Econ200 final

resource pricing is important because:

1. resource prices are a major determinant of money incomes 2. resource prices allocate scarce resources among alternative uses 3. resource prices, along with resource productivity, are important to firms in minimizing their costs

True or False: although individual purely competitive firms can influence the price of their product, these firms as a group cannot influence market price

FALSE

True or False: economic profits are the salaries received by the hired managers of business corporations

FALSE

True or False: in maximizing profit a firm will always produce that output where total revenues are at a maximum

FALSE

True or False: in the long run a pure monopolistic must produce at that output where average total cost is at a minimum

FALSE

True or False: in the short run a competitive firm will always choose to shut down if the product price is less than the lowest attainable average total cost?

FALSE

True or False: monopolistically competitive sellers produce efficiently because they obtain only normal profits in the long run

FALSE

True or False: price discrimination is illegal in the united states under antitrust regulations

FALSE

True or False: the demand curve for a purely competitive firm is perfectly elastic, but the demand curve for a purely competitive industry is downsloping...

TRUE

True or False: the demand curve of a monoplistically competitive producer is less elastic than that of a purely competitive producer

TRUE

True or False: the demand curve of a monopolistically competitive firm is more elastic than that of a pure monopolist

TRUE

True or False: the demand for a resource depends on its productivity and the market value of the product it is producing

TRUE

True or False: the marginal revenue product curve of a purely competitive seller declines solely because of the law of diminishing returns

TRUE

True or False: the us breakfast cereal industry is an example of differentiated oligopoly

TRUE

a purely competitive seller is

a "price taker"

oligopolistic industries are characterized by:

a few dominant firms and substantial entry barriers

the term oligopoly indicates:

a few firms producing either a differentiated or homogeneous product

monopolistic competition means

a large number of firms producing a standardized or homogeneous product

other things equal, in which of the following cases would economic profit be the greatest

a regulated monopolist charging a price equal to average total cost

marginal revenue product measures the:

amount by which the extra production of one more worker increases a firm's total revenue

what is the best example of oligopoly

automobile manufacturing

when total revenue is increasing, what is marginal revenue (positive/negative)?

marginal revenue is positive

the demand schedule or curve confronted by the individual purely competitive firm is

perfectly elastic

because the monopolist's demand curve is downsloping:

price must be lowered to sell more output

interest is the:

price paid for the use of money

in what market model does demand and marginal revenue diverge?

pure monopoly, oligopoly, and monopolistic competition

a competitive employer should hire additional labor as long as:

the MRP exceeds the wage rate

what industry is an illustration of differentiated oligopoly?

the soft drink industry

if a firm in a purely competitive industry is confronted with an equilibrium price of $5, its marginal revenue:

will also be $5

True or False: a pure monopolist will maximize profits by producing at that output where price and marginal cost are equal

FALSE

True or False: because of their large scale level or production, pure monopolists overallocate resources to their industry by producing beyond the P=MC output

FALSE

True or False: in the long run monopolistically competitive firms make normal profits because they are forced to operate at the minimum point on their average total cost curve

FALSE

True or False: mutual interdependence means that oligopolistic producers rely on price competition in determining their share of the total market for their product

FALSE

True or False: price discrimination occurs every time a firm sells a good for two different prices

FALSE

True or False: the demand curve for a purely competitive industry is perfectly elastic, but the demand curves faced by individual firms in such an industry are downsloping

FALSE

True or False: the monopolistically competitive seller maximizes profits by equating price and marginal cost

FALSE

is the following a basic characteristic of monopolistic competition (yes/no): recognized mutual interdependence

NO

True or False: after all long run adjustments have been completed, a firm in a competitive industry will produce that level of output where average total cost is at a minimum?

TRUE

True or False: demand is the active and supply is the passive determinant of land rent

TRUE

True or False: economic rent is a price paid for productive resources whose supply is perfectly inelastic?

TRUE

True or False: generally speaking, the larger the number of firms in an oligopolistic industry, the more difficult it is for those firms to collude

TRUE

True or False: if three or four homogeneous oligopolists collude, the resulting price and production outcomes will be similar to those of pure monopoly

TRUE

True or False: in the long run, purely competitive firms and non-monopolistically competitive firms earn zero economic profits, while pure monopolies may or may not earn economic profits

TRUE

True or False: it will be profitable for a firm to hire additional units of any resource up to the point at which its MRP is equal to its MRC

TRUE

True or False: marginal cost is a measure of the alternative goods which society forgoes in using resources to produce an additional unit of some specific product

TRUE

when the pure monopolist's demand curve is elastic, marginal revenue (positive/negative)

is positive

monopolistic competition is characterized by a

large number of firms and low entry barriers

when total revenue is increasing

marginal revenue may be either positive or negative

in the short run, a monopolist's economic profits

may be positive or negative depending on market demand and cost

which of the following is not characteristic of pure competition?

price strategies by firms

price discrimination refers to

selling a given product for different prices at two different points in time