Microeconomics

A business-stealing externality is

. the negative externality associated with entry of new firms in a monopolistically competitive market.

The rutabaga market is perfectly competitive. Research is published claiming that eating rutabagas leads to gaining weight and so the demand for rutabagas permanently decreases. The permanent decrease in demand results in a

8) Price discrimination occurs when a firm lower price, economic losses by rutabaga farmers, and exit from the market.

The outcome of a colluding oligopoly is

Same as monopolist

How does the demand for any one seller's product in perfect competition compare to the market demand for that product?

The demand for any one seller's product is perfectly elastic while the market demand curve is downward sloping.

In which of the following market structures is(are) there a large number of sellers?

(i) monopolistic competition (ii) perfect competition

A firm's marginal cost has a minimum value of $50, its average variable cost has a minimum value of $80, and its average total cost has a minimum value of $90. Then the firm will shut down once the price of its product falls below

$80

which of the following goods are not likely to be sold in monopolistically competitive markets?

Cable Services

The prisoners' dilemma game

Correctc. has a Nash equilibrium, but the Nash equilibrium outcome is not the outcome the players would agree to if they could cooperate with each other.

When a monopolistically competitive firm's demand curve shifts leftward, what happens to its marginal revenue curve?

It shifts leftward.

Business stealing externality occurs in which type of market

Monopolistic competition

an outcome in which all players choose the best strategy they can, given the choices of all other players

a Nash equilibrium

excess capacity is

a characteristic of rising average total cost curves.

When an oligopoly market reaches a Nash equilibrium,

a firm will have chosen its best strategy, given the strategies chosen by other firms in the market.

A cartel is

a group of firms acting together to raise price, decrease output, and increase economic profit.

In a perfectly competitive market, one farmer's barley is

a perfect substitute for another farmer's barley.

When consumers are exposed to additional choices that result from the introduction of a new product in monopolistic competitive market,

a product-variety externality is said to occur

If a firm, Best Computer Buys, requires its customers to buy software from it whenever the customers purchase a computer, the company's policy is called

a tying arrangement

45) Patents, copyrights, and trademarks

a. are examples of government-created monopolies.

44) In a perfectly competitive market, at the profit‐maximizing level of output,

a. marginal revenue equals marginal cost.

Monopolies are socially inefficient because the price they charge is

above marginal cost

In order to be successful, a cartel must

agree on the total level of production and on the amount produced by each member.

A concentration ratio

all are correct

In the prisoners' dilemma game, self-interest leads

all are correct

A profit-maximizing firm in a monopolistically competitive market is characterized by which of the following?

all correct

antitrust laws allow the government to

all of the above are correct

An equilibrium occurs in a game when

all players follow a strategy that they have no incentive to change.

As a group, oligopolists would always be better off if they would act collectively

as a single monopolist.

as a group, oligopolists would always be better off if they would act collectively

as a single monopolist.

42) For a monopolistically competitive firm,

at the profit-maximizing quantity of output, price equals the minimum of average total cost.

For a firm in monopolistic competition, the efficient scale is the amount of output at which ________ is a minimum.

average total cost

The competitive firm's long-run supply curve is that portion of the marginal cost curve that lies above

average total cost

46) Monopolies are socially inefficient because the price they charge is

b. above demand .

A monopolist can make an economic profit in the long run because of

barriers to entry.

A monopolistically competitive market has characteristics that are similar to

both a monopoly and a competitive firm.

A distinguishing feature of an oligopolistic industry is the tension between

cooperation and self interest

A distinguishing feature of an oligopolistic industry is the tension between

cooperation and self interest.

The equilibrium quantity in markets characterized by oligopoly is

higher than in monopoly markets and lower than in perfectly competitive markets.

Entry and exit drive each firm in a monopolistically competitive market to a point of tangency between its

demand curve and its average total cost curve.

In an oligopoly, each firm knows that its profits

depend on both how much output it produces and how much output its rival firms produce.

the prisoners dilemma provides insights into the

disadvantages of not having cooperation

A firm in a monopolistically competitive market faces a

downward-sloping demand curve because the firm's product is different from those offered by other firms.

The simplest type of oligopoly is

duopoly.

An agreement between two duopolists to function as a monopolist usually breaks down because

each duopolist wants a larger share of the market in order to capture more profit.

The free entry and exit of firms in a monopolistically competitive market guarantees that

economic losses, but not economic profits, can persist in the long run.

n the long run, firms in perfectly competitive market produce at a level that is ________ the efficient scale of output.

equal to

In a long-run equilibrium,

excess capacity applies to monopolistically competitive firms but not to competitive firms.

In a market characterized by oligopoly:

firms will earn the highest profit when they cooperate and behave like a monopolist

Which of the following is a characteristic of monopolistic competition?

free entry

In general, game theory is the study of

how people behave in strategic situations

Consider a perfectly competitive market that was in a long-run equilibrium when a permanent increase in demand occurs. Which of the following will occur as a result?

i. The existing firms will start to earn an economic profit. ii. New firms will be motivated to enter the market.

Price discrimination occurs when a firm

is able to sell different units of a good at different prices.

A dominant strategy is one that

is best for the player, regardless of what strategies other players follow.

When a firm is able to engage in perfect price discrimination, its marginal revenue curve

is the same as its demand curve.

Monopolistic competition is an inefficient market structure because

it has a deadweight loss, just as monopoly does.

We know that a perfectly competitive firm is a price taker because

its demand curve is horizontal.

A perfectly competitive firm's short-run supply curve is

its marginal cost curve above the AVC curve.

If a monopolistically competitive seller's marginal cost is $3.56, the firm will decrease its output if

its marginal revenue is less than $3.56.

Even though four firms can profitably sell hotdogs downtown, the government licenses only two firms. This market is a

legal duopoly.

The equilibrium price in a market characterized by oligopoly is

lower than in monopoly markets and higher than in perfectly competitive markets.

the focus of antitrust legislation is to

maintain competition

If two duopolists can stick to a cartel agreement to boost their prices, then both

make greater economic profits than if they did not collude

A monopolistically competitive industry is characterized by

many firms selling products that are similar but not identical.

The profit-maximizing rule for a firm in a monopolistically competitive market is to always select the quantity at which

marginal revenue is equal to marginal cost

A perfectly competitive firm maximizes its profit by producing at the point where

marginal revenue is equal to marginal cost.

Hotels in New York City frequently experience an average vacancy rate of about 20 percent (i.e., on an average night, 80 percent of the hotel rooms are full). This kind of excess capacity is indicative of what kind of market?

monopolistic competition

In which of the following markets is economic profit driven to zero in the long run

monopolistic competition

When a firm's average total cost curve continually declines, the firm is a

natural monopoly

Because of the number of firms in monopolistic competition,

no one firm can dominate the market.

As the number of firms in an oligopoly increases, the

price approaches marginal cost, and the quantity approaches the socially efficient level.

Product differentiation allows a firm to compete with another firm on the basis of

quality, price, and marketing.

As firms exit a monopolistically competitive market, profits of remaining firms

rise, and product diversity in the market decreases.

Suppose that marginal revenue for a perfectly competitive firm is $20 . When the firm produces 10 units, its marginal cost is $20, its average total cost is $22, and its average variable cost is $17. Then to maximize its profit in the short run, the firm

should stay open and incur an economic loss of $20.

In an oligopoly, output is

somewhere between the output in monopoly and that in perfect competition outcomes

Copy of In the language of game theory, a situation in which each person must consider how others might respond to his or her own actions is called a

strategic situation.

In the language of game theory, a situation in which each person must consider how others might respond to his or her own actions is called a

strategic situation.

Financial aid to college students is an example of

subsidies.

entry into a competitive market by new firms will increase the

supply of good

in a game, a dominant strategy is

the best strategy for a player to follow, regardless of the strategies followed by other players

Economists use game theory to analyze strategic behavior, which takes into account

the expected behavior of others and the recognition of mutual interdependence.

An example of a firm in monopolistic competition is

the many Chinese restaurants in San Francisco.

A firm operating in a monopolistically competitive market can earn economic profits in

the short run but not in the long run.

The relationship between marginal revenue and elasticity is

when demand is elastic, marginal revenue is positive and when demand is inelastic, marginal revenue is negative.

A monopoly produces a product ________ and there ________ barriers to entry into the market.

with no close substitutes; are

in the long run, each firm in a competitive industry earns

zero economic profits