Study Guide Test 3
The graph illustrates an unregulated, profit-maximizing monopolist that cannot price discriminate. This profit-maximizing firm will produce:
800 units of output and charge a price of $9.00 per unit.
The graph illustrates an unregulated, profit-maximizing monopolist that cannot price discriminate. This profit-maximizing firm will earn profit equal to:
$1,200.
Based on the graph below and assuming no externalities, the deadweight loss in this market is approximately equal to:
$1,500.
Which of the following statements is true for a pure, unregulated monopolist that cannot price discriminate in short-run equilibrium?
P > MR, but MR = MC
A monopolistically competitive firm:
all of the above are true
Barriers to entry:
are obstacles that make it impossible or unprofitable for new firms to enter a market in the long run.
From society's perspective:
competition leads to lower prices, higher output, and greater efficiency than monopoly.
Ceteris paribus, an increase in the marginal product of manufacturing workers causes the:
demand for labor to shift to the right
The market for ______ is most likely monopolistically competitive.
dental services
A firm gains monopoly power when barriers to entry can be _____ and _____.
erected; maintained
A firm in a monopolistically competitive market is similar to a monopoly firm in that the firm:
maximizes profit by producing the quantity where marginal revenue equals marginal cost.
A market with many firms, product differentiation, and easy entry in the long run is best classified as:
monopolistically competive
Oligopoly is characterized by all of the following except:
no price-setting ability
A concentration ratio measures the:
percentage of sales going to the largest firms in an industry.
If a monopolist is able to engage in perfect price discrimination:
price is equal to marginal revenue.
To be successful in increasing the price of their product, members of a cartel must:
restrict market output.
Government addresses the inefficiency associated with monopoly by:
restricting market power through antitrust laws and regulation.
The Herfindahl-Hirschman Index is a measure of industry concentration that is calculated by:
summing the squares of the market shares of each firm in the industry.
A natural monopoly can:
supply the entire market at a lower cost than many competing firms.
Game theory helps explain:
the strategic behavior of firms in oligopoly markets
If a monopolistically competitive firm is earning economic profits in the short-run, then:
these profits will be eliminated in the long-run as new firms enter the industry.
The demand for labor:
is derived from the demand for the output that labor helps produce.
A competitive, profit-maximizing firm will choose to hire workers up to the point where the value of the marginal product:
is equal to the wage.
A firm is a pure monopoly when:
it is the only seller of a unique product and barriers to entry prevent other sellers from entering the market in the long run.
The market for _____ is most likely a monopoly.
local utilities
The monopolistically competitive firm represented in the graph is in:
long-run equilibrium since it is earning zero profit.
A monopolist maximizes short-run profit by producing the level of output where:
MR = MC.
Assume perfectly competitive markets with product price equal to $2 and the wage rate equal to $7.50. If the firm follows the profit-maximizing hiring rule, it will pay total variable costs equal to:
$30.
Suppose the demand for a monopolist's output is represented by the data below: A monopolist that must charge each customer the same price will earn total revenue equal to _____ and marginal revenue equal to _____ if the price charged is $9.50.
$47.50; $9.10
Suppose the demand for a monopolist's output is represented by the data below: A monopolist that is able to engage in first degree or perfect price discrimination will earn total revenue equal to _____ and marginal revenue equal to _____ if the quantity sold is 5 units.
$48.50; $9.50
Assume the firm is selling output in a perfectly competitive market, the price of the product is $2, total fixed costs are equal to $5 and the wage rate paid to workers is $7.50. If labor is the only variable input and this firm hires the profit-maximizing number of workers, it will earn profit equal to ________.
$5
The graph illustrates an unregulated, profit-maximizing monopolist that cannot price discriminate. Assuming the firm produces the profit-maximizing level of ouput, it will earn total revenue equal to _____ and pay total costs equal to _____.
$7,200; $6,000
Assume perfectly competitive markets with product price equal to $2 and the wage rate equal to $7.50. Based on the data in the table below, hiring the third worker adds $____ to revenue and $____ to cost.
10; 7.50
Assume perfectly competitive markets with product price equal to $2 and the wage rate equal to $7.50. Based on the data in the table below, a profit-maximizing firm would hire ____ workers.
4
Which of the following best represents a derived demand for labor?
The demand for the services of teachers by school districts
A monopolist that earns positive economic profit in the short run will:
earn positive economic profit in the long run if it can maintain barriers to entry, assuming no changes in costs or market demand.
In a competitive labor market, a decrease in the supply of labor, ceteris paribus, will:
increase the market wage rate.
The market for _____ is most likely an oligopoly.
soda
The demand curves of firms in monopolistically competitive markets are relatively elastic compared to market demand due to:
the existence of close substitutes.
If DeBeers has a monopoly in the diamond market, then:
the marginal revenue of selling one more diamond is less than the price of that diamond if DeBeers cannot price discriminate.
