Micro econ final

An externality

the impact of one person's actions on the well-being of a bystander is called

Generally fails to maximize total economic well-being

A monopoly market

Marginal revenue equals marginal cost

At the profit-maximizing level of output

a one-unit increase in output will increase the firm's profit.

If a competitive firm is currently producing a level of output at which marginal revenue exceeds marginal cost, then

It's average total cost is less than $10

If a competitive firm is selling 900 units of its product at a price of $10 per unit and earning a positive profit,then

Emit a higher level of smoke than is socially efficient

If an aluminum manufacturer does not bear the entire cost of the smoke it emits, it will

Mary pays Cathy $16 so that Mary can smoke.

Mary and Cathy are roommates. Mary assigns a $30 value to smoking cigarettes. Cathy values smoke-free air at $15. Which of the following scenarios is a successful example of the Coase theorem?

In the absence of transaction costs, private parties can solve the problem of externalities on their own.

The coase theorem states that

Barriers to entry

The fundamental source of monopoly power is

A market that fails to allocate resources efficiently

The term market failure refers to

Constrained by demand

When a firm operates under conditions of monopoly, it's price

Price of its output increases

When a monopolist reduces the quantity of output it produces and sells, the

Average total cost declines over large regions of output.

Which of the following is a characteristic of a natural monopoly?

One buyer

Which of the following is not a characteristic of a monopoly?

Subsides

Which of the following policies is the government most inclined to use when faced with positive externality?

A local cable TV provider

Which of the following would be most likely to have monopoly power?

A corrective tax

a tax designed to induce private decision makers to take account of the social costs that arise from a negative externality