Econ
Which of the following is not an example of price discrimination?
An ice cream parlor charges a higher price for ice cream than for sherbet.
A meat processing plant produces both steak and ground beef. What effect would rising market prices for steak have on the market for ground beef?
The supply of ground beef will decrease.
The law of demand implies, holding everything else constant, that
as the price of bagels increases, the quantity of bagels demanded will decrease.
Average variable and average total costs get closer together as output increases because ________ as output increases.
average fixed costs decrease
Refer to Figure 12-10. The firm's shut-down point is
b
If, as a person consumes more and more of a good, each additional unit adds less satisfaction than the previous unit consumed, we are seeing the workings of
the law of diminishing marginal utility.
Refer to Figure 10-9. The change in the budget constraint from BC1 to BC2 implies
the price of DVDs has increased and the price of CDs has decreased.
The income elasticity of demand measures
the responsiveness of quantity demanded to changes in income.
If in the market for peaches, the supply curve has shifted to the left
the supply of peaches has decreased.
The producers surplus on a unit sold equals
Price minus marginal cost
Perfect price discrimination is characterized by charging
each customer a price equal to his or her maximum willingness to pay.
Economic costs of production differ from accounting costs in that
economic costs add the opportunity costs of a firm using its own resources while accounting costs do not.
If demand is _____, a higher price yields _____ total revenue.
elastic; lower
Suppose Toor's beer is sold in a monopolistically competitive market. In the long run we expect the price of Toor's beer to:
equal the average cost of production of Toors beer.
Marginal utility is the
extra satisfaction received from consuming one more unit of a product.
Productive efficiency is achieved when
firms produce goods and services at the lowest cost.
If demand is elastic, the absolute value of the price elasticity of demand is
greater than one.
In economics, the term ________ means "additional" or "extra."
marginal
A large number of firms in Richland sell energy drinks. However, each firm faces a downward sloping demand curve. The market for energy drinks in Richland is an example of a(n) ________.
monopolistic competition
In economics, choices must be made because we live in a world of
scarcity.
A business manages to become more efficient. As a result of this improved efficiency, it will
shift its supply curve to the right.
Refer to Figure 12-10. If the price is less than $6, the firm should ______________ in the short run and __________ in the long run.
shut down; exit the market
An oligopolist differs from a perfect competitor in that
there are no entry barriers in perfect competition but there are entry barriers in oligopoly.
If a monopolist's marginal revenue is $35 per unit and its marginal cost is $25, then
to maximize profit the firm should increase output.
Refer to Figure 6.13. If Arthur moves from indifference curve 1 to indifference curve 2, then Arthurʹs
total utility increases.
4) A patent or copyright is a barrier to entry based on A) government action to protect a producer. B) ownership of a key necessary raw material. C) large economies of scale as output increases. D) widespread network externalities.
A) government action to protect a producer.
Table 2-7 Fred Barney Pogo Sticks 24 28 Unicycles 8 14 Table 2-7 shows the output per month of two people, Fred and Barney. They can either devote their time to making pogo sticks or making unicycles. Refer to Table 2-7. Which of the following statements is true?
Barney has a comparative advantage in making unicycles and Fred in making pogo sticks.
Table 2-7 Fred Barney Pogo Sticks 24 28 Unicycles 8 14 Table 2-7 shows the output per month of two people, Fred and Barney. They can either devote their time to making pogo sticks or making unicycles. Refer to Table 2-7. Which of the following statements is true?
Barney has an absolute advantage in making both products.
The prices college students and faculty members pay for Apple computers are lower than the prices Apple charges on its Website and in retail stores. Apple charges lower prices to college students and faculty members because (hint: price discrimination) A) Apple can deduct from its federal taxes some of the costs of the computers it sells to college students and faculty members. B) college students and faculty members typically buy more supplies from Apple (print cartridges, paper, etc.,) than the general public. C) college students and faculty members have a more elastic demand for computers than the general public. D) college students and faculty members have a more inelastic demand for computers than the general public.
