Microeconomics final
Exhibit 8-3 Cost per unit curves As shown in Exhibit 8-3, the firm will produce in the short run if the price is at least equal to:
$1.50 per unit (point B).
In Exhibit 11-2, if product price is fixed at $8, the MRP of the 2nd worker is equal to:
$200
Exhibit 8-16 Short-run cost curves for a competitive firmI n Exhibit 8-16, the firm should shut down in the short run if the market price of its product falls below:
$30 per unit
If a fishing boat owner brings 10,000 fish to market and the market price is $7 per fish, she will have $70,000 in total revenue. If the average variable cost of 10,000 fish is $4 and the fixed cost of the boat is $20,000, what is her profit?
10000
Exhibit 8-2 Total revenue and total cost graph In Exhibit 8-2, economic profit for the firm is at a maximum when output per week equals:
250 units
In Exhibit 11-13, how many workers will the monopsonist hire?
3
Exhibit 9-4 Demand and cost curves for a monopolist As shown in Exhibit 9-4, in order to maximize its profit (or minimize its loss), how much output should the monopoly produce?
4 units per hour
Exhibit 10-1 A monopolistic competitive firm As presented in Exhibit 10-1, the short-run profit-maximizing output for the monopolistic competitive firm is:
400 units per day
The landmark antitrust case which established that size alone can be an antitrust violation is the:
ALCOA case.
The per se rule was introduced in the:
Alcoa case
If Microsoft merges with retail stores and computer makers, such that competition is substantially reduced, it would be in violation of the:
Celler-Kefauver Act.
Which act of Congress extended the government's authority to block horizontal and vertical mergers?
Celler-Kefauver Act.
The first piece of antitrust legislation in the United States to deal with price discrimination was the:
Clayton Act
The federal agency established in 1934 to regulate telephones and broadcasting industries is the:
Federal Communications Commission (FCC).
If an employer currently finds that the MRP of its labor resources equals $67, and the MFC equals $56, what would you advise the firm to do?
Hire additional workers.
Which of the following best explains why a firm in a perfectly competitive market must take the price determined in the market?
If a price taker increased its price, consumers would buy from other suppliers.
Which of the following statements best describes firms under monopolistic competition?
In the long run, positive economic profit will be eliminated.
The most profitable output level can be found by looking at which two curves?
MR and MC.
If a monopolistically competitive firm can earn a profit, it will increase production until:
MR=MC
If product price decreases, then:
MRP will decrease.
Monopolists are criticized because they are inefficient. What is meant by this statement?
Monopolists usually don't produce at the minimum of the ATC.
Which of the following type of firm is not a price taker in the market in which the firm buys its inputs?
Monopsony.
Exhibit 8-8 A firm's cost and marginal revenue curves In Exhibit 8-8, product price in this market is fixed at $35. This firm is currently operating where MR = MC. Which of the following is true?
Price > AVC, and the firm should stay at its current output.
Suppose product price is fixed at $24; MR = MC at Q = 200; AFC = $6; AVC = $16. What do you advise this firm to do?
Stay at the current output; the firm is earning a profit of $400.
Which of the following countries has the largest union membership measured as the percentage of civilian employees in unions?
Sweden
Maximizing profit means finding the maximum difference between:
TR and TC
Which of the following is true for a pure monopolist?
The demand curve is above the marginal revenue curve.
Which of the following is a difference between a monopolist and a firm in perfect competition?
The marginal revenue curve is downward-sloping.
Which of the following will decrease the demand for fast-food burger workers' labor?
The price of pizza, a substitute for burgers, decreases.
Which of the following is a characteristic of a competitive price-taker market?
There are many firms in the market, each producing a small share of total market output.
The landmark antitrust case which established that size alone is not sufficient to prove an antitrust violation is the:
U.S. Steel case.
Which of the following statements are false? a. b and d. b. Marginal cost is always rising. c. Marginal and average total costs are equal at the most efficient d.production level. e.The AFC and AVC curves do not cross. f. The AFC and ATC curves do not cross.
a
Compared to a perfectly competitive industry, a monopolist with the same marginal cost and demand curve will charge:
a higher price and produce a lower volume of output.
Under perfect competition, no matter how much output is produced, the total revenue curve is:
a positively sloped line
Price discrimination occurs when:
a seller charges different prices to different consumers of the same product or service.
Compared to the perfectly competitive outcome, monopolistically competitive markets will result in:
a wider variety of products and higher prices.
Which of the following is characteristic of the marginal revenue product schedule for a resource?
all are true
The assumption(s) made to construct a kinked-demand oligopoly model is (are) that:
all firms will follow a price decrease but will ignore any price increase.
