Econ 202 Exam #3 ch. 12-13

advertising, product promotion, and changes in the real or perceived characteristics of a product.

Nonprice competition refers to A. price increases by a firm that are ignored by its rivals. B. advertising, product promotion, and changes in the real or perceived characteristics of a product. C. competition between products of different industries, for example, competition between aluminum and steel in the manufacture of automobile parts. D. reductions in production costs that are not reflected in price reductions.

$480

Refer to the diagram for a monopolistically competitive firm in short-run equilibrium. This firm will realize an economic Select one: A. profit of $600. B. profit of $280. C. loss of $320. D. profit of $480.

a single firm producing a product for which there are no close substitutes.

Pure monopoly refers to A. a large number of firms producing a differentiated product. B. any market in which the demand curve for the firm is downsloping. C. a single firm producing a product for which there are no close substitutes. D. a standardized product being produced by many firms.

$160

Refer to the diagram for a monopolistically competitive firm in short-run equilibrium. The profit-maximizing output for this firm will be Select one: A. 100. B. 160. C. 210. D. 180.

$16

Refer to the diagram for a monopolistically competitive firm in short-run equilibrium. This firm's profit-maximizing price will be A. $10. B. $19. C. $13. D. $16.

is the industry demand curve.

The nondiscriminating pure monopolist's demand curve A. is the industry demand curve. B. is identical to its marginal revenue curve. C. shows a direct or positive relationship between price and quantity demanded. D. tends to be inelastic at high prices and elastic at low prices.

1,800

Firm Market Share A 20 B 20 C 20 D 20 E 10 F 10 Refer to the data. The Herfindahl index for the industry is A. 80. B. 1,800. C. 1,600. D. 18,000.

Of barriers of entry

Pure monopolists may obtain economic profits in the long run because A. of barriers to entry. B. marginal revenue is constant as sales increase. C. of advertising. D. of rising average fixed costs.

C

Refer to the diagram for a pure monopolist. Monopoly price will be Select one: A. c. B. b. C. a. D. e.

$.75 or less

Suppose that a pure monopolist can sell 4 units of output at $2 per unit and 5 units at $1.75 per unit. The monopolist will produce and sell the fifth unit if its marginal cost is A. $2 or less. B. $1.75 or less. C. $.75 or less. D. $1 or less.

Increase by C-A

if price is reduced from P1 to P2, total revenue will:

pure competition, monopolistic competition, oligopoly, pure monopoly

In which of these continuums of degrees of competition (highest to lowest) is monopolistic competition properly placed? A. pure competition, monopolistic competition, oligopoly, pure monopoly B. oligopoly, pure competition, monopolistic competition, pure monopoly C. monopolistic competition, pure competition, pure monopoly, oligopoly D. pure competition, oligopoly, pure monopoly, monopolistic competition

5

Answer the question on the basis of the accompanying table, which shows the demand schedule facing a non discriminating monopolist p Qd $10 1 7 2 5 3 3 4 1 5

may realize either profits or losses in the short run but realize normal profits in the long run.

Monopolistically competitive firms A. may realize either profits or losses in the short run but realize normal profits in the long run. B. incur persistent losses in both the short run and long run. C. persistently realize economic profits in both the short run and long run. D. realize normal profits in the short run but losses in the long run.

the selling of a given product to different customers at different prices that do not reflect cost differences.

Price discrimination refers to A. the difference between the prices a purely competitive seller and a purely monopolistic seller would charge. B. any price above that which is equal to a minimum average total cost. C. selling a given product for different prices at two different points in time. D. the selling of a given product to different customers at different prices that do not reflect cost differences.

larger the number of competitors

The monopolistically competitive seller's demand curve will become more elastic the A. larger the number of competitors. B. smaller the number of competitors. C. more significant the barriers to entering the industry. D. greater the degree of product differentiation.

directly with the number of competitors but inversely with the degree of product differentiation.

The price elasticity of a monopolistically competitive firm's demand curve varies A. inversely with the number of competitors and the degree of product differentiation. B. directly with the number of competitors and the degree of product differentiation. C. directly with the number of competitors but inversely with the degree of product differentiation. D. inversely with the number of competitors but directly with the degree of product differentiation.

price of the seventh unit is $11.

A pure monopolist is selling six units at a price of $12. If the marginal revenue of the seventh unit is $5, then the A. price of the seventh unit is $11. B. price of the seventh unit is $10. C. firm's demand curve is perfectly elastic. D. price of the seventh unit is greater than $12.

inelastic segment of its demand curve, because it can increase total revenue and reduce total cost by increasing price.

A pure monopolist should never produce in the A. elastic segment of its demand curve, because it can increase total revenue and reduce total cost by lowering price. B. inelastic segment of its demand curve, because it can always increase total revenue by more than it increases total cost by reducing price. C. segment of its demand curve, where the price elasticity coefficient is greater than one. D. inelastic segment of its demand curve, because it can increase total revenue and reduce total cost by increasing price.

3

Based on the accompanying table, how many units would the given profit-maximizing nondiscriminating pure monopolist produce? Output. Total Cost. ProductPrice 0. $250. $500 1. 260. 300 2. 290 150 3 350 200 4 480 150 5 700 100

the firm would not be maximizing profits.

If a monopolist were to produce in the inelastic segment of its demand curve, A. it would necessarily incur a loss. B. total revenue would be at a maximum. C. marginal revenue would be positive. D. the firm would not be maximizing profits

it will be in the interest of the firm, but not necessarily of society, to reduce output.

If a pure monopolist is producing more output than the MR = MC output, A. it will be in the interest of the firm, but not necessarily of society, to reduce output. B. it will be in the interest of the firm and society to increase output. C. the firm may, or may not, be maximizing profits. D. it will be in the interest of the firm and society to reduce output.

pure monopoly

In which one of the following market models is X-inefficiency most likely to be the greatest? A. pure monopoly B. oligopoly C. monopolistic competition D. pure competition

more difficult than under pure competition but not nearly as difficult as under pure monopoly.

Under monopolistic competition, entry to the industry is A. completely free of barriers. B. more difficult than under pure monopoly. C. more difficult than under pure competition but not nearly as difficult as under pure monopoly. D. blocked.

A purely competitive firm is a "price taker," while a monopolist is a "price maker."

Which of the following is correct? A. Both purely competitive and monopolistic firms are "price takers." B. A purely competitive firm is a "price taker," while a monopolist is a "price maker." C. Both purely competitive and monopolistic firms are "price makers." D. A purely competitive firm is a "price maker," while a monopolist is a "price taker."