ECON Exam 3
Refer to the above graph. In the short run, this monopolistically competitive firm will set price at... (7)
$65 and produce 35 units of output.
Refer to the above graph. The profit-maximizing monopolist in it will set its price at... (6)
0J
Refer to the above table. If the firm shuts down in the short run, the total cost will be... (1)
$2,500
Based on the graph above, what is the difference between the purely competitive equilibrium level of output and the pure monopolist equilibrium level of output? (6)
20
Industry X is dominated by four large firms that hold market shares of 30, 30, 20, and 20. The Herfindahl index for this industry is...
2600.
Refer to the above graph. It represents a profit-maximizing firm producing under conditions of pure competition. When the firm is in equilibrium in the short run, its average variable cost is... (4)
D8
The classic example of private, unregulated monopoly is...
De Beers
Which is a barrier to entry?
Patents
Which market as the least number of firms?
Pure monopoly
Natural monopolies result from...
extensive economies of scale in production
The demand curve faced by a purely competitive firm...
is downward sloping.
Allocative efficiency occurs when the...
marginal cost equals the marginal benefit to society.
One defining characteristic of pure monopoly is that...
the monopolist produce a product with no close substitute.
One difference between monopolistic competition and pure competition is that...
there is some control over price in monopolistic competition.
Refer to the above table. If the product sells for $1,200 a unit, the firm's profit-maximizing output is... (4)
4
Which would be most characteristic of oligopoly?
A few large producers.
Competitive firms are assumed to...
be price takers.
In an oligopolistic market there are...
few sellers.
In the long run an oligopoly...
may earn positive or pure economic profits.
A profit-maximizing monopolist facing the situation shown in the graph above should...
shut down immediately
One feature of pure monopoly is that the demand curve...
slopes downward
Monopolistic competition is characterized by excess capacity because...
firms produce an output level less than the least cost output.
The kinked demand curve is based upon the assumption that an oligopolist's rivals will...
follow a price cut, but ignore a price increase.
For the last unit sold by a perfectly price discrimination monopolist, price will be...
maximized.
The primary lead industry in the United States would be described by an economist as...
oligopoly.
At the profit-maximizing level of output, a monopolist will always operate where...
price is greater than marginal cost.
Which assumption is part of the model of monopolistic competition?
No collusion among firms.
The supply curve for a pure monopolist...
does not exist.
Refer to the above table. What is the change in total revenue if she lowers the price from $20 to $18?
$30
Refer to the above table. The equlibrium price of the product is... (2)
$40
Refer to the above table. The marginal revenue from the third unit of output is... (2)
$40
Refer to the above graph. At the profit-maximizing level of short-run output, this monopolistically competitive firm will be making a profit of... (7)
$525
Refer to the above graph. It shows the cost curve for a competitive firm. If the market price falls to $.55, the optimal output rate is... (4)
0
Refer to the above graph. The level of output at which this firm will shut down is... (3)
0A
Refer to the above graph. The level of output at which this firm is maximizing an economic profit is... (3)
0C
Refer to the above graph. The level of output at which this firm will produce is... (3)
0C
Refer to the above graph. To maximize profits, this firm would produce... (3)
0E units, which will result in economic profits equal to ABGH.
Refer to the above cost chart. If the marginal revenue is $6, what output level will the firm produce? (3)
14
Assume the price for a product sold by a purely competitive firm is $5. Give the data in the accompanying table, at what output is total profit highest in the short run? (1)
40
Refer to the above graph. A successful advertising campaign by a monopolistically competitive firm will cause the demand curve to shift from... (7)
A to B and become less elastic.
Refer to the above graphs. A short-run equilibrium that would produce profits for a monopolistically competitive firm would be represented by graph... (8)
A.
Monopolists are said to be allocatively inefficient because...
At the profit maximizing output, the marginal benefit to society from increasing output is greater than the marginal cost to society.
The individual firm's short-run supply curve is that part of its...
Average variable cost curve.
Refer to the above graph. It represents a profit-maximizing firm producing under conditions of pure competition. When the firm is in equilibrium in the short run, its average fixed cost is... (4)
DE
A firm sells a product in a purely competitive market. The marginal cost of the product at the current output is $5 and the market price is 5$. What should the firm do?
Increase output if the minimum possible average variable cost is $3.75.
Which is true under conditions of pure competition?
No single firm can influence the market price by changing its output.
There is no control over price firms in...
Oligopoly.
Refer to the above graph. It shows the short-run cost curves for purely competitive firm together with a number of different prices. At what price is the shutdown point for the firm? (4)
P1
Given the oligopolistic firm pictured above, what is the profit-maximizing price? (8)
P3
Refer to the above graph showing the short-run revenue curves for a monopolist. What price should be charged in order to maximize total revenue? (5)
P3
Refer to the above graph. It shows the short-run cost curves for a purely competitive firm together with a number of different prices. At what price is the firm making only normal profit? (4)
P3
Refer to the above graph. If the monopoly shown is able to begin practicing perfect price discrimination, what will the profit-maximizing quanitity be? (6)
Q2
Refer to the above graph for a firm in pure competition. Line A represents... (1)
Total revenue.
The long-run supply curve would be perfectly elastic in...
a decreasing g-cost industry.
One feature of pure monopoly is that the monopolist is...
a price maker.
A major characteristic of monopolistic competition is...
a relatively large number of firms selling the product.
A profit-maximizing firm in the short run will expand output...
as long as marginal revennue is greater than marginal cost.
In long-run equilibrium under conditions of pure competition and productive efficiency, all firms produce at minimum...
average total cost.
A potential negative effect of advertising for society is that it can...
be self-cancelling and contribute to economic inefficiency.
A pure monopoly firm will never charge a price in the inelastic range of its demand curve because lowering price to get into this region will...
decrease total revenue, increase total cost, and decrease profit.
In the long run, a representative firm in a monopolistically competitive industry will typically...
earn a normal profit, but not an economic profit.
In a typical graph for a purely competitive firm, where the total cost and total revenue curves intersect, there is a(n)...
normal profit.
Based on the graph above, the firm is earning... (3)
normal profits, since its price just covers ATC.
If an oligopolist's demand curve has a "kink" in it, then...
over some interval, a change in the oligopolist's marginal cost will not cause a change in the oligopolist's profit-maximizing price.
If a firm is a price taker, then the demand curve for the firm's product is...
perfectly elastic.