Econ 102 Gordon test 4 - Assignment Essays

question

Everything Below is chapter 8

answer

------------------

question

A perfectly competitive market is characterized by:

answer

many buyers and sellers, a standardized product, and free entry and exit.

question

In a perfectly competitive market, _____.

answer

buyers and sellers are fully informed about the price and availability of all resources and products

question

In _____, a firm is so small relative to the size of the market that the firm's decision about how much to produce has no effect on the market price.

answer

perfect competition

question

In a perfectly competitive market, the market demand curve is _____, while an individual firm's demand curve is _____.

answer

downward sloping; horizontal

question

The demand curve facing a perfectly competitive firm is:

answer

perfectly elastic.

question

Each firm tries to maximize economic profit. Economic profit equals:

answer

the difference between total revenue and total cost.

question

To maximize total profit in the short run, a perfectly competitive firm must find:

answer

the quantity at which total revenue exceeds total cost by the greatest amount.

question

In a perfectly competitive market, each firm tries to maximize profit by:

answer

controlling its quantity supplied.

question

The total revenue earned by a firm can be calculated by:

answer

multiplying the total output produced by the firm by the market price of a product.

question

Which of the following is true of a perfectly competitive market?

answer

Marginal revenue equals market price.

question

If marginal revenue exceeds marginal cost, then a profit-maximizing perfectly competitive firm should:

answer

increase output.

question

Profit is maximized at the rate of output where _____.

answer

marginal revenue equals marginal cost

question

The profit-maximizing rate of output for a firm in a perfectly competitive market is found where:

answer

price equals marginal cost.

question

If price is less than marginal cost, a profit-maximizing perfectly competitive firm should:

answer

decrease output

question

A perfectly competitive firm will choose to shut down if _____ at all rates of output.

answer

its average variable cost exceeds the price

question

_____ is the sunk cost for a perfectly competitive firm in the short run, whether the firm produces or shuts down.

answer

Fixed cost

question

In the short run, a perfectly competitive firm will shut down if:

answer

total revenue is less than total variable cost.

question

A perfectly competitive firm should produce in the short run:

answer

as long as price exceeds average variable cost.

question

The perfectly competitive firm's supply curve is:

answer

that portion of the marginal cost curve that intersects and rises above the average variable cost curve.

question

Identify the correct statement about the short-run supply curve of a firm.

answer

It is an upward-sloping curve.

question

The short-run industry supply curve is the:

answer

horizontal sum of all the firms' short-run supply curves.

question

In short-run equilibrium, under perfect competition, _____.

answer

economic profit earned by firms can be negative, zero, or positive

question

In a perfectly competitive market, equilibrium price is determined:

answer

at the point of intersection of the market demand and the market supply curves.

question

In a perfectly competitive market, a firm operating in the long run is forced by competition to adjust its scale of operation:

answer

until average cost is minimized.

question

Which of the following is true of the long-run equilibrium for firms and an industry in perfect competition?

answer

Firms produce output where price equals marginal cost, which also corresponds to the point where the marginal cost curve intersects the long-run average cost curve.

question

In a perfectly competitive market, as a result of a decrease in demand, _____ in the long run.

answer

some firms are forced out of business

question

Which of the following industry types features a horizontal long-run supply curve?

answer

A constant-cost industry

question

Which of the following is true of a constant cost industry?

answer

Each firm's long-run average cost curve does not shift as industry output changes.

question

The long-run supply curve of firms in an increasing cost industry is:

answer

upward sloping.

question

Which of the following is true of perfect competition?

answer

It guarantees both allocative efficiency and productive efficiency in the long run.

question

_____ efficiency occurs when a firm produces at the minimum point on its long-run average cost curve.

answer

Productive

question

_____ will ensure that each firm produces at the minimum point of its long-run average cost curve in a perfectly competitive market.

answer

The entry and exit of firms

question

Allocative efficiency occurs when firms produce the output corresponding to the point:

answer

where marginal benefit equals marginal cost.

question

If resources are allocated in such a way that there is no other way to increase the total utility of consumers, _____.

answer

a market is said to be allocatively efficient

question

Everything below is chapter 9

answer

---------

question

A monopolized market is characterized by:

answer

a sole supplier, no close substitutes, and barriers to entry.

question

Which of the following is true of a monopolist?