C) college students and faculty members have a more elastic demand for computers than the general public.
Figure 4-6 shows the demand and supply curves for the almond market. The government believes that the equilibrium price is too low and tries to help almond growers by setting a price floor at Pf. Refer to Figure 4-6. What is the area that represents the deadweight loss after the imposition of the price floor?
C+D
Economies of scale occur when A) long-run average cost rise as a firm expands its plant size. B) short-run average costs rise as a firm expands its plant size. C) long-run labor costs rise as a firm increases its output. D) long-run average costs fall as a firm increases its output.
D) long-run average costs fall as a firm increases its output.
The key characteristics of a monopolistically competitive market structure include A) high barriers to entry. B) sellers acting to maximize revenue. C) few sellers. D) sellers selling similar but differentiated products.
D) sellers selling similar but differentiated products.
Which of the following statements explains the difference between diminishing returns and diseconomies of scale?
Diminishing returns apply only to the short run; diseconomies of scale apply only in the long run.
Which of the following statements best describes the economic short run?
It is a period during which at least one of the firm's inputs is fixed.
Vincent and Jean are two cooks who work in a village. Each of them can either bake cakes or make pizzas. Every ingredient is readily available to them, and the only scarce resource is the cooks time. Vincent can bake 10 cakes or make five pizzas in an hour. Jean can bake 12 cakes or make a pizzas in an hour please answer the questions Which Cook has the absolute advantage in baking cakes
Jean
Vincent and Jean are two cooks who work in a village. Each of them can either bake cakes or make pizzas. Every ingredient is readily available to them, and the only scarce resource is the cooks time. Vincent can bake 10 cakes or make five pizzas in an hour. Jean can bake 12 cakes or make a pizzas in an hour please answer the questions Which Cook has the absolute advantage in making pizzas
Jean
Letters are used to represent the terms used to answer this question: price (P), quantity of output (Q), total cost (TC) and average total cost (ATC). Which of the following equations is equal to a firm's average profit?
P - ATC
Which of the following is a normative economic statement?
Pharmaceutical manufacturers should not be allowed to patent their products so prescription drugs would be more affordable.
Classify the statement as an example of positive or normative analysis Higher tariffs on imported automobiles would decrease the demand for foreign made cars
Positive
During the Obama ministration, they didn't element of low-cost batteries for electric cars received large amounts of federal funding via subsidizes. Meanwhile, American households gave a higher priority towards minimizing their environment mental impact. Consider the market for zero emissions electric vehicles, where there is an upward sloping supply curve in a downward sloping demand curve In which direction will demand and supply shift? What what happened to equilibrium prices,?
Q1. Both curbs will shift right Q2 The price will change ambiguously
D
Refer to Figure 6.1. Assume Tom's budget constraint is AC. Given his current monthly income he CANNOT purchase the bundle of goods at point
What is a natural monopoly?
a monopoly that results when one firm is able to produce at a lower cost than multiple firms, giving large firms with higher levels of output an advantage over smaller competitors
Compared to a monopolistic competitor, a monopolist faces
a more inelastic demand curve
Rent control is an example of
a price ceiling.
A minimum price, set by the government, that sellers may charge for a good is known as
a price floor.
Fixed costs
do NOT exist in the long run.
In the long run firms in both monopolistically competitive markets and perfectly competitive markets earn zero economic profits, but unlike perfectly competitive firms in the long run, monopolistically competitive firms
do not produce at minimum average total cost.
There are several jewelry manufacturers in Richland. However, the jewelry produced by different manufacturers has different designs and the products are never identical. The jewelry market in Richland is an example of a ________.
monopolistically competitive market
Jon is consuming X and Y so that he is spending his entire income and MUx/Px = 7 and MUy/Py = 4. To maximize utility, he should consume
more X and less Y.
