Chapters 17 & 18 Microeconomics

Kevin owns a personal training gymnasium in Orlando. The figure above shows the demand and cost curves for his firm, which competes in a monopolistically competitive market. How much has Kevin marked up his price

$40.00

Kevin owns a personal training gymnasium in Orlando. The figure above shows the demand and cost curves for his firm, which competes in a monopolistically competitive market. In order for Kevin to maximize his profits, what price should he charge his clients

$60.00

Kevin owns a personal training gymnasium in Orlando. The figure above shows the demand and cost curves for his firm, which competes in a monopolistically competitive market. What is Kevin's excess capacity of clients per day (quantity)

2

Kevin owns a personal training gymnasium in Orlando. The figure above shows the demand and cost curves for his firm, which competes in a monopolistically competitive market. In order for Kevin to maximize his profits, how many clients will he train per day

4

Kevin owns a personal training gymnasium in Orlando. The figure above shows the demand and cost curves for his firm, which competes in a monopolistically competitive market. What is Kevin's efficient scale of clients per day (quantity)

6

A cartel is

A group of firms acting together to raise price, decrease output, and increase economic profit

If the Herfindahl-Hirschman Index in the market for single-use cameras equals 10,000, then the single-use camera industry is best characterized as

A monopoly

Oligopoly is a market structure in which

A small number of firms compete

If an industry exceeds the HHI of 2,500, the market structure is probably

An oligopoly

Two firms make most of the consumer alkaline batteries in the country: Duracell and Energizer. The market for batteries is most likely

An oligopoly

For a firm in monopolistic competition, the efficient scale is the amount of output at which ________ is a minimum

Average total cost

In the prisoners' dilemma, each player is ________ regardless of the other players' actions

Better off confessing

A Nash equilibrium is defined as

Each player taking the best possible action given the action of the other player

Advertising costs and other selling costs are

Fixed costs

In monopolistic competition, firms can make zero economic profit

In the long run but not in the short run

Because economic profits are eliminated in the long run in monopolistic competition, to earn an economic profit firms continuously

Innovate and develop new products

The possible alternatives for an oligopoly range from the monopoly outcome with ________ to the perfectly competitive outcome with ________

Low output; high output

A market is considered competitive if the Herfindahl-Hirschman Index (HHI) is ________ and its four-firm concentration ratio is ________

Low; low

One characteristic of monopolistic competition is that it has

Many firms producing a slightly differentiated product

An oligopoly created because of economies of scale is called a

Natural oligopoly

In monopolistic competition there are ________ barriers to entry, so therefore in the long run, economic profit ________

No; equals zero

Antitrust law is the law that regulates ________ and prevents them from becoming

Oligopolies; monopolies

The fact that firms in oligopoly are interdependent means that

One firm's actions influence the profits of the other firms

A table that shows the payoffs for every possible action by each player for every possible action by each other player is called the ________

Payoff matrix

When an oligopoly reduces its price with the intent of driving away its competitors, it is said to be engaging in

Predatory pricing

In monopolistic competition, firms compete on the basis of

Price, quality, and marketing

All games have which features

Rules, strategies, and payoffs

Which of the following is the best example of a differentiated product

Running shoes

Which antitrust law has two main provisions, one against conspiring with others to restrict competition and the other making it a felony to monopolize or attempt to monopolize

Sherman Act

A firm's markup is

The difference between price and marginal cost

Economists use game theory to analyze strategic behavior, which takes into account

The expected behavior of others and the recognition of mutual interdependence

The four-firm concentration ratio is the percentage of ________ accounted for by the four largest firms in an industry

Total revenue