Micro ch 15-18 (test questions)
A single-price monopoly can sell 10 units of its product at a price of $45 each but to sell 11 units, the monopoly must cut the price to $44. What is the marginal revenue of the extra unit sold?
$34
In the short run, a perfectly competitive firm can experience which of the following?
An economic profit An economic loss but it continues to stay open An economic loss equal to its total fixed cost when it shuts down
If a firm shuts down, it
incurs an economic loss equal to its total fixed cost.
In a perfect competition, marginal revenue
is equal to the market price.
Each firm in a perfectly competitive industry
produces a good that is identical to that of the other firms
Consider a perfectly competitive market experiencing good times. In the short run, the equilibrium price will ______ and firms will earn an ______
Increase; economic profit as the new price exceeds average total cost
Which of the following is only in oligopoly
One firm's actions affect another firm's profit
Which of the following is always a violation of the antitrust laws?
Price fixing
Product discrimination allows a firm to compete with another firm on the basis of
Quality, price and marketing
If firms in monopolistic competition are earning economic profits, eventually
new firms enter the industry
When economies of scale exist so that one firm can meet the entire market demand at a lower average total cost than 2 or more firms,
A natural monopoly develops
A firm in monopolistic competition ______ influence its price and _____ influence the market average price
Can; cannot
New balance is a firm in monopolistic competition. If new balance is making an economic profit from their new cross-training shoe, over time the demand for these shoes
Decrease as new firms enter the market
Game theory is the tool that economists use to analyze strategic behavior, which is behavior that takes account the _______ behavior of others and the mutual recognition of _______
Expected; interdependence
To max profit, a monopolistic competitive firm produces so that ______ and an oligopoly firm produces so that ________
MR=MC; MR=MC
The focus of antitrust legislation is to
Maintain competition
Which market has the fewest number of firms?
Monopoly
When economies of scale limit the number of firms in an industry to 3, there is a
Natural oligopoly
A natural barrier to entry is defined as a barrier that arises because of
Technology that allows one firm to meet the entire market demand at lower average total cost than could 2 or more firms
Consider a perfectly competitive market that was in a long-run equilibrium when a permanent increase in demand occurs. Which of the following will occur as a result?
The existing firms will start to earn an economic profit New firms will be motivated to enter the market
In 2016, a federal judge prohibited Staples and Office Depot from merging because
The resulting HHI would have been too high
With perfect price discrimination, a monopoly can extract the ________ price each customer is willing to pay and thereby obtain the entire ________ surplus.
maximum; consumer
In contrast to competitive firms, single-price monopolies
can make an economic profit indefinitely.
A group of firms acting together to limit output, raise price, and increase economic profit is a called a
cartel
What does monopolistic competition have in common with monopoly?
downward sloping demand curve
when a city licenses only 3 taxi firms to serve the market the city has created a
legal oligopoly
The marginal revenue curve facing a monopolistically competitive firm
lies below its demand curve
For a duopoly, the maximum total profit is reached when the duopoly produces
the same amount of output as the monopoly outcome.
price discrimination is possible, in part, because
the willingness to pay can vary among groups of buyers