ECON HW#3

Refer to the diagram for a monopolistically competitive firm in short-run equilibrium. This firm's profit-maximizing price will be:

$16

Answer the question on the basis of the demand schedule shown below: Refer to the data. The marginal revenue obtained from selling the third unit of output is:

$3

Which of the following statements best illustrates the concept of derived demand?

A decline in the demand for shoes will cause the demand for leather to decline.

In the short run, a profit-maximizing monopolistically competitive firm sets it price:

above marginal cost.

In the United States, professional football players earn much higher incomes than professional soccer players. This occurs because:

consumers have a greater demand for football games than for soccer games.

The four-firm sales concentration ratio for an industry measures the:

extent to which the four largest firms dominate the production of a good.

When a firm is on the inelastic segment of its demand curve, it can:

increase profits by increasing price.

Cartels are difficult to maintain in the long run because:

individual members may find it profitable to cheat on agreements.

Assume a pencil manufacturer is employing resources C and D in such quantities that the MRPs of the last units hired are $80 and $50 respectively. The price of resource C is $90 and the price of D is $35. This firm:

should hire less of C and more of D.

Answer the question on the basis of the data contained in the following table. Assume that the firm is hiring labor in a purely competitive market. The given data reveal that:

the firm is selling its product in an imperfectly competitive market.

If the number of firms in a monopolistically competitive industry increases and the degree of product differentiation diminishes:

the industry would more closely approximate pure competition.

Suppose the demand for strawberries rises sharply, resulting in an increased price for strawberries. As it relates to strawberry pickers, we could expect the:

MRP curve to shift to the right.

Marginal revenue product measures the:

amount by which the extra production of one more worker increases a firm's total revenue.

A pure monopolist is producing an output such that ATC = $4, P = $5, MC = $2, and MR = $3. This firm is realizing:

an economic profit that could be increased by producing more output

The MR = MC rule:

applies both to pure monopoly and pure competition.

The labor demand curve of an imperfectly competitive seller is downsloping:

because of both diminishing returns and the necessity to lower price to sell more output.

Refer to the diagram for a pure monopolist. Monopoly price will be:

c

The monopolistically competitive firm shown in the figure:

cannot operate profitably in the short run.

Oligopolistic firms engage in collusion to:

earn greater profits.

Assuming no change in product demand, a pure monopolist:

must lower price to increase sales.