answer

A monopolist has the exclusive right to supply a good or service if it has a patent on the good or service.

question

Which of the following is true of a patent in the United States?

answer

It grants the holder the exclusive right to sell a product for 20 years.

question

Which of the following is true of the shape of the demand curve facing a monopolist?

answer

It is downward sloping.

question

The demand curve faced by a monopolist is the same as the:

answer

market demand curve.

question

For a monopolist, _____.

answer

marginal revenue is less than average revenue

question

For a monopolist, _____.

answer

marginal revenue is less than average revenue

question

Which of the following is a similarity between a monopoly firm and a perfectly competitive firm?

answer

The demand curve is the average revenue curve for both firms.

question

For a monopolist, marginal revenue is:

answer

less than price.

question

Which of the following is a difference between monopoly and perfect competition?

answer

A perfectly competitive firm's marginal revenue equals price, while a monopolist's marginal revenue is less than price.

question

When a monopolist's marginal revenue is zero, _____.

answer

total revenue is at a maximum

question

At the rate of output where a monopolist's marginal revenue equals zero, the price elasticity of demand for the monopolist's product is _____.

answer

equal to one

question

In order to increase total revenue, a profit-maximizing monopolist should never expand output to the:

answer

inelastic portion of the demand curve for a good.

question

A monopolist's profit-maximizing level of output occurs at the point where:

answer

marginal revenue equals marginal cost.

question

A firm that is the only seller in a market _____.

answer

is likely to charge a price that is limited by consumer demand

question

For a monopolist producing output at a level where profit is maximized, _____.

answer

price exceeds marginal cost.

question

A monopoly firm will shut down in the short run if:

answer

price falls below the average variable cost.

question

The supply curve for a monopolist:

answer

cannot be constructed.

question

A monopolist is likely to shut down in the short run if:

answer

the average variable cost curve is above the average revenue curve at all output rates.

question

Which of the following is likely to ensure that a monopolist earns positive economic profits in the long run?

answer

High barriers that block new entry

question

A monopolist produces:

answer

less output than a perfectly competitive firm and charges a higher price.

question

Allocative inefficiency arises in a:

answer

monopoly as it produces less output than a perfectly competitive firm and charges a higher price.

question

The output produced by a profit-maximizing monopolist:

answer

is less than the level that would maximize social welfare.

question

The deadweight or social loss of a monopoly:

answer

arises as monopolists restrict output and increase prices.

question

A monopolist might keep prices below the profit-maximizing level:

answer

because of government intervention and scrutiny.

question

To practice price discrimination, a firm must:

answer

have different groups of customers with different price elasticities of demand.

question

Which of the following correctly describes price discrimination?

answer

Selling the same good or service for different prices to different consumers for reasons unrelated to cost

question

Which of the following is an example of price discrimination?

answer

Charging lower admission prices to movies from senior citizens

question

Everything below is chapter 10

answer

--------

question

In monopolistic competition:

answer

there are many close substitutes for the products offered by each firm.

question

From the following, identify the correct statement.

answer

Firms under monopolistic competition can enter or leave the market with ease in the long run.

question

Firms that operate in a monopolistically competitive market:

answer

are price makers and not price takers.

question

Which of the following can serve as a product differentiation tool in the hands of sellers in a monopolistically competitive market?

answer

The package design

question

Which of the following exemplifies the spatial differentiation used by firms under monopolistic competition to differentiate their product in the market?

answer

A diamond jeweler offering products online and at retail stores situated at convenient locations

question

Which of the following is an example of product differentiation based on services offered by firms in a monopolistically competitive market?

answer

A cash back guarantee offered by a watch manufacturer in case of manufacturing defects

question

Which of the following is true of the profit-maximizing level of output selected by a monopolistically competitive firm in the short run?

answer

Output is set in the short run where marginal cost equals marginal revenue.

question

Which of the following is true of a monopolistically competitive firm in the short run?

answer

As long as price exceeds average variable cost, the firm in the short run loses less by producing than by shutting down

question

Like a perfect competitor, a monopolistic competitor:

answer

earns zero economic profit in the long run.

question

Which of the following is true about long-run profits for monopolistically competitive firms?

answer

Monopolistically competitive firms always experience zero economic profits in the long run.

question

Which of the following is a possible reason for zero economic profit earned by a monopolistically competitive firm in the long run?

answer

Low barriers to entry

question

A firm in a monopolistically competitive industry is likely to earn zero economic profit in the long run if:

answer

enough firms enter the industry.

question

In the long run, a monopolistically competitive firm will:

answer

produce less than a perfectly competitive firm.

question

The difference between a firm's profit-maximizing quantity and the quantity that minimizes average cost is called:

answer

excess capacity.

question

A monopolistically competitive firm with excess capacity can reduce its average cost of production by:

answer

increasing the quantity of output produced

question

Oligopoly is a market structure characterized by a _____ number of firms who behave _____.

answer

small; interdependently

question

Identify a statement that is true of an oligopoly.

answer

Any change in the price of a product by an oligopoly firm may prompt a reaction from its rivals.

question

A market structure characterized by a very few firms who behave interdependently is known as:

answer

an oligopoly.

question

Which of the following is a possible effect of costly advertisement campaigns by a new firm to promote a new product in a market dominated by well established brands?

answer

Costly advertisement campaigns may cripple a new firm if the product fails.

question

New firms may find it difficult to enter an oligopoly industry if:

answer

the total investment required to reach the minimum efficient scale is high.

question

If firms in an oligopolistic industry face high fixed costs, then:

answer

competition is likely to be low.

question

Oligopolies compete with existing rivals and try to block new entry by:

answer

offering a variety of products.

question

Suppose, Nelson & Robinson, a renowned manufacturer of herbal products, introduces 16 new varieties of facial cleansers and shower gels within the same year. This will:

answer

allow the company to crowd out new entrants in the market.

question

Competition in an oligopolistic industry is likely to be high if:

answer

the cost incurred to get to minimum efficient scale is low.

question

Which of the following correctly defines a cartel?

answer

A group of firms that agree to coordinate their production and pricing decision to reap monopoly profits

question

Which of the following is one of the problems encountered by the Organization for Petroleum Exporting Countries (OPEC) oil cartel?

answer

There has been considerable cheating by OPEC members on their quantity allocations.

question

It is easier for firms to form and maintain a cartel when:

answer

there are greater barriers to entry.

question

A firm whose price is matched by other firms in the market as a form of tacit collusion is called:

answer

a price leader.

question

Which of the following is a possible reason for price leadership as a means of collusion to be less effective?

answer

High level of product differentiation among sellers

question

Identify a statement that is true of price leadership.

answer

A price leader may lose business if other firms do not follow its pricing decisions.

question

In game theory, the outcome achieved when each player's choice does not depend on what the other player does is called:

answer

the dominant-strategy equilibrium.

question

_____ is a situation in which a firm or a player in game theory chooses the best strategy given the strategies chosen by others.

answer

Nash equilibrium

question

Which of the following is true of Nash equilibrium?

answer

In some games, the outcome achieved at the equilibrium may not be optimal for all the players.

question

Compared to perfect competition, in oligopoly:

answer

both price and profits are normally higher.

question

Oligopoly _____ than perfect competition due to the efficiency arising from the economies of scale of its large firms.

answer

enjoys higher profits

question

An oligopoly firm that enjoys huge brand loyalty will:

answer

earn long-run economic profit.

question

With regard to economic growth, what is the current state of the economy?

answer

expansion

question

How long has the economy been in this condition?

answer

10 years and 5 months as of November 2019

question

is the current condition of the economy above or below average in length?

answer

above

question

How do you know if the current condition of the economy is above or below average in length?

answer

Average length expansions since wwii has lasted 58 months (5 years)

question

What is the current unemployment rate?

answer

The unemployment rate is 3.5% for November 2019

question

Is this relatively high or low rate of unemployment?

answer

low

question

How do you know if the current rate is relatively high or low?

answer

Economists believe that any rate of unemployment between 3-6% constitutes full employment

question

What is the current rate of inflation?

answer

For the 12 month period ending in October 2019, the rate of inflation was 1.8%

question

Is this relatively high or low rate of inflation?

answer

low

question

How do you know if the inflation rate is relatively high or low?

answer

Economists believe that any rate of inflation of 3% or less constitutes price stability

1 of 111

question

Everything Below is chapter 8

answer

------------------

question

A perfectly competitive market is characterized by:

answer

many buyers and sellers, a standