Final Exam - BECO
The long-run market supply curve in a competitive market will
typically be more elastic than the short-run supply curve.
What is the shape of the marginal cost curve for this firm?
upward-sloping
A seller's opportunity cost measures the
value of everything she must give up to produce a good
A firm that shuts down temporarily has to pay
its fixed costs but not its variable costs
If marginal cost is rising
marginal product must be falling.
When this game reaches a Nash equilibrium, annual profit will grow by
$1.5 million for HomeMax and by $1.0 million for Lopes.
What is the value of F?
$150
How large would a corrective tax need to be to move this market from the equilibrium outcome to the socially optimal outcome?
$4
If the market price is $1,000, the producer surplus in the market is
$400
How much consumer surplus will be derived from the purchase of this product at the monopolistically competitive price?
$450
If the supply curve is S', the demand curve is D, and the equilibrium price is $150, what is the producer surplus?
$625
What price will the monopolistically competitive firm charge in this market?
$70
At which number of workers does diminishing marginal product begin?
2
What is the marginal product of the Second worker?
200 units
The socially optimal quantity of output is
5 units
In order to maximize profits, the firm will produce
5 units of output because marginal revenue equals marginal cost.
A monopolistically competitive industry is characterized by
A monopolistically competitive industry is characterized by
Which of the following will cause an increase in consumer surplus?
A technological improvement in the production of the good
A membership at a gym that always has space in classes and on machines is an example of the type of good represented by Box
B
The distinction between efficiency and equality can be described as follows:
Efficiency refers to maximizing the size of the pie; equality refers to distributing the pie fairly among members of society.
Which of the following is not a characteristic of a competitive market?
Entry is limited.
The overuse of antibiotics leads to the development of antibiotic-resistant diseases. Therefore, the socially optimal quantity of antibiotics is represented by point
Q2 .
The socially optimal quantity would be
Q2 .
A profit-maximizing monopoly will produce an output level of
Q3 .
The average fixed cost curve
always declines with increased levels of output
Marginal cost is equal to average total cost when
average total cost is at its minimum
Market failure associated with the free-rider problem is a result of
benefits that accrue to those who don't pay.
Efficient scale is reached
beyond 133.33 units
For a firm, marginal revenue minus marginal cost is equal to
change in profit
Goods that are rival in consumption but not excludable would be considered
common resources
The social cost of a monopoly is equal to its
deadweight loss.
The price ceiling causes quantity
demanded to exceed quantity supplied by 90 units.
Monopoly firms face
downward-sloping demand curves, so they can sell only the specific price-quantity combinations that lie on the demand curve.
A firm's opportunity costs of production are equal to its
explicit costs + implicit costs.
Competitive markets are characterized by
free entry and exit by firms
The equilibrium quantity in markets characterized by oligopoly is
higher than in monopoly markets and lower than in perfectly competitive markets
Two home-improvement stores (Lopes and HomeMax) in a growing urban area are interested in expanding their market share. Both are interested in expanding the size of their store and parking lot to accommodate potential growth in their customer base. The following game depicts the strategic outcomes that result from the game. Increases in annual profits (in millions of dollars) of the two home-improvement stores are shown in the following figure. Refer to Table 17-6. Pursuing its own best interest, Lopes will
increase the size of its store and parking lot regardless of the decision made by HomeMax.
Two home-improvement stores (Lopes and HomeMax) in a growing urban area are interested in expanding their market share. Both are interested in expanding the size of their store and parking lot to accommodate potential growth in their customer base. The following game depicts the strategic outcomes that result from the game. Increases in annual profits (in millions of dollars) of the two home-improvement stores are shown in the following figure. Pursuing its own best interest, HomeMax will
increase the size of its store and parking lot regardless of the decision made by Lopes.
When the price falls from P2 to P1 , consumer surplus
increases by an amount equal to B+C.
When an externality is present, the market equilibrium is
inefficient, and the equilibrium does not maximize the total benefit to society as a whole.
If the government imposes a price ceiling at $15, it would be
nonbinding if market demand is Demand A and binding if market demand is Demand B
A good is excludable if
people can be prevented from using it
Selling the same good at different prices to different customers is known as
price discrimination
The deadweight loss associated with a monopoly occurs because the monopolist
produces an output level less than the socially optimal level
The intersection of a firm's marginal revenue and marginal cost curves determines the level of output at which
profit is maximized
According to the Coase theorem, private parties can solve the problem of externalities if
property rights are clearly defined
Markets fail to allocate resources efficiently when
property rights are not well established
Rent control
serves as an example of a price ceiling.
In some cases, tradable pollution permits may be better than a corrective tax because
the government can set a maximum level of pollution using permits
A monopolistically competitive firm chooses
the quantity of output to produce, but the price of its output is determined by demand.
Efficiency in a market is achieved when
the sum of producer surplus and consumer surplus is maximized
As the number of firms in an oligopoly increases,
the total quantity of output produced by firms in the market gets closer to the socially efficient quantity.
If a price ceiling is not binding, then
there will be no effect on the market price or quantity sold
The maximum price that a buyer will pay for a good is called
willingness to pay
If the price a consumer pays for a product is equal to a consumer's willingness to pay, then the consumer surplus relevant to that purchase is
zero
