EC202 CH. 9-11 - Assignment Essays

question

A firm characterized as a price-taker:

answer

has no control over the price it pays, or receives, in the market.

question

Which of the following lists the three main characteristics of a competitive market?

answer

many buyers and sellers, similar products, easy entry into the market

question

Which characteristic of competitive markets is mainly responsible for firms making zero economic profits in the long run?

answer

easy entry into and exit from the market

question

Marginal revenue is the change in total:

answer

revenue when the firm produces additional units

question

Profit maximization occurs when:

answer

a firm expands output until marginal revenue is equal to marginal cost.

question

When marginal revenue equals marginal cost

answer

firms are maximizing profits, so they should continue at that production level

question

Refer to the accompanying figure. Point _________ corresponds to the profit-maximizing quantity that a competitive firm would produce

answer

Point C

question

If this firm is maximizing profits, total revenue is represented by the area:

answer

A x C

question

If the firm is maximizing profits, total cost is represented by the area:

answer

B x C

question

If the firm is maximizing profits, profit is represented by the area:

answer

(A−B)×C

question

All firms, no matter what type of firm structure they are producing in, make their production decisions based on the point where their:

answer

marginal revenue equals marginal costs

question

Profits are maximized when producing:

answer

3 units

question

When profits are maximized, profits are equal to:

answer

question

Assuming that all firms have the same cost structure, the price is:

answer

question

If a competitive firm can make enough revenue to cover its variable costs, the firm will:

answer

choose to remain open

question

Which of the following conditions will result in the firm making an economic profit?

answer

P>ATC

question

Which of the following conditions will result in the firm making zero economic profits?

answer

P=ATC

question

Refer to the accompanying figure. If the price is $8, the firm is making:

answer

a profit and more firms will enter the market in the long run

question

Firms will always stay in the market if the price they charge is:

answer

greater than their minimum average variable cost (AVC)

question

Refer to the accompanying table. A firm participating in a competitive market with these costs would be indifferent about producing or shutting down if the price is:

answer

question

The marginal cost curve is the short-run supply curve:

answer

as long as the firm is operating

question

A firm’s short-run supply curve is equal to the firm’s:

answer

marginal cost curve above minimum average variable cost (AVC)

question

Refer to the accompanying figure. This firm’s short-run supply curve is represented by the:

answer

marginal cost (MC) curve above $15

question

A firm’s willingness to supply its product in the short run is represented on a graph by the:

answer

part of the marginal cost (MC) curve above minimum average variable cost (AVC)

question

It’s easy to determine if a firm is making long-run production decisions by looking at its cost structure because, in the long run, a firm does not have any:

answer

fixed costs

question

If the market price of a product is between the minimum average variable cost (AVC) and minimum average total cost (ATC) of a firm, that firm will:

answer

produce in the short run but shut down in the long run

question

At current production levels, the marginal revenue of a competitive firm is $15 and the marginal cost of the firm is $15. The firm should

answer

continue producing at current levels

question

According to the accompanying figure, if the price is $5, the firm is making:

answer

zero profits and the market is at long-run equilibrium

question

A firm will shut down in the long-run if the:

answer

price is anywhere below the minimum average total cost (ATC)

question

This firm would shut down in the long run if the price:

answer

Fell below $5

question

If the price is $3, the firm is making:

answer

a loss and will exit the market

question

Refer to the accompanying figure. A firm would produce in the long-run only if the market price is:

answer

above $20

question

A firm’s willingness to supply its product in the long run is represented on a graph by the:

answer

part of the marginal cost (MC) curve above minimum average total cost (ATC)

question

Costs that have been incurred as a result of past decisions are known as:

answer

sunk costs

question

Signals:

answer

convey information about the profitability of various markets

question

If the short-run supply curve and the demand curve intersect below the long-run supply curve, firms will experience __________ economic profits, meaning the price is __________ the minimum point on the average total cost curve