Demand is more elastic when you are shopping in Walmart than when you shop at a small convenience store because:
more competing products means greater elasticity.
When ________ substitutes exist, a monopolist has ________ power to raise price.
more; less
Which of the following describes rules created by governments that allow for exclusivity in sales, use, and production of an invention for a limited period?
patent
The law of demand refers to
the inverse relationship between price and quantity demanded
Figure 11-2 36) Refer to Figure 11-2. The curve labeled "E" is A) the average product curve. B) the output supply curve. C) the total product curve. D) the marginal product curve
the marginal product curve.
D
Refer to Figure 6.16. Jason maximizes utility at point
The machines workers have to work with are considered
physical capital.
Which of the following statements best describes the concept of consumer surplus?
"I was all ready to pay $300 for a new leather jacket that I had seen in Macy's but I ended up paying only $180 for the same jacket."
Refer to Figure 4.3. An example of an effective price floor would be government setting the price of pencils at
$0.50.
The satisfaction a person receives from consuming goods and services is called
utility.
Which of the following is the best example of a perfectly competitive industry?
wheat production
When is allocative efficiency met in a perfectly competitive market?
when price equals marginal cost
If, when you consume another piece of candy, your marginal utility is zero, then
you have maximized your total utility from consuming candy.
Table 8.4 presents the cost schedule for David's Figs. If David produces two figs, David's fixed costs are:
$100
Table 8.4 presents the cost schedule for David's Figs. If David produces one fig, David's total costs are: A) $0. B) $190. C) $80 . D) $90.
$190
Jane has $500 a week to spend on clothing (c) and food (f). The price of clothing is $25 and the price of food is $10. What is the equation for Jane's budget constraint?
$25 × Clothing + $10 × Food = $500
You own and are the only employee of a company that sets odds for sporting events. Last year your total revenue was $60,000. Your costs for rent and supplies were $50,000. To start this business you invested an amount of your own capital that could pay you a $20,000 a year return. During the year your economic costs were
$70,000.
Refer to Figure 8.3. If total fixed costs are $50, then average total cost of producing 10 basketballs is
$8.
Studies have shown that drinking one glass of red wine per day may help prevent heart disease. Assume this is true, and favorable weather has increased the grape harvest of California vineyards. In the market for red wine, these two developments would
) increase demand and increase supply resulting in an increase in the equilibrium quantity and an uncertain effect on the equilibrium price of red wine.
Implicit costs can be defined as
) the non-monetary opportunity cost of using the firm's own resources
44) A market with a large number of sellers A) can only be a monopolistically competitive market. B) might be a perfectly competitive, monopolistically competitive, oligopoly, or monopoly market. C) can only be a perfectly competitive market. D) might be a monopolistically competitive or a perfectly competitive market.
. D) might be a monopolistically competitive or a perfectly competitive market.
Which of the following sellers will achieve their desired results for total revenue? Hey pharmacy raises the price of its storebrand pain medication in order to raise revenue from sales. The store brand medication has mini brand name substitutes Or A florist raises the prices of roses before a Valentine's Day in hopes to raise total revenue. The floors is the only flower shop in town
A florist raises the prices of roses before and on Valentine's Day and hopes to raise total revenue. The florist is the only shop in town
Which of the following firms is likely to have the highest market power?
A monopoly
When monopolists perfectly price discriminate, they A. attempt to capture consumer surplus as profit. b. can eliminate the deadweight loss to society of a monopoly. C. charge different prices to different buyers. D All are correct
All are correct
Figure 4-6 shows the demand and supply curves for the almond market. The government believes that the equilibrium price is too low and tries to help almond growers by setting a price floor at Pf. Refer to Figure 4-6. What is the area that represents producer surplus after the imposition of the price floor?