Deficient information on unsafe products can cause:
all of the above answers are true.
Exhibit 8-12 Marginal revenue and cost per unit curves The firm shown in Exhibit 8-12 will:
all of these
The MFC curve increases for a monopsonist because:
as more workers are hired, all workers receive higher wages.
A perfectly competitive firm's supply curve follows the upward-sloping segment of its marginal cost curve above the:
average variable cost curve.
If input prices for a perfectly competitive industry remain constant as the output of the industry expands in the long run, the industry supply curve will:
be perfectly horizontal
Exhibit 10-1 A monopolistic competitive firm In the long run, which of the following is true for the firm shown in Exhibit 10-1?
both a and b are possible
Suppose a monopolist and a perfectly competitive firm have the same cost curves. The monopolistic firm would:
charge a higher price than the perfectly competitive firm.
A firm is currently operating where the MC of the last unit produced = $84, and the MR of this unit = $70. What would you advise this firm to do?
decrease output
Exhibit 8-5 A firm's MR and MC curves In Exhibit 8-5, suppose a firm is currently producing 50 units of output. What would you advise this firm to do?
decrease output
The demand for a factor of production depends on the:
demand for the products that it helps to produce.
If the demand for the finished product increases, the:
demand for the resources will increase.
Which of the following is true about advertising? a. If monopolistically competitive firms compete through advertising, that creates brand loyalty, then advertising can be an effective entry cost. b. Advertising may be the only way that a new entrant can penetrate c. a market dominated by long-established firms. d. Advertising has no impact on entry costs or market structure. e. both a and b
e.
Which of the following represents an arbitrage transaction? a. Traders buy silks where they are abundant and cheap, and haul them along a trail to another place where they would be quite scarce and valued. b. A trader buys a block of government bonds in one market where it is temporarily priced below where it can be immediately resold in a different market. c. Someone buys a block of Final Four tickets and scalp them at the game. d. A senior citizen buys a block of theater tickets at a senior discount and scalps them to teenagers behind the theater. e. all of the above
e. all of the above
In the long run in monopolistic competition,
economic profits are zero.
Exhibit 8-14 Total cost and total revenue curves If the firm in Exhibit 8-14 minimizes its loss at 200 units of output, marginal cost is:
equal to the marginal revenue
A grocery store cannot sell Campbell Soup if it also sells other brands of soup. This is an example of:
exclusive dealing.
A monopolist that maximizes total revenue earns maximum economic profit.
false
A monopolist will charge a lower price and produce more output than if it was operating in a competitive market.
false
A monopolistically competitive firm, like a perfectly competitive firm, is a price taker.
false
A perfectly competitive industry must have a perfectly elastic long-run supply curve.
false
Antitrust laws in other countries are much stronger than U.S. antitrust laws.
false
Easy entry and exit cause oligopoly profits to be zero in the long run
false
In long-run equilibrium, a perfectly competitive firm will produce an output level at which its long-run average cost curve is upward sloping.
false
In the short run, the supply curve for a perfectly competitive firm is its marginal cost curve for all levels of output.
false
The Robinson-Patman Act strengthened the merger provisions of the Sherman Antitrust Act.
false
The long-run supply curve for a competitive industry always has a positive slope.
false
In a constant-cost industry, input prices remain constant as:
firms enter and exit the industry.
Monopolistic competition is inefficient because:
firms have excess capacity in the long run.
Perfectly competitive markets are characterized by:
firms selling a homogeneous product.
Assume the short-run average total cost for a perfectly competitive industry increases as the output of the industry expands. In the long run, the industry supply curve will:
have a positive slope
If a potato farmer expands output, he finds that the increase in total revenue is less than the increase in total costs. This means that:
he should not have expanded output.
An individual firm in a competitive labor market faces a(n):
horizontal labor supply curve.
Exhibit 10-4 Kinked demand curves In Exhibit 10-4, the exhibit represents a kinked-demand oligopoly model. Suppose the current price is $50. If one firm in the oligopoly now attempts to raise price, all firms will:
ignore this price increase and cause the price-raising firm to move along D1.
Exhibit 8-5 A firm's MR and MC curves In Exhibit 8-5, a firm is currently producing 40 units of output. What would you advise this firm to do?
increase output
Suppose that, in the long run, the price of feature films rises as the movie production industry expands. We can conclude that movie production is a(n):
increasing-cost industry.
Exhibit 8-6 A firm's cost and MC curves In Exhibit 8-6, if this firm is currently producing 20 units of output, this firm:
is at its profit-maximizing point.
