micro 12,13,14
At the profit-maximizing level of short-run output, this monopolistically competitive firm will be making a profit of
$525
Refer to the demand and cost data for a pure monopolist given in the table. If the monopolist perfectly price-discriminated and sold each unit of the product at the maximum price the buyer of that unit would be willing to pay, and if the monopolist sold 4 units, then total revenue would be
$900
If the industry depicted in this graph were purely competitive, the output quantity would be
160
For a monopolist to sell an output level of 10 units, the price must be $8. MR at this output level will be
< $8
Which is the best example of price discrimination?
A telephone company charging lower rates to weekend users than weekday users
If the profit-maximizing pure monopolist whose information is in the accompanying table is able to price discriminate, charging each customer the price associated with each given level of output, how many units will the firm produce?
4
"Price makers" refers to firms that
Face a downward-sloping demand curve
The payoff matrix represents
a positive-sum game.
In the long run, a profit-maximizing monopolistically competitive firm sets it price
above marginal cost.
Refer to the above graph of a representative firm in monopolistic competition. If curve (2) represents ATC and line (3) represents demand, then we can conclude that the industry
is in long-run equilibrium.
The following pairs of products illustrate product differentiation, except
tank tops and denim shorts.
Assume that an industry is significantly affected by import competition from foreign suppliers. Taking this factor into account, it would mean that
the industry is less concentrated than suggested by domestic concentration ratios.
Answer the question based on the payoff matrix for a duopoly in which the numbers indicate the profit from either opening a coffee shop in a small town or not opening the coffee shop. If the firms are playing a sequential game, then
there are two potential Nash equilibriums for this game.
A firm will earn economic profits whenever:
Average revenue exceeds average total costs
One feature of pure monopoly is that the demand curve
slopes downward.
A strategy that is better than any alternative strategy —regardless of what the other firm does— is called a
Dominant strategy
The highest possible value of the Herfindahl index is 1,000.
False
An exclusive legal right as sole producer for 20 years granted to an inventor of a product is called a
Patent
Answer the question based on the payoff matrix for a duopoly, in which the numbers indicate the profit from following either an international strategy or a national strategy. Which of the following is true?
The national strategy is the dominant strategy for both firms.
As firms exit from a monopolistically competitive industry in the long run, the remaining firms' profits will begin to rise.
True
In order to maximize profits, the monopolist will produce the output level where MR = MC and charge a price equal to MR and MC.
True
Which would make it easier to maintain an effective collusive agreement in a cartel?
a decrease in the elasticity of demand for the cartel's product
A majority distinction between a monopolistically competitive firm and an oligopolistic firm is that
a recognized interdependence exists between firms in one industry but not in the other
The industry characterized by these data is
an oligopoly
The variety of products and features that consumers may choose from in monopolistically competitive industries
at least partially offsets the economic inefficiencies of this market structure.
If monopolistically competitive firms in an industry are making an economic profit, then new firms will enter the industry and the product demand facing existing firms will
decrease
In the long run, a representative firm in a monopolistically competitive industry will end up
earning a normal profit, but not an economic profit.
The Herfindahl index
gives much greater weight to larger firms than to smaller firms in an industry.
Answer the question based on the payoff matrix for a duopoly in which the numbers indicate the profit in millions of dollars for each firm. If Firm A adopts the low-price strategy, then Firm B would adopt the
high-price strategy and earn $200
Under which of the following conditions would a profit-maximizing monopolist necessarily raise price?
if marginal cost was greater than marginal revenue
The quantitative difference between areas Q 1 bcQ 2 and P 1 P 2 ba in the diagram measures
marginal revenue.
In long-run equilibrium, a monopolistically competitive producer achieves
neither productive efficiency nor allocative efficiency.
One major barrier to entry under pure monopoly arises from
ownership of essential resources.
At the profit-maximizing level of output for a monopolist,
price is greater than marginal cost.
For a monopolistically competitive firm in long-run equilibrium,
price will equal average total cost.
Suppose that a pure monopolist can sell 5 units of output at $4 per unit and 6 units at $3.90 per unit. The monopolist will produce and sell the sixth unit if its marginal cost is
$3.40 or less.
If columns 1 and 3 are this firm's demand schedule, maximum economic profit will be
$80
Refer to the diagrams. With the industry structures represented by diagram
(A), there will be only a normal profit in the long run, while in (B) an economic profit can persist.
The profit-maximizing level of output will be
5 units
Which case best represents a case of price discrimination?
A major airline sells tickets to senior citizens at lower prices than to other passengers.
Refer to the above graphs. The long-run equilibrium for a monopolistically competitive firm is represented by graph
B
Monopolists are said to be allocatively inefficient because
at the profit-maximizing output, the marginal benefit of the product to society exceeds its marginal cost.
The monopolistic competition model assumes that
firms will engage in nonprice competition
One inherent factor that tends to destroy collusion among oligopolists is the
incentive to cheat.
When a firm is on the inelastic segment of its demand curve, it can
increase profits by increasing price.
A monopolistically competitive firm is producing at a short-run output level where average total cost is $10.00, marginal cost is $5.00, marginal revenue is $6.00, and price is $12.00. In the short run, the firm should
increase the level of output.
Refer to the long-run cost curve for a firm. If the firm produces output Q 1 at an average total cost of ATC 1, then the firm is
incurring X-inefficiency and is failing to realize all existing economies of scale.
"Variety is the spice of life" is best applied to which market structure
monopolistic competition
Refer to the diagram. If this somehow was a costless product (that is, the total cost of any level of output was zero), the firm would maximize profits by
producing Q2 units and charging a price of P2.