answer

negative; below

question

If Firm A is making zero economic profits,

answer

Firm A is breaking even when opportunity cost is taken into consideration

question

If firms in a competitive market are making positive economic profits, you would expect firms to:

answer

enter the market, causing the market supply curve to shift to the right

question

Holding all else constant, a decrease in the market demand for a product in a competitive market would cause:

answer

the marginal revenue (MR) curve of the firms to shift downward

question

A monopoly:

answer

is characterized by a single seller who produces a well-defined product for which there are no good substitutes

question

Two conditions allow a single seller to become a monopolist. Those two conditions are that the firm must:

answer

have something unique to sell and it must have a way to prevent potential competitors from entering the market

question

The typical result of monopoly is ____________ prices and ____________ output than we find in a competitive market

answer

higher; lower

question

Three natural barriers to entry are:

answer

economies of scale, problems raising capital, and control of resources

question

A natural monopoly:

answer

exists when a single seller experiences lower average total costs than any potential competitor

question

Apple and Google apply for hundreds of patents every year. These patents

answer

provide incentives for Apple and Google to spend large amounts of money up front on research and development of new products

question

Both monopolies and competitive firms:

answer

try to maximize profits

question

A price-maker:

answer

has some control over the price it charges

question

The profit-maximizing rule for a monopolist is:

answer

Marginal revenue = marginal cost.

question

The demand curve for the product of a firm in a competitive market is ____________, and the demand curve for the product of a monopolist is ____________.

answer

horizontal; downward-sloping

question

Because the demand curve for a monopolist is downward sloping:

answer

the monopolist has many price-output combinations

question

When marginal revenue is negative, the:

answer

lost revenues associated with the price effect outweigh the revenue gains created by the

output effect.

question

At high price levels, demand tends to be ____________ and the price effect is ____________, relative to the output effect.

answer

elastic; small

question

At low price levels, demand tends to be ____________ and the price effect is ____________, relative to the output effect

answer

inelastic; large

question

If a monopolist is producing a quantity where marginal revenue is equal to $32 and the marginal cost is equal to $30, the monopolist should:

answer

increase production and lower the price to maximize profits

question

This firm:

answer

cannot make a profit

question

This profit-maximizing firm’s total profit is equal to:

answer

−$160

question

The profit-maximizing price and quantity are:

answer

$26 and 20, respectively

question

As production increases the price consumers are willing to pay for the good:

answer

decreases

question

The profit-maximizing quantity for this firm is:

answer

question

The profit-maximizing price for this firm is:

answer

question

The profit made by this profit-maximizing firm is:

answer

question

The equation of a firm’s marginal revenue curve is estimated to be price = 50 − Q (quantity), and the equations of their marginal cost curve is estimated to be price = 10 + 3Q. The profit- maximizing quantity for this firm is:

answer

question

When a monopolist lowers its price from $80 to $70, the quantity it is able to sell increases from 100 to 150. The change in revenue associated with the output effect is equal to:

answer

$3500

question

When the price changes from $50 to $30, the price effect leads to a loss of ____________ in revenue.

answer

$600

question

When the price changes from $50 to $30, the output effect leads to an increase of ____________ in revenue.

answer

$450

question

The equation of a firm’s marginal revenue curve is estimated to be P = 50 − Q (quantity), and the equations of their marginal cost curve is estimated to be P = 10 + 3Q. The profit-maximizing price for this firm is:

answer

$40

question

Which of the following is a characteristic of a monopoly but not a characteristic of a competitive market?

answer

A monopoly may earn long-run economic profits

question

Which of the following is a characteristic of a monopoly but not of a competitive market?

