res econ 202 exam 3- moodle

if the inverse demand function for a monopoly's produce is p=abQ, then the firm's marginal revenue function is

a-2bQ

monopolistic competition and monopoly have all of the following in common EXCEPT...

barriers to entry

Two firms sell 100% orange juice in 10 ounce bottles. The juice is only good for one week. The two firms have contracts for all the oranges produced in a large geographic area. Each firm decides how many bottles of juice to produce at the same time. This market is best described with a

cournot model

the loss associated with the fact that the profit-maximizing quantity consumers value the goods more than it costs to produce them is called

deadweight loss

the monopolist...

does not have a supply curve

perfect competition and monopolistic competition are similar in that firms in both types of market structure will...

earn zero profit in the long run

a typical firm in a cartel will hold what attitude?

if i alone cheat, I'm better off; if everyone cheats, I'm worse off

assuming a homogeneous product, the Bertrand equilibrium price is...

independent of the number of firms

In 2013, the Oakland A's were one of the hottest teams in baseball. They were regularly drawing "sellout" crowds, with many more fans wanting tickets. However, the A's do not sell all of the 56,000 seats. The A's have removed or put tarps over roughly 20,000 seats in most of the third deck and the outfield stands. The A's management says that the reason is to create a more intimate feeling for the fans. What's another explanation?

limit quantity to raise price

regardless of market structure, all firms

maximize profit by setting MR equal to MC

Suppose there is a relatively large number of firms, a high degree of product differentiation, and free entry. What market structure is most likely to form?

monopolistically competitive market

If two quantity-setting firms act simultaneously, is the Stackelberg outcome likely? Why or why not? If two quantity-setting firms act simultaneously, then the Stackelberg outcome is

not likely because neither firm can credibly commit to producing the stackelberg output level

a firm is a natural monopoly if...

one firm can produce the total output of the market at lower costs than two or more firms could

in the short run, a monopolistic competitor...

sets MR=MC

As an economist, you are asked to model an oligopoly market with the following characteristics: firms produce an undifferentiated product, choose quantities, and then let the market determine the price. Further, when making output decisions, there is one firm that the other firms follow. Which oligopoly model would best predict actual behavior in this market?

stackelberg

the bertrand model of price setting assumes that a firm chooses its price....

subject to what price rival firms are charging

the cornet model of oligopoly assumes that...

-firms make their decisions simultaneously. -firms decide what quantity to produce. -firms do not cooperate.