B + E
Refer to Figure 3-2 representing the orange market. A decrease in the price of the product (orange) would be represented by a movement from
B to A. It would go downward
According to Figure 2.4, a decrease in unemployment may be represented by the movement from
C to D. C is not on the line and D is
Which of the following is not an example of price discrimination? A) A movie theater charges a lower price for a child's ticket than for an adult's ticket. B) Airlines charging Economy and Business Class fares C) An ice cream parlor charges a higher price for ice cream than for sherbet. D) A university rebates part of the cost of tuition in the form of financial aid for needy students.
C) An ice cream parlor charges a higher price for ice cream than for sherbet.
Assume that firms in an oligopoly stopped colluding, in other words they stop joint setting of the price and output to maximize total industry profit. Then, in this market the price charged will ________ and the total output produced will ________. A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease
C) decrease; increase
) In long-run equilibrium, compared to a perfectly competitive market, a monopolistically competitive industry produces a ________ level of output and charges a ________ price. A) higher; higher B) lower; lower C) lower; higher D) higher; lowe
C) lower; higher
When the absolute value of the price elasticity of demand is greater than one, demand is;
Elastic
Free entry and exit means that in the long run, price will;
Equal average cost
According to Figure 2.4, which point cannot be produced with the current state of technology?
F it is not on the line
Which of the following characteristics is not common to monopolistic competition and perfect competition?
Firms take market prices as given
Godrickporter and Star Connections are the only two airport shuttle and limousine rental service companies in the mid-sized town of Godrick Hollow. Each firm must decide on whether to increase its advertising spending to compete for customers. Table 14-1 shows the payoff matrix for this advertising game. Refer to Table 14-1. What is the Nash equilibrium in this game?
Godrickporter increases its advertising budget, but Star Connections does not.
(Figure: Market for Juice) Use the figure to answer the question. You are studying the demand for Minute Maid and Tropicana orange juice. Minute Maid improves the taste of its juice and people start preferring Minute Maid over Tropicana. Which graph depicts the impact of these changes on both Minute Maid and Tropicana?
Graph A shows what happens in the market for Minute Maid, and Graph B shows what happens in the market for Tropicana.
(Figure: Butter and Jam) Some people like to eat jam and butter sandwiches, and for them, these two foods are complementary goods. For these people, which of the graphs illustrates the impact of a fall in the price of butter on the jam market?
Graph D
Refer to Figure 6.16. The highest indifference curve depicted is the one on which point D lies. Why is Jason NOT maximizing his utility at point D?
He cannot afford point D.
Jason, a high-school student, mows lawns for families in his neighborhood. The going rate is $12 for each lawn-mowing service. Jason would like to charge $20 because he believes he has more experience mowing lawns than the many other teenagers who also offer the same service. If the market for lawn mowing services is perfectly competitive, what would happen if Jason raised his price?
If Jason raises his price he would lose all his customers.
) Short Run and Long Run Costs
In the short run, there are both fixed and variable costs. In the long run, there are no fixed costs. Efficient long run costs are sustained when the combination of outputs that a firm produces results in the desired quantity of the goods at the lowest possible cost. Variable costs change with the output.
Identify the statement as either a micro economics issue or a macro economics issue. The Canadian unemployment rate was lower in January 2014 then it was in January 2012.
Macro economics
Identify the statements as either a macro economic issue or a micro economic issue. A person blames inflation for the general increase in prices at the grocery store throughout British Columbia
Macro economics
Consumer Surplus equals:
Marginal benefit minus price
Identify the statements as either a micro economic issue or a macro economic issue. In January 2014, a person made a personal budget
Micro economics
Identify the statement as either a macro economic issue or a micro economic issue A person gets a raise at work
Microeconomics
Godrickporter and Star Connections are the only two airport shuttle and limousine rental service companies in the mid-sized town of Godrick Hollow. Each firm must decide on whether to increase its advertising spending to compete for customers. Table 14-1 shows the payoff matrix for this advertising game. Refer to Table 14-1. Is there a dominant strategy for Star Connections and if so, what is it?