answer

price > marginal cost

question

The profit-maximizing price and quantity are:

answer

$25 and 100, respectively

question

When this firm is producing at the profit-maximizing price and quantity, its total revenue is:

answer

$2500

question

If a firm is producing a quantity of 150 and charging a price of $13, it:

answer

should lower production to 100 units and raise the price to $25 to maximize profits

question

If a firm is producing a quantity of 100 and charging a price of $10, it:

answer

should continue to produce 100 units but raise the price to $25 to maximize profits

question

If a firm is producing a quantity of 100 and charging a price of $25, it:

answer

is already maximizing profits and should not change the price or quantity produced

question

Refer to the accompanying figure. The revenue received by the profit-maximizing monopolist in this market is represented by:

answer

C + D + F + G + I + J

question

Deadweight loss results in a monopoly because:

answer

some consumers who would benefit from a competitive market lose out

question

The deadweight loss associated with this profit-maximizing monopoly is represented by area(s):

answer

E+H

question

The consumer surplus associated with this profit-maximizing monopoly is represented by areas:

answer

A + B

question

Which areas of the graph represent the consumer surplus transferred to the monopolist as a result of the monopolist taking over the market?

answer

C+D

question

The deadweight loss associated with this profit-maximizing monopoly is equal to:

answer

$100

question

Consumer surplus associated with a profit-maximizing monopoly is equal to:

answer

$300

question

The consumer surplus that is transferred to the monopolist as a result of the monopolist taking over the market is:

answer

$150

question

Rent-seeking occurs when:

answer

resources are used to secure monopoly rights through the political process

question

Price discrimination exists when a firm sells __________ goods at more than one price to __________ groups of customers

answer

identical; different

question

For a firm to be able to practice price discrimination, it must be a:

answer

price-maker

question

One reason that firms may be unable to utilize price discrimination as a viable strategy is because:

answer

firms are unable to prevent resale of the product they offer for sale

question

Price discrimination allows firms to make more money by partitioning their customers into at least two distinct groups, those that:

answer

will get a discount and those that are willing to pay more

question

If a firm is unable to distinguish which of their buyers has inelastic demand and which has a relatively elastic demand, then the firm will be unable to price discriminate because they will:

answer

not know which price to charge which customer

question

Firms are most likely to engage in price discrimination if:

answer

the goods cannot be resold in the market

question

Price discrimination can help improve efficiency in the market because goods are sold to more people, thus increasing profits. If all consumers have similar tastes, will a firm be able to price- discriminate?

answer

No, because the firm will not be able to distinguish among groups of consumers

question

The main reason firms cannot price-discriminate under perfect competition is because:

answer

firms are price-takers and cannot set prices for their goods

question

Price discrimination allows businesses to make additional profits and allows markets to work more:

answer

efficiently

question

Perfect price discrimination occurs when a firm is able to:

answer

charge each buyer the highest price she or he is willing to pay for the good

question

EJH Cinemas, a movie theater next to your university, attracts two types of customers: those who are associated with the university (students, faculty, and staff) and locals who live in the surrounding area. There are 10,000 university customers interested in purchasing movie tickets from EJH Cinemas, with a maximum willingness to pay of $7 per ticket. There are 20,000 local customers interested in purchasing tickets, with a maximum willingness to pay of $9 per ticket. The movie theater incurs a constant marginal cost of $4 per ticket. For simplicity, assume each customer purchases, at most, one ticket.

- What will be the amount of EJH Cinemas’ total revenue if the price is $7 per ticket?

answer

$210,000

question

- What is the amount of consumer surplus if the price is $7 per ticket?

answer

$40,000

question

- What will be the amount of EJH Cinemas’ total revenue if the price is $9 per ticket?

answer

$180,000

question

- What is the amount of consumer surplus if the price is $9 per ticket?

answer

question

- If EJH Cinemas decides to practice price discrimination, charging $9 for a standard ticket available to everyone but only $7 for a ticket if you show your university identification (students, faculty, and staff), what will be the movie theater’s total revenue?

answer

$250,000

question

answer

question

When a market model moves from that of a monopoly to one in which perfect price discrimination is practiced, the deadweight loss:

answer

decreases

question

For a perfectly competitive market, which area(s) are designated as consumer surplus?

