all units after the first.
Refer to Table 26.1. At the profit-maximizing output and price, Will's Beach Ball Company will earn a profit equal to
$18.
Refer to Figure 19.1. The total consumer surplus in this market is equal to
$900.
Complete Table 19.3 below. Assume the price of cola is $8 per unit and the price of pretzels is $4 per unit. In Table 19.3, what is the marginal utility of the fifth unit of cola?
12.
Suppose there are 51 firms in a market. The largest firm has sales of $50 million and each of the other firms has sales of $1 million. The Herfindahl-Hirshman Index of this industry is
2,550.
In Table 24.1, using the profit maximization rule, a monopolist will produce
3 units.
In Table 19.3 the marginal utility per dollar of the second cola is
4.
Suppose there are only three firms in a market. The largest firm has sales of $500 million, the second-largest has sales of $300 million, and the smallest has sales of $200 million. The market share of the largest firm is
50 percent.
Which of the following statements is not correct?
A monopolist's ability to act as a price setter guarantees economic profits in the short run.
A cartel is
A public agreement between firms or countries to restrict production and raise prices.
Refer to Table 19.1. For Josh, diminishing marginal utility begins
After the first slice of pizza.
Which of the following would most likely have a price elasticity coefficient greater than 1?
Airline travel in the long run.
If income rises by 10 percent and the quantity sold of a particular vehicle falls by 7 percent, then this particular type of vehicle is
An inferior good.
The price charged by a profit-maximizing monopolist occurs
At a price on the demand curve above the intersection where MR = MC.
In the article "Men vs. Women: How They Spend,"
Both sexes spend more than they earn.
When the percentage change in quantity demanded is less than the percentage change in price, ceteris paribus,
Demand is inelastic.
When the size of a factory (and all its associated inputs) doubles and, as a result, output more than doubles,
Economies of scale must exist.
A U-shaped average total cost curve implies
First marginal cost below average total cost, and then marginal cost above average total cost.
Which of the following is a factor of production for the Little Biscuit Bread Company?
Flour.
The marginal revenue curve is below the demand curve
If a firm must lower its price to sell additional output.
If a monopolist is producing a level of output where MR exceeds MC, then it should
Increase its output.
Assume a good has a downward-sloping, linear demand curve. Starting at a price of zero, as the price of the good increases, total revenue
Increases, then decreases.
If a monopolistic competitor is maximizing profit, it is producing at a point where marginal cost
Is less than price.
The demand curve facing an oligopoly firm is kinked because
It is most likely that rivals will match price cuts but not price increases.
Which of the following is true about the kink in the demand curve?
It is the result of different rival responses to price increases and reductions.
If a fifth unit of labor was added to Table 21.1, its MPP would most likely be
Less than 7.
A monopolist will find that its marginal revenue curve
Lies below its demand curve and is steeper than its demand curve.
The cross-price elasticity of demand for the products of monopolistically competitive firms is
Low.
Refer to Table 25.2. Assume there are only four firms in the pool sweeper industry. The U.S. Justice Department would most likely
Not allow any mergers among firms in this industry.
The law of diminishing marginal utility suggests that
People are willing to buy additional quantities of a good only if its price falls.
According to the theory of contestable markets, monopoly may not be a problem if
Potential competition exists.
Refer to Figure 26.1 for a monopolistically competitive firm. The profit-maximizing output and price combination for this firm in the short run is
Q2, P4.
Total revenue is
Quantity sold times price.
Price discrimination occurs when
Sellers charge two separate prices for the same product to two different groups.
In monopoly and perfect competition, a firm should expand production when
Marginal revenue is above marginal cost.
Maximum utility is achieved when
Marginal utility is zero.
All of the following are limitations on the market power of a monopoly except
The ability of a company to control the quantity supplied.
Which of the following is the same for monopoly and competition under the same cost and demand conditions?
The goal of maximizing profits.
Supply is very inelastic when
The quantity supplied changes little when the price increases.