Microecon ABM1041 Final Exam Harvey 2022
The table provides information for Calamari Contests, a maker of games inspired by squids. Complete the table as necessary to answer questions 71-75. At the profit-maximizing number of games produced, what is Calamari's profit?
$0
According to the graph at the right, what is the monopolist's average total cost of production?
$20
The table provides information for Calamari Contests, a maker of games inspired by squids. Complete the table as necessary to answer questions 71-75. What is the marginal revenue of the 2nd game?
$4
The table provides information for Calamari Contests, a maker of games inspired by squids. Complete the table as necessary to answer questions 71-75. Using the MR=MC rule, what is the price Calamari charges for each game?
$5
The table provides information for Calamari Contests, a maker of games inspired by squids. Complete the table as necessary to answer questions 71-75. Using the MR=MC rule, what is Calamari's profit-maximizing number of games to produce?
2
Suppose Guilder and Florin can produce both Cloth and Meat. Use the table to the right, which shows their production possibilities, to answer questions 67-70. Guilder x Cloth= 40, Guilder x Meat= 10 Florin x Cloth= 10, Florin x Meat= 20 Suppose Guilder chooses to consume one-half of what it can produce. How much Cloth will Gilder consume?
20 units of cloths
Suppose Guilder and Florin can produce both Cloth and Meat. Use the table to the right, which shows their production possibilities, to answer questions 67-70. Guilder x Cloth= 40, Guilder x Meat= 10 Florin x Cloth= 10, Florin x Meat= 20 Suppose Florin trades one-half of what it specializes in to Guilder in exchange for what Guilder specializes in, with a term of trade of 1 Cloth for 1 Meat. How much Cloth will Guilder consume after trade?
30 units of Cloth
Consider the market for wool sweaters. Which of the following will cause lower prices and a greater quantity of wool sweaters exchanged?
Apparel manufacturers develop a more efficient way of processing wool fabrics.
Consider the market for wool sweaters. Which of the following will cause higher prices and a higher quantity of wool sweaters exchanged?
Consumers expect the weather to be colder than normal during the next several weeks.
A decrease in price will cause an increase in demand. This is the law of demand.
False
A positive externality is a benefit that accrues to participants within the market.
False
Elasticity of demand is closely related to the slope of the demand curve. The more responsive buyers are to a change in the price, the steeper is the demand curve.
False
Firms in an industry characterized by oligopoly usually don't have to consider the reactions of competitors when they formulate pricing, product and other strategies.
False
The primary difference between perfect competition and monopolistic competition is that entry and exit is difficult in the case of monopolistic competition.
False
Suppose Guilder and Florin can produce both Cloth and Meat. Use the table to the right, which shows their production possibilities, to answer questions 67-70. Guilder x Cloth= 40, Guilder x Meat= 10 Florin x Cloth= 10, Florin x Meat= 20 Which country should specialize in the production of Meat?
Florin
Suppose Guilder and Florin can produce both Cloth and Meat. Use the table to the right, which shows their production possibilities, to answer questions 67-70. Guilder x Cloth= 40, Guilder x Meat= 10 Florin x Cloth= 10, Florin x Meat= 20 Which country should specialize in the production of Cloth?
Guilder
Based on the graph at the right, which statement is TRUE about monopolist?
It is operating at a profit.
Which of these is an example of consumers creating a negative externality?
Litter is found in an area around a fast-food restaurant.
The table provides information for Calamari Contests, a maker of games inspired by squids. Complete the table as necessary to answer questions 71-75. Is Calamari Contests a perfectly competitive firm or a monopolist?
Monopolist
Consider the market for new cars. Which of the following will cause higher prices and a greater quantity of new cars exchanged?
New government regulations make it more difficult for cars more than 8 years old to pass safety inspections.
Consider the market for new cars. Which of the following will cause lower prices and a greater quantity of new cars exchanged?
New technology improves the production efficiency of automobile manufactures.
Use the matrix at right to answer questions 76-79. A dominant strategy exists for which player(s)?
Only Brenda
Use the matrix at right to answer questions 76-79. If Adam chooses Down, what is Brenda's best response?
Right
Which of the markets is the best example of monopolistic competition?
The fast food industry
Consider the market for breakfast cereal. Which of the following will cause higher prices and a lower quantity of breakfast cereal exchanged?
The prices of inputs like refined sugar and cereal crops (wheat, corn, etc.) increase.
Which is an example of capital in the production process of an amusement park?
The roller-coaster
Consider the market for breakfast cereal. Which of the following will cause lower prices and a greater quantity of breakfast cereal exchanged?
There is an increase in the number of firms selling breakfast cereal.
A firm seeking to maximize profits will increase the amount of output it produces when marginal revenue is greater than marginal cost.
This is true for all firms regardless of market structure.
The notion that individuals and firms are compelled to retaliate or punish others for engaging in noncooperative actions, but leaving the door open for future reconciliation, is BEST referred to as what kind of strategy?
Tot-for-tat
A Nash equilibrium assumes that each player chooses his or her best strategy.
True
A country's comparative advantage is determined by an assessment of its opportunity costs.
True
A decrease in consumer income will increase the demand for products and services that are income inferior
True
A dominant strategy is an action that is the same best response regardless of what another player's actions are.
True
A firm should (at least in the short run) continue production if variable costs are less than revenues.
True
According to the Coase theorem, if transactions costs are negligible, the outcome is efficient, regardless of the distribution of property rights.
True
An event that will cause an increase in the supply of yogurt is an increase in the number of sellers in the yogurt market.
True
An important lesson from the prisoner's dilemma game is that the interests of individuals will not always align with the collective interests of people.
True
An increase in price will cause an increase in quantity supplied. This is the law of supply.
True
Because pf scarcity people face tradeoffs in nearly every choice they make.
True
Charging different groups of people different prices (such as children's prices and seniors' prices versus regular or adult prices) is an example of third-degree price discrimination.
True
Customers who purchase a network good after it matures are called casual users.
True
Getting a flu shot reduces the chances of spreading the illness to one's classmates and friend. However, this is still considered a market failure because the number of people who obtain flu shots is less than the socially optimal quantity.
True
If price exceeds marginal cost at a competitive firm's current level of output, then the firm can increase profit if it increases its output.
True
If the government sets a price ceiling below the equilibrium market price, then we can expect that there will be shortages of the good (i.e., quantity demanded will exceed quantity supplied).
True
In the long run, a typical firm in a monopolistically competitive industry will likely earn little to no economic profit.
True
Public goods are characterized by the inability to exclude non-payers and the fact that consumption of the good does not preclude others form consuming it.
True
Spraying for mosquito control in a local community is an example of a public good because it is nonrival and exhibits nonexcludability.
True
Suppose medical studies reveal that long distance running reduces the chance of having a heart attack. We can expect that the equilibrium price of running shoes would increase and the equilibrium quantity of running shoes sold would increase.
True
Suppose the price of raw materials and other inputs used to produce computers increases. We should expect that the equilibrium market price of computers will increase and the quantity of computers sold will decrease.
True
The demand for paperback books is decreasing. A possible cause is that more consumers are preferring digital over paperback books.
True
The free rider problem typically results in a production of output that is less than the social optimal quantity.
True
The social cost curve lies above the private supply curve for the producer in cases of negative externalities.
True
The speed by which a network good can enter into a virtuous or vicious cycle is generally faster than that of a non-network good.
True
Universities are engaging in price discrimination when they charge different levels of tuition to in-state and out-state students.
True
Use the matrix at right to answer questions 76-79. If Brenda chooses Right, what is Adam's best response?
Up
Use the matrix at right to answer questions 76-79. What is the Nash Equilibrium to this game?
Up, Right
The live band that plays nearby makes it difficult for patrons of a restaurant to hold a conversion. This is an example of
a negative externality
Other things being equal, a price-discriminating firm will charge less to the customers who
are the most elastic in their demand for a product.
It has been suggested that a way to save endangered species is to give hunting rights to people who live in the vicinity of that species. The idea behind this suggestion is that
by giving people rights to profit from the animals, they have an incentive to ensure their survival.
If a consumer buys a set of headphones at the same time as she buys an MP3 player, these two products are MOST likely _____ goods.
complementary
The reason a monopoly imposes a deadweight loss on society is that
consumers are denied output for which they are willing to pay more than the cost of producing it.
A network good is one where the
cost to the user falls if there is a large number of other users of the good.
The reason monopolistic competitive firms have difficulty maintaining a profit in the long run is that
ease of entry into the market encourages new firms to enter and force down the price.
Unlike positive externalities from physical (non-network) goods, network externalities affect
existing and potential users
In which situation can a Prisoner's Dilemma outcome most likely be avoided?
if the game is repeated over and over under the same conditions.
The socially optimal level of a product that produces pollution
incorporates both the private and the social costs of production.
The Coase theorem claims that in the case of tobacco
it does not matter who is given the property rights to the air, as long as the parties involved are allowed to bargain.
A subscription to an online movie streaming service is an example of a club good because
it is nonrival in consumption and excludable
Fishing in a community lake is an example of using a common property resource because
it is rival in consumption and nonexcludable
The income distribution in the United States is generally _____ equally distributed than in European countries and is ______ equally distributed than in many South American countries.
less; more
At an all-you-can-eat buffet, a person will stop eating when
marginal utility is equal to zero.
Over time, interconnection in network industries creates a ____ environment that leads firms to ______
more competitive; lower costs.
When a country is operating at its full potential output, it is producing at a point
on the production possibility frontier.
The reason economists consider monopoly to be socially undesirable is because the monopolist
produces less than the socially efficient amount.
Customers of monopolistically competitive firms will pay more for products than they would if the same products are sold in a perfectly competitive market structure. The higher price
represents the value that consumers place on product differentiation and innovation.
If the price the U.S. Post Office charges to deliver Express Mail rises, the demand facing FedEx will rise because its respective services are _____ goods.
substitute
Suppose the government sets the price for water and the market for water is always experiencing shortages. One can infer that
the government has established a price ceiling for water.
When markets are efficient
the sum of consumer and producer surplus is maximized.
Opportunity costs exist because
using resources for one activity means that their use elsewhere must be given up.