answer

A+B+C

question

For a monopoly that charges a single price of P1, which area(s) are designated as consumer surplus?

answer

question

If the firm can price-discriminate perfectly, which area(s) are designated as consumer surplus?

answer

There is no consumer surplus

question

For a perfectly competitive market, which area(s) are designated as deadweight loss?

answer

There is no deadweight loss

question

For a monopoly that charges a single price of P1, which area(s) are designated as deadweight loss?

answer

question

If the firm can perfectly price discriminate, which area(s) are designated as deadweight loss?

answer

There is no deadweight loss

question

In a price discrimination setting, who pays the higher price for the same good?

answer

The consumers with the most inelastic demand pay the highest price

1 of 106

question

A firm characterized as a price-taker:

answer

has no control over the price it pays, or receives, in the market.

question

Which of the following lists the three main characteristics of a competitive market?

answer

many buyers and sellers, similar products, easy entry into the market

question

Which characteristic of competitive markets is mainly responsible for firms making zero economic profits in the long run?

answer

easy entry into and exit from the market

question

Marginal revenue is the change in total:

answer

revenue when the firm produces additional units

question

Profit maximization occurs when:

answer

a firm expands output until marginal revenue is equal to marginal cost.

question

When marginal revenue equals marginal cost

answer

firms are maximizing profits, so they should continue at that production level

question

Refer to the accompanying figure. Point _________ corresponds to the profit-maximizing quantity that a competitive firm would produce

answer

Point C

question

If this firm is maximizing profits, total revenue is represented by the area:

answer

A x C

question

If the firm is maximizing profits, total cost is represented by the area:

answer

B x C

question

If the firm is maximizing profits, profit is represented by the area:

answer

(A−B)×C

question

All firms, no matter what type of firm structure they are producing in, make their production decisions based on the point where their:

answer

marginal revenue equals marginal costs

question

Profits are maximized when producing:

answer

3 units

question

When profits are maximized, profits are equal to:

answer

question

Assuming that all firms have the same cost structure, the price is:

answer

question

If a competitive firm can make enough revenue to cover its variable costs, the firm will:

answer

choose to remain open

question

Which of the following conditions will result in the firm making an economic profit?

answer

P>ATC

question

Which of the following conditions will result in the firm making zero economic profits?

answer

P=ATC

question

Refer to the accompanying figure. If the price is $8, the firm is making:

answer

a profit and more firms will enter the market in the long run

question

Firms will always stay in the market if the price they charge is:

answer

greater than their minimum average variable cost (AVC)

question

Refer to the accompanying table. A firm participating in a competitive market with these costs would be indifferent about producing or shutting down if the price is:

answer

question

The marginal cost curve is the short-run supply curve:

answer

as long as the firm is operating

question

A firm’s short-run supply curve is equal to the firm’s:

answer

marginal cost curve above minimum average variable cost (AVC)

question

Refer to the accompanying figure. This firm’s short-run supply curve is represented by the:

answer

marginal cost (MC) curve above $15

question

A firm’s willingness to supply its product in the short run is represented on a graph by the:

answer

part of the marginal cost (MC) curve above minimum average variable cost (AVC)

question

It’s easy to determine if a firm is making long-run production decisions by looking at its cost structure because, in the long run, a firm does not have any:

answer

fixed costs

question

If the market price of a product is between the minimum average variable cost (AVC) and minimum average total cost (ATC) of a firm, that firm will:

answer

produce in the short run but shut down in the long run

question

At current production levels, the marginal revenue of a competitive firm is $15 and the marginal cost of the firm is $15. The firm should

answer

continue producing at current levels

question

According to the accompanying figure, if the price is $5, the firm is making:

answer

zero profits and the market is at long-run equilibrium

question

A firm will shut down in the long-run if the:

answer

price is anywhere below the minimum average total cost (ATC)

question

This firm would shut down in the long run if the price:

answer

Fell below $5

question

If the price is $3, the firm is making:

answer

a loss and will exit the market

question

Refer to the accompanying figure. A firm would produce in the long-run only if the market price is:

answer

above $20

question

A firm’s willingness to supply its product in the long run is represented on a graph by the:

answer

part of the marginal cost (MC) curve above minimum average total cost (ATC)

question

Costs that have been incurred as a result of past decisions are known as:

answer

sunk costs

question

Signals:

answer

convey information about the profitability of various markets

question

answer

negative; below

question

If Firm A is making zero economic profits,

answer

Firm A is breaking even when opportunity cost is taken into consideration

question

If firms in a competitive market are making positive economic profits, you would expect firms to:

answer

enter the market, causing the market supply curve to shift to the right

question

Holding all else constant, a decrease in the market demand for a product in a competitive market would cause:

answer

the marginal revenue (MR) curve of the firms to shift downward

question

A monopoly:

answer

is characterized by a single seller who produces a well-defined product for which there are no good substitutes

question

Two conditions allow a single seller to become a monopolist. Those two conditions are that the firm must:

answer

have something unique to sell and it must have a way to prevent potential competitors from entering the market

question

The typical result of monopoly is ____________ prices and ____________ output than we find in a competitive market

answer

higher; lower

question

Three natural barriers to entry are:

answer

economies of scale, problems raising capital, and control of resources

question

A natural monopoly:

answer

exists when a single seller experiences lower average total costs than any potential competitor

question

Apple and Google apply for hundreds of patents every year. These patents

answer

provide incentives for Apple and Google to spend large amounts of money up front on research and development of new products

question

Both monopolies and competitive firms:

answer

try to maximize profits

question

A price-maker:

answer

has some control over the price it charges

question

The profit-maximizing rule for a monopolist is:

answer

Marginal revenue = marginal cost.

question

The demand curve for the product of a firm in a competitive market is ____________, and the demand curve for the product of a monopolist is ____________.

answer

horizontal; downward-sloping

question

Because the demand curve for a monopolist is downward sloping:

answer

the monopolist has many price-output combinations

question

When marginal revenue is negative, the:

answer

lost revenues associated with the price effect outweigh the revenue gains created by the

output effect.

question

At high price levels, demand tends to be ____________ and the price effect is ____________, relative to the output effect.

answer

elastic; small

question

At low price levels, demand tends to be ____________ and the price effect is ____________, relative to the output effect

answer

inelastic; large

question

If a monopolist is producing a quantity where marginal revenue is equal to $32 and the marginal cost is equal to $30, the monopolist should:

answer

increase production and lower the price to maximize profits

question

This firm:

answer

cannot make a profit

question

This profit-maximizing firm’s total profit is equal to:

answer

−$160

question

The profit-maximizing price and quantity are:

answer

$26 and 20, respectively

question

As production increases the price consumers are willing to pay for the good:

answer

decreases

question

The profit-maximizing quantity for this firm is:

answer

question

The profit-maximizing price for this firm is:

answer

question

The profit made by this profit-maximizing firm is:

answer

question

answer

question

When a monopolist lowers its price from $80 to $70, the quantity it is able to sell increases from 100 to 150. The change in revenue associated with the output effect is equal to:

answer

$3500

question

When the price changes from $50 to $30, the price effect leads to a loss of ____________ in revenue.

answer

$600

question

When the price changes from $50 to $30, the output effect leads to an increase of ____________ in revenue.

answer

$450

question

answer

$40

question

Which of the following is a characteristic of a monopoly but not a characteristic of a competitive market?

answer

A monopoly may earn long-run economic profits

question

Which of the following is a characteristic of a monopoly but not of a competitive market?

answer

price > marginal cost

question

The profit-maximizing price and quantity are:

answer

$25 and 100, respectively

question

When this firm is producing at the profit-maximizing price and quantity, its total revenue is:

answer

$2500

question

If a firm is producing a quantity of 150 and charging a price of $13, it:

answer

should lower production to 100 units and raise the price to $25 to maximize profits

question

If a firm is producing a quantity of 100 and charging a price of $10, it:

answer

should continue to produce 100 units but raise the price to $25 to maximize profits

question

If a firm is producing a quantity of 100 and charging a price of $25, it:

answer

is already maximizing profits and should not change the price or quantity produced

question

Refer to the accompanying figure. The revenue received by the profit-maximizing monopolist in this market is represented by:

answer

C + D + F + G + I + J

question

Deadweight loss results in a monopoly because:

answer

some consumers who would benefit from a competitive market lose out

question

The deadweight loss associated with this profit-maximizing monopoly is represented by area(s):

answer

E+H

question

The consumer surplus associated with this profit-maximizing monopoly is represented by areas:

answer

A + B

question

Which areas of the graph represent the consumer surplus transferred to the monopolist as a result of the monopolist taking over the market?

answer

C+D

question

The deadweight loss associated with this profit-maximizing monopoly is equal to:

answer

$100

question

Consumer surplus associated with a profit-maximizing monopoly is equal to:

answer

$300

question

The consumer surplus that is transferred to the monopolist as a result of the monopolist taking over the market is:

answer

$150

question

Rent-seeking occurs when:

answer

resources are used to secure monopoly rights through the political process

question

Price discrimination exists when a firm sells __________ goods at more than one price to __________ groups of customers

answer

identical; different

question

For a firm to be able to practice price discrimination, it must be a:

answer

price-maker

question

One reason that firms may be unable to utilize price discrimination as a viable strategy is because:

answer

firms are unable to prevent resale of the product they offer for sale

question

Price discrimination allows firms to make more money by partitioning their customers into at least two distinct groups, those that:

answer

will get a discount and those that are willing to pay more

question

If a firm is unable to distinguish which of their buyers has inelastic demand and which has a relatively elastic demand, then the firm will be unable to price discriminate because they will:

answer

not know which price to charge which customer

question

Firms are most likely to engage in price discrimination if:

answer

the goods cannot be resold in the market

question

answer

No, because the firm will not be able to distinguish among groups of consumers

question

The main reason firms cannot price-discriminate under perfect competition is because:

answer

firms are price-takers and cannot set prices for their goods

question

Price discrimination allows businesses to make additional profits and allows markets to work more:

answer

efficiently

question

Perfect price discrimination occurs when a firm is able to:

answer

charge each buyer the highest price she or he is willing to pay for the good

question

- What will be the amount of EJH Cinemas’ total revenue if the price is $7 per ticket?

answer

$210,000

question

- What is the amount of consumer surplus if the price is $7 per ticket?

answer

$40,000

question

- What will be the amount of EJH Cinemas’ total revenue if the price is $9 per ticket?

answer

$180,000

question

- What is the amount of consumer surplus if the price is $9 per ticket?

answer

question

answer

$250,000

question

answer

question

When a market model moves from that of a monopoly to one in which perfect price discrimination is practiced, the deadweight loss:

answer

decreases

question

For a perfectly competitive market, which area(s) are designated as consumer surplus?

answer

A+B+C

question

For a monopoly that charges a single price of P1, which area(s) are designated as consumer surplus?

answer

question

If the firm can price-discriminate perfectly, which area(s) are designated as consumer surplus?

answer

There is no consumer surplus

question

For a perfectly competitive market, which area(s) are designated as deadweight loss?

answer

There is no deadweight loss

question

For a monopoly that charges a single price of P1, which area(s) are designated as deadweight loss?

answer

question

If the firm can perfectly price discriminate, which area(s) are designated as deadweight loss?

answer

There is no deadweight loss

question

In a price discrimination setting, who pays the higher price for the same good?

answer

The consumers with the most inelastic demand pay the highest price

Order an Essay Now & Get These Features For Free:

Turnitin Report

Formatting

Title Page

Citation

Outline

Place an Order