ECON EXAM #3 (From HW)
______ is an attempt by a firm to drive out its competitors so that the firm can operate as a monopoly.
Attempt to monopolize
With perfect price discrimination, a monopoly can charge the _____________ price each consumer is willing to pay and thereby obtain the entire ______________ surplus.
Maximum; Consumer
______ is setting a low price to drive competitors out of business with the intention of setting a monopoly price when the competition has gone
Predatory Pricing
______ is making an agreement with competitors to set a specified price and not to vary it.
Price Fixing
Which of the following is ALWAYS illegal?
Price fixing
A cartel is
an agreement among firms to limit output, raise prices, and increase economic output
Competition among online music retailers _______ economic profit.
decreases
A Nash equilibrium in the duopoly game occurs when
each player takes the best possible action regardless of the strategy chosen by other firms
For an oligopoly, barriers to entry are often caused by
economies of scale
A monopoly sets its price such that demand for the good produced is ______.
elastic
In an oligopoly,
firms are interdependent
An industry is considered monopolistic competition if the four-firm concentration ratio
is less than 40%
One characteristic of monopolistic competition is that it has
many firms producing a slightly differentiated product.
Average variable cost is at a minimum when _______.
marginal cost equals average variable cost
A single-price monopoly maximizes profit by producing the quantity at which ______.
marginal revenue equals marginal cost and setting the price equal to the most people are willing to pay for that quantity
Producers of vitamins operate in
monopolistic competition
The firms that sell shampoo operate in
monopolistic competition
Firms in which of the following industries can earn an economic profit in the long run?
monopoly
The only restaurant in a small town is an example of
monopoly
Firms that sell dog food operate in
oligopoly
Game theory is used to analyze the interactions among firms in ____.
oligopoly
A cartel is most likely to occur in
oligopoly as firms act together to raise prices and increase profits.
The market in which the firms that sell orange juice operate is
perfect competition
Monopolistic competition differs from ______.
perfect competition because the goods or services produced are differentiated.
Setting a price so low that competitors are driven out of a market and then boosting the price is called
predatory pricing
A firm in monopolistic competition maximizes its profit by ______.
producing the quantity at which marginal cost equals marginal revenue and charging the highest price at which it can sell that quantity
To maintain their economic profits, firms in monopolistic competition must continually engage in
product development and marketing
One of the major benefits of monopolistic competition is
product differentation
Brand names change the behavior of producers by _______.
providing an incentive to achieve a consistent quality standard
Brand names help consumers by _______.
providing consumers with information about the quality of a product
If a firm in monopolistic competition quits engaging in product development then its costs
shift the ATC curve downward
If a firm in monopolistic competition quits engaging in product development then its demand curve
slowly shifts to the left.
If the price of oil remains low for some years and ethanol producers are incurring an economic loss, then in the long run ______.
some producers will exit the market, supply will decrease, and the price will rise
A monopoly ______.
that produces a good that cannot be resold might choose to price discriminate
A firm's cost of production equals ______.
the costs of all resources used by the firm whether bought in the marketplace or owned by the firm
Economists use game theory to analyze strategic behavior, which takes into account
the expected behavior of others and the recognition of mutual interdependence.
It would be inefficient to make brand names illegal if ________.
the marginal benefit from brand names equals the marginal cost of brand names.
If firms in an oligopolistic industry successfully collude and form a cartel, what price and output will result?
the monopoly price and output
The primary reason why monopolistically competitive firms cannot earn an economic profit in the long run is because
there is freedom of entry in this market structure
If firms in oligopoly form a cartel, it will likely break down because ________________.
with price exceeding marginal cost, a firm might expand production to increase its profit
The rising price of grain ______ the average total cost and ______ the marginal cost of producing breakfast cereals.
increases; increases