No, its outcome depends on what Godrickporter does.
Classify the statement as an example of positive or normative analysis International trade should be limited because it can cause some workers to lose their job
Normative
Where is consumer spores on the graph
On the top remember to look where the lines me
Figure 15-2 above shows the demand and cost curves facing a monopolist. The firm's profit maximizing output level is _______________ and profit maximizing price is __________________
Q2 ; P3
A
Refer to Figure 6.1. Assume Tom's budget constraint is AC. At which point does Tom consume only hot dogs?
Which of the statements is true of technology?
Technology refers to the processes a firm uses in production
Which of the following is not a characteristic of indifference curves?
The closer to the origin, the greater the utility level.
Which of the following is evidence of a shortage of walnuts?
The quantity demanded of walnuts is greater than the quantity supplied.
Which statement is NOT true regarding the total variable cost curve?
The total variable cost curve is a horizontal line.
Refer to Figure 3-6. The figure above represents the market for canvas tote bags. Assume that the market price is $35. Which of the following statements is true?
There is a surplus that will cause the price to decrease; quantity demanded will then increase and quantity supplied will decrease until the price equals $25.
Which of the following statements is true? A) Total cost = fixed cost + variable cost. B) Total cost = fixed cost + implicit cost. C) Variable cost = wages + salaries + benefits. D) Opportunity cost = explicit cost - implicit cos
Total cost = fixed cost + variable cost.
Which statement best categorizes the relationship between elasticities of demand, price, and total revenue?
When demand is elastic and prices fall, total revenue rises
Godrickporter and Star Connections are the only two airport shuttle and limousine rental service companies in the mid-sized town of Godrick Hollow. Each firm must decide on whether to increase its advertising spending to compete for customers. Table 14-1 shows the payoff matrix for this advertising game. Refer to Table 14-1. Is there a dominant strategy for Godrickporter and if so, what is it?
Yes, Godrickporter should increase its advertising spending.
27) Monopolistically competitive firms have some market power A) by producing differentiated products. B) because of barriers to exit from the industry. C) because of barriers to entry into the industry. D) by virtue of size alone.
a by producing differentiated products.
If there is a technological advance in the production of the Amazon Echo smart speaker, you would expect to see _____ overtime.
a fall in its equilibrium price
What is a prisoner's dilemma?
a game in which players act in rational, self-interested ways that leave everyone worse of
Perfect Competition
a market structure in which a large number of firms all produce the same product
Oligopoly
a market structure in which only a few sellers offer similar or identical products
An example of a factor of production is
a worker hired by Dell.
A characteristic of the long run is
a. all inputs can be varied Short run = there are both fixed and variable inputs
Which of the following would shift the supply curve for MP3 players to the left?
an increase in the price of an input used to produce MP3 players
Sunk costs are costs that
are incurred in the past and cannot be reversed.
If the production possibilities frontier is ________, then opportunity costs are changing as more of one good is produced.
bowed out
Suppose the consumer's income increases while the prices of the goods remain constant. Then the
budget constraint shifts outward parallel to the original budget constraint.
If the cross-price elasticity of demand for computers and software is negative, this means the two goods are
complements.
The difference between the highest price a consumer is willing to pay for a good and the price the consumer actually pays is called
consumer surplus.
Refer to Figure 6.6. Bill's budget constraint was originally AD. If his new budget constraint is EF, then his income
increased and the price of bell peppers decreased.
If a good has a negative income elasticity of demand, this indicates that the good is
inferior.
Suppose the percentage change in newspapers demanded for any price change is infinite. The absolute value of the elasticity of demand for newspapers is _____, and demand is _____.
infinity; perfectly elastic
Absolute advantage can be determined by comparing different producers' __________
input requirements per unit of output.
At the point where total product is maximized, marginal product
is zero, but average product is still positive.
) Long-run cost curves are U-shaped because A) of the law of demand. B) of economies and diseconomies of scale. C) of the law of diminishing returns. D) of the law of supply.
of economies and diseconomies of scale.
Total revenue equals
price per unit times quantity sold.
When you purchase a new pair of jeans you do so in the
product market.
Monopolies, oligopolies, and monopolistic competitive industries all
raise price and quantity over what would occur in perfect competition in order to maximize their profits.
Market power refers to a firmʹs ability to
raise price without losing all sales of its product.
Allocative efficiency is achieved when firms produce goods and services
that consumers value most.
The total amount of producer surplus in a market is equal to
the area above the market supply curve and below the market price.
Monopoly
the exclusive possession or control of the supply or trade in a commodity or service.
If the price floor is set below the equilibrium price,
the floor will be ineffective.
If a firm lowered the price of the product it sells and found that total revenue did not change, then the demand for its product is
unit-elastic
Table 2-7 Fred Barney Pogo Sticks 24 28 Unicycles 8 14 Table 2-7 shows the output per month of two people, Fred and Barney. They can either devote their time to making pogo sticks or making unicycles. Refer to Table 2-7. What is Fred's opportunity cost of making a pogo stick?
1/3 unicycle
Table 2-7 Fred Barney Pogo Sticks 24 28 Unicycles 8 14 Table 2-7 shows the output per month of two people, Fred and Barney. They can either devote their time to making pogo sticks or making unicycles. Refer to Table 2-7. What is Barney's opportunity cost of making a unicycle?
2 pogo sticks
Refer to the information provided in Figure 6.9 below to answer the questions that follow. Refer to Figure 6.9. The marginal utility of the second video game rental is
8
Refer to Figure 12-10. The firm's profit maximizing condition is satisfied at point ________ and the firm produces ______ units when it is maximizing the profits.
; 300
Figure 4-6 shows the demand and supply curves for the almond market. The government believes that the equilibrium price is too low and tries to help almond growers by setting a price floor at Pf. Refer to Figure 4-6. What area represents consumer surplus after the imposition of the price floor?
A
According to the law of demand,
A decrease in price increases quantity demanded
Which of the following firms is likely to have the highest market power? A) A perfectly competitive firm B) A monopoly C) An oligopoly with homogeneous products D) A monopolistic competitor
A monopoly
Jason, a high-school student, mows lawns for families in his neighborhood. The going rate is $12 for each lawn-mowing service. Jason would like to charge $20 because he believes he has more experience mowing lawns than the many other teenagers who also offer the same service. If the market for lawn mowing services is perfectly competitive, what would happen if Jason raised his price? A) If Jason raises his price he would lose all his customers. B) If Jason raises his price, then all others supplying the same service will also raise their prices. C) Initially, his customers might complain but over time they will come to accept the new rate. D) He would lose some but not all his customers.
A) If Jason raises his price he would lose all his customers.
Peet's Coffee and Teas produces some flavorful varieties of Peet's brand coffee. Is Peet's a monopoly? A) No, although Peet's coffee is a unique product, there are many different brands of coffee that are very close substitutes. B) Yes, Peet's is the only supplier of Peet's coffee in a market where there are high barriers to entry. C) No, Peet's is not a monopoly because there are many branches of Peet's. D) Yes, there are no substitutes to Peet's coffee.
A) No, although Peet's coffee is a unique product, there are many different brands of coffee that are very close substitutes.
A firm will make a negative profit when A) P < ATC. B) P > AVC. 11 C) P = ATC. D) P = MC.
A) P < ATC
A group of firms explicitly colluding to make price and output decisions is called A) a cartel. B) an oligopoly. C) a concentrated industry. D) price leadership
A) a cartel.
An oligopoly firm is similar to a monopolistically competitive firm in that A) both firms have market power. B) both firms face the prisoner's dilemma. C) both firms are in industries characterized by an interdependent firm . D) both operate in a market in which there are entry barriers.
