Micro Test #3
Which of the following is not characteristic of pure competition?
price strategies by firms
OPEC provides an example of:
An international cartel
Economists would describe the U.S. automobile industry as:
An oligopoly
The MR=MC rule:
Applies both to pure monopoly and pure competition
Barriers to entering an industry:
Are the basis for monopoly
In long run equilibrium, production for the firm shown in the diagram above is:
Less efficient than in a purely competitive market
An unregulated pure monopolist will maximize profits by producing that output at which:
MR=MC
Oligopolistic industries:
Many produce either standardized or differentiated products
A competitive firm in the short run can determine the profit- maximizing (or loss minimizing) output by equating:
Marginal Revenue and Marginal Cost
In which of the following market structures is there clear- cut mutual interdependence with respect to price- output policies?
Oligopoly
Refer to the above diagram for a pure monopolists. Suppose a regulatory commission is created to determine a legal price for the monopoly. If the commission seeks to provide the monopolist with a "fair return," it will set the price at:
P1
The lowest price at which the firm should produce is:
P2
In the short run a purely competitive firm will always make an economic profit if:
P>ATC
Refer to the above diagram for a pure monopolists. If the monopolist is unregulated, it will maximize profits by charging:
Price P3 and producing output Q3
Which of the following is characteristic of a purely competitive sellers demand curve?
Price and marginal revenue are equal at all levels of output
Refer to the above diagram. If this somehow was a countless product (that is, the total cost of any level of output is zero), the firm would maximize profits by:
Producing Q2 units and charging a price of P2
A one-firm industry is known as:
Pure Monopoly
In which of the following industry structures is the entry of new firms the most difficult?
Pure Monopoly
An industry comprised of a very large number of sellers producing a standardized product is known as:
Pure competition
Refer to the diagram. The firm is selling its product in a(n):
Purely competitive market
Refer to the above diagram for a pure monopolist. Monopoly price will be:
c
Refer to the above profits- payoff table for a duopoly. If the firms are acting independently and firm X sets its price at $6, firm Y will achieve the largest profit by selecting:
$4
A purely competitive seller is:
A "Price Taker"
Which of the following statements is incorrect?
A Monopolist's 100 percent market share ensures economic profits
Which of the following industries most clearly approximates pure competition?
Agriculture
Excess capacity refers to the:
Amount by which actual production falls short of the minimum ATC output
Which of the above diagrams correctly portray a nondiscriminating pure monopolist's demand (D) and marginal revenue (MR) curves?
B
Diagram. The firm will produce at a loss at all prices:
Between P2 and P3
If form a firm P= minimum ATC =MC, then:
Both allocative efficiency and productive efficiency are being achieved
Refer to the above profits-payoff table for a duopoly. If initially firms X and Y are charging $5 and $4 respectively:
Both firms would find its advantageous to collude to raise their prices by $1 each
If a monopolist engages in price discrimination, we can expect:
Both profits and output to increase
Which of the above diagrams correctly portray the demand (D) and marginal revenue (MR) curves of a purely competitive seller?
C
Which of the following is not a basic characteristic of pure competition?
Considerable non-price competition
Refer to the above diagram. To maximize profits or minimize losses this firm should produce:
E units will charge price A
The MR=MC rule can be restated for a purely competitive seller as P= MC because:
Each additional unit of output adds exactly to total revenue
Price is constant or given to an individual firm selling in a purely competitive market because:
Each seller supplies a negligible fraction of total supply
In long run equilibrium, the firm in the diagram above will:
Earn a normal profit
Monopoly power ensures that a firm will earn economic profits.
False
A Monopolistically competitive firm has a:
Highly elastic demand curve
A Monopolistically competitive firm's marginal revenue curve:
Is downsloping and lies below the demand curve
The marginal revenue curve of a purely competitive firm:
Is horizontal at the market price
The nondiscriminating monopolists demand curve:
Is less elastic than a purely competitive firm's demand curve
Refer to the diagram above. The profit- maximizing output is:
Is n
Assume the XYZ Corporation is producing 20 units of output. It is selling this output in a purely competitive market at $10 per unit. Its total fixed costs are $100 and its average variable cost is $3 at 20 units of output. The corporation:
Is realizing an economic profit of $40
Monopolistic competition is characterized by a:
Large number of firms and low entry barriers
If at the MC=MR output, AVC exceeds price:
The firm should shut down in the short run
A perfectly discriminating pure monopolist will charge each buyer:
The maximum price each would be willing to pay
The MR=MC rule applies:
To firms in all types of industries
Firms seek to maximize:
Total profit
If a firm in a purely competitive industry is confronted with and equilibrium price of $5, its marginal revenue:
Will also be $5
Assume the above figure applies to a perfectly discriminating pure monopolist, that is, to a monopolist who is able to extract from each buyer the maximum price that buyer is willing to pay. The profit- maximizing output:
Will be k
A pure monopolist:
Will realize an economic profit exceeds ATC at the equilibrium output
Refer to the above diagram for a pure monopolist. Monopoly output will be:
f