Exhibit 8-7 A firm's cost and MR curves In Exhibit 8-7, if this firm is currently producing 20 units of output, this firm:
is at its profit-maximizing point.
If pizza used to be produced in a perfectly competitive market, and now the pizza market has become a monopoly, we can expect:
less pizza to be sold at a higher price.
The marginal approach to profit maximization means that a firm should produce until
marginal revenue equals marginal cost.
The demand for labor curve is identical to the:
marginal revenue product curve.
Under monopoly, a firm
maximizes profit by setting marginal cost equal to marginal revenue.
If a firm reacts to other firms' market decisions by anticipating how the other will then react, this is:
mutual interdependence
Exhibit 9-10 A monopolistI n Exhibit 9-10, at the profit-maximizing or loss-minimizing output, the monopolist's total economic profit is:
negative
One reason the supply of carpenters is greater than the supply of physicians is because:
none of the above
Which of the following is the best example of an investment in human capital?
on-the-job training received by an apprentice electrician
Exhibit 9-1 Monopolist's demand curve At an output of 100 units, marginal revenue for a monopolist with the demand curve shown in Exhibit 9-1 would be:
positive
In contrast to a perfectly competitive firm, a monopolist earns:
positive economic profit in the long run.
When the price of a good is a constant, the marginal revenue per unit of output is the same as
price
Exhibit 13-3 A monopolist In Exhibit 13-3, if this industry is regulated and the regulatory commission wants revenue to just cover cost, the proper price and output combination to be set is:
price = $5; output = 40.
If a firm's marginal revenue from its 100th unit of output is $50 and the marginal cost from its 100th unit of output is $45, then in the short run this firm should:
produce more than 99 units of output.
The theory of monopolistic competition predicts that in long-run equilibrium a monopolistically competitive firm will:
produce the output level at which price equals long-run average cost.
Which of the following is always associated with monopolistic competition?
product differentation
As new firms enter a monopolistic competitive industry, it can be expected that:
profits of existing firms will decrease
According to the kinked demand theory, when one firm raises its price, other firms will:
refuse to follow
If marginal cost exceeds marginal revenue, a profit-maximizing monopolist will:
restrict output to increase the price even higher.
A monopoly is a sole ____, and a monopsonist is a sole ____.
seller in a product market; buyer in a labor market
Suppose a monopolist's demand curve lies below its average variable cost curve. The firm will:
shut down
If a competitive firm is losing money then it should:
shut down if its losses are greater than total fixed costs.
If regulation imposes marginal cost pricing on a natural monopoly, then the monopoly will:
suffer persistent economic losses.
One key characteristic that is distinctive of an oligopoly market is that:
the decisions of one seller often influences the price of products, the output, and the profits of rival firms.
The demand curve for a monopolist is:
the demand curve for the industry.
A vertical merger occurs when:
the firms stood in a buyer-seller relationship before the merger.
A monopoly is:
the only seller of a good for which there are no good substitutes in a market with high barriers to entry
Although U.S. Steel controlled nearly 75 percent of the domestic iron and steel industry, in 1920 the Supreme Court ruled that the firm was not in violation of the Sherman Antitrust Act because there was no evidence of abusive behavior. What antitrust doctrine was the court applying in this case?
the rules of reason
Under the Clayton Act,
the same person cannot sit on the boards of directors of competing corporations.
If the marginal product of labor is always positive, the total revenue will grow with each additional worker. Firms do not continuously hire new workers because:
they stop when MRP = wage
A decrease in the price of the output will decrease the firm's demand for labor.
true
A perfectly competitive firm will shut down in the short run when marginal revenue equals marginal cost at a price less than minimum average variable cost.
true
A perfectly competitive market is characterized by the free entry and exit of firms.
true
In the United States during the 1980s, there was a movement toward deregulation of industry.
true
Oligopolies have few sellers and difficult entry.
true
The Federal Trade Commission is charged with protecting consumers from false and misleading advertising.
true
The Sherman Antitrust Act was not specific enough to eliminate monopolies in the United States.
true
The short-run supply curve and short-run marginal cost curve for a perfectly competitive firm coincide when the market price is greater than average variable cost.
true
To maximize profit, a monopsonist hires workers up to the point at which marginal factor cost (MFC) equals marginal revenue product (MRP).
true
Firms that place their assets in the custody of a board of trustees is called a(n):
trust
The labor supply curve facing a monopsonist is:
upward slopping
In the long run, both monopolistic competition and perfect competition result in:
zero economic profit for firms.
