eco exam 5

In the long run, which of the following is true for a monopolistic competitive firm?

Price equals average total cost but is greater than marginal cost.

Consider the following numbers at which a monopolist is producing, where MR = MC:Quantity = 20; Price = $9; Average Total Cost = $6. What is the total revenue and profit?

$180; $60

The Fish Shack is the only seafood restaurant in a remote village. It charges $15 for a bowl of fish soup and sells 10 bowls of it a day. In order to increase sales to 11 bowls a day, it must reduce the price to $14. What is the marginal revenue of the eleventh bowl?

$4

the market price of pomegranates is $2, and JoAnne sells 25 pomegranates at the local farmer's market. The total revenue is _____ and the marginal revenue is _____.

$50.00; $2.00

(Table) Suppose a monopolist faces the demand relationship shown in the table. If the marginal cost is $6, then the profit-maximizing output is:

2 units

In the graph showing the revenue and cost curves for a monopolist, what is the profit maximizing output and price?

20; 10

Which statement is NOT true about a Nash equilibrium?

A Nash equilibrium gives each player the highest possible payoff in the game.

The difference between a natural monopoly and a monopoly is that:

A legal monopoly is usually granted by governments. A natural monopoly occurs when a single firm can fill the demand for a good more efficiently than if there were multiple firms in an industry.

GM and Ford are simultaneously deciding whether to invest in a new electric car. If both invest, the payoffs are GM = 75, Ford = 75. If GM invests and Ford doesn't, the payoffs are GM = 130, Ford = 40. If GM doesn't invest and Ford does, the payoffs are GM = 40, Ford = 130. If neither invest, the payoffs are GM = 100, Ford = 100. What (if any) is the Nash equilibrium to this game

Both GM and Ford invest

The "dilemma" in a Prisoner's Dilemma refers to the fact that:

Both players will be better off cooperating but not cooperating is a dominant strategy

Why are consumers generally exposed to more advertisements for restaurants than vegetables?

Restaurants are able to differentiate themesevle through advertisement

Golf and bargaining games are examples of:

Sequential-move

A monopoly firm exhibits all of the following characteristics EXCEPT:

a marginal revenue curve that equals price at all quantities.

Which of these BEST represents a barrier to entry?

a research patent awarded to an inventor of a product

Which one of these following industries or firms would be an example of natural monopoly?

a residential electricity company

An example of an oligopoly is:

a small number of large mutually dependent firms

Which strategy makes price discrimination more difficult for a firm?

allowing unwanted concert tickets to be sold on StubHub

If the cast members on a major television sit-com threaten to walk off the set if they do not receive a large pay increase, and the television network in response threatens to replace the cast with new members, this situation is most likely to resemble a:

chicken game.

Barriers to entry allow some monopolists to:

convince the government to provide special favors for them.

The word "monopolistic" in the label "monopolistic competition" refers to the fact that:

each firm produces a slightly different version of the product

Which characteristic does NOT describe an oligopoly?

economic profits being zero in the long run

Under monopolistic competition, low barriers to market entry typically causes price to _____ and profits to _____.

decrease; decrease

Given the payoff matrix below, the game _____ a prisoner's dilemma because _____:

does represent; both firms could have a higher payoff if each played another strategy

If the snowboard industry is dominated by four large firms, each with 20% of marketshare, and 2 small firms, each with 10% market share, what is the four-firm concentration ratio and what is the Herfindahl-Hirschman Index (HHI)?

four-firm concentration ratio = 80; HHI = 1,800

If a player chooses not to forgive another player who cheats on an agreement, which trigger strategy is more likely to be used?

grim strategy

Which of these is a characteristic of a natural monopoly?

high economies of scale

In which situation can a Prisoner's Dilemma outcome most likely be avoided?

if the game is repeated over and over under the same conditions

Which of these is NOT a potential benefit provided by monopolies?

increased consumer surplus as a result of a smaller scale of operations

Compared with a competitive market, a cartel as a whole will produce:

less output in order to increase prices.

Which of these is NOT part of the basic setup of a game?

mistakes

If the owner of a concert hall wishes to use third-degree price discrimination to price its tickets at $20, $15, and $10, it should price tickets lower for customers who are:

more elastic in their demand for tickets.

Compared to a competitive industry, a monopolist is likely to achieve _____ producer surplus while generating _____ deadweight loss.

more; more

A form of regulation that controls a firm's prices and profits based on its costs and capital investments is called:

price caps

Suppose that a monopoly in the market for an COVID-19 drug turns competitive after an other company discovers another cure. What is likely to happen to prices and quantity in this market?

prices would fall, but quantity would rise

The taxi industry in many cities has lobbied politicians to increase driver requirements for ride-sharing companies such as Uber in order for them to operate legally. The money spent by the taxi industry for this purpose is:

rent-seeking.

When a firm uses price discrimination successfully, the result is that producer surplus_____ while deadweight loss _____ compared to a single-price monopoly.

rises; falls because output increases with price discrimination

When a theme park sells a 1-day adult pass for $110 and a 2-day adult pass for $180, and a 1-day child pass for $90 and a 2-day child pass for $150, the theme park is engaging in

second- and third-degree price discrimination.

Consumers often seek bargains by purchasing goods in large quantities; for example, buying in bulk at Costco or buying larger boxes of cereal so the price per ounce is lower.These purchasing strategies result in which form of price discrimination?

second-degree price discrimination