A) both firms have market power
Compared to a perfectly competitive firm, the demand curve facing a monopolistically competitive firm is A) less elastic because monopolistically competitive firms produce similar, but not identical, products. B) more elastic because in the long run, the demand curve is tangent to the firm's average total cost curve. C) more elastic because there are many close substitutes for the p D) just as elastic because there are many sellers in both markets
A) less elastic because monopolistically competitive firms produce similar, but not identical, products.
Which of the following is the best example of a perfectly competitive industry? A) wheat production B) airplane production C) steel production D) electricity production
A) wheat production
Refer to the information provided in Figure 4.6 below to answer the questions that follow. Equilibrium in this market occurs at the intersection of curves S and D. In figure 4.6 at equilibrium consumer surplus is area
A+B+C.
What is the difference between an "increase in demand" and an "increase in quantity demanded"?
An "increase in supply" means the supply curve has shifted to the right while an "increase in quantity supplied" refers to a movement along a given supply curve in response to an increase in price.
The demand curve for an individual seller's product in perfect competition is A) downward sloping. B) horizontal. C) vertical. D) the same as market demand.
B) horizontal
A monopoly firm is selling lemonade to tourists on an island is currently maximizing profits by charging a price of $10 per glass. It follows that the marginal cost of lemonade is: A) equal to $10 B) less than $10 C) indeterminate D) greater than $10
B) less than $10
Monopolistic competition differs from perfect competition primarily because in A) monopolistic competition, entry into the industry is blocked . B) monopolistic competition, firms can differentiate their products. C) monopolistic competition, there are relatively few barriers to entry. D) perfect competition, firms can differentiate their products.
B) monopolistic competition, firms can differentiate their products.
The restaurant industry is an example of a(n) ________ industry. A) perfectly competitive B) monopolistically competitive C) oligopolistic D) monopolistic
B) monopolistically competitive
Harry Watson is an engineering student taking an economic elective in his senior year. He has the option after college to work as a petroleum engineer or to design a roller coaster. He is using concepts he learned in his economics course to help him with this decision. He thinks many engineers would prefer to design a roller coaster and Expects a lower salary in this field. With this analysis, he is knowledgeIng the dependency that exist
Between people or business in the same market
When monopolists perfectly price discriminate, they A) can eliminate the deadweight loss to society of a monopoly. B) attempt to capture consumer surplus as profit. C) charge different prices to different buyers. D) All of the above are correct.
D) All of the above are correct.
Why do firms in monopolistic competition typically make zero profit in the long run? A) because firms do not produce at their minimum efficient scale B) because the total market is not large enough to accommodate so many firms C) because firms produce differentiated products D) because the lack of entry barriers would compete away profits
D) because the lack of entry barriers would compete away profits
Suppose Toor's beer is sold in a monopolistically competitive market. In the long run we expect the price of Toor's beer to: A) exceed the average cost of production of Toors beer. B) equal the marginal cost of production for Toors beer. C) equal the minimum possible average cost of producing Toors beer. D) equal the average cost of production of Toors beer.
D) equal the average cost of production of Toors beer.
Long-run equilibrium under monopolistic competition is similar to that under perfect competition in that A) price equals marginal cost. B) price equals marginal revenue. C) firms produce at the minimum point of their average cost curves. D) firms earn normal profits.
D) firms earn normal profits.
A monopoly differs from monopolistic competition in that A) a monopoly can never make a loss but a firm in monopolistic competition can. B) a monopoly faces a perfectly inelastic demand curve while a monopolistic competitor faces an elastic demand curve. C) a monopoly has market power while a firm in monopolistic competition does not have any market power. D) in a monopoly there are significant entry barriers but there are low barriers to entry in a monopolistically competitive market structure.
D) in a monopoly there are significant entry barriers but there are low barriers to entry in a monopolistically competitive market structure.
A characteristic found only in oligopolies is A) independence of firms. B) always break even level of profits. C) product that has no close substitutes. D) interdependence of firm
D) interdependence of firms.
Product differentiation that makes the product better than a rival's product from everyone's perspective A) always increases welfare. B) makes the rival's product obsolete. C) is known as horizontal differentiation. D) is known as vertical differentiation.
D) is known as vertical differentiation.
The marginal product of labor is defined as A) the additional sales revenue that results when one more worker is hired. B) the additional number of workers required to produce one more unit of output. C) the cost of hiring one more worker. D) the additional output that results when one more worker is hired, holding all other resources constant.
D) the additional output that results when one more worker is hired, holding all other resources constant.
Which of the following statements explains the difference between diminishing returns and diseconomies of scale? A) Diminishing returns are the result of changes in explicit costs. Diseconomies of scale are the result of changes in explicit costs and implicit costs. B) Diminishing returns apply only to the short run; diseconomies of scale apply only in the long run. C) Diminishing returns refer to production while diseconomies of scale refer to costs. D) Diminishing returns cause a firm's marginal cost curve to rise; diseconomies of scale cause a firm's marginal cost curve to fall.
Diminishing returns apply only to the short run; diseconomies of scale apply only in the long run.
What is an indifference curve?
It is a curve that shows the combinations of consumption bundles that gives the consumer the same utility.
What is quantity supplied?
It is the amount of an item that a seller is willing to sell at a particular price.
Classify the statement as an example of positive or normative analysis The sugar quota in the United States cost customers 6.08 billion a year
Positive
The interdependence principle states that your best choice today depends on all of the following EXCEPT
past decisions you have made.
perfectly price inelastic.
Refer to the information provided in Figure 5.1 below to answer the questions that follow. Refer to Figure 5.1. The demand for tickets is
E
Refer to the information provided in Figure 6.1 below to answer the questions that follow. fig61.jpg Refer to Figure 6.1. Assume Tom's budget constraint is AC. He does NOT spend his entire income at point
Refer to Figure 3-2 representing the orange market. A decrease in the price of a substitute in production (for example, lemons) would be represented by a movement from ________ in the orange market.
S1 to S2. The graft is inceasing
Which of the following(s) is a way to differentiate product? A) Services, Location B) Physical appearance C) Reliability, durability D) All of the above
Services, Location B) Physical appearance C) Reliability, durability D) All of the above
Economics is the
study of the consumption, production, and distribution of goods and services.
Monopolistic Competition
a market structure in which many companies sell products that are similar but not identical
The total of consumer plus producer surplus is greatest
at the market equilibrium.
An equilibrium price is:
determined by the intersection of the demand and supply curves.
A monopolistically competitive firm will
have some control over its price because its product is differentiated.
A monopoly firm is selling lemonade to tourists on an island is currently maximizing profits by charging a price of $15 per glass. It follows that the marginal cost of lemonade is:
less than $15
The term ________ in economics refers to a group of buyers and sellers of a product and the arrangement by which they come together to trade.
market
Studying how the management of Hewlett Packard decides how many computers to produce and the price to charge for its computers would be considered
microeconomics.
Figure 2-7 Mercedes Benz recently decided to introduce its B-class automobile in the U.S. market, an electric car that is has designed and developed in a partnership with Tesla Motors. Assume Mercedes Benz chooses to produce both electric-engine vehicles and gasoline-engine vehicles. Figure 2-7 shows changes to its production possibilities frontier in response to new developments and different strategic production decisions. Refer to Figure 2-7. Assume a new government regulation that leads to a technological setback which greatly increases the cost to produce electric-engine vehicles and gasoline-engine vehicles. This is best represented by the
movement from H to G in Graph B.
Long-run cost curves are U-shaped because
of economies and diseconomies of scale.
Strategic behavior characterizes a(n) ________ industry.
oligopolistic
The highest valued alternative that must be given up to engage in an activity is the definition of
opportunity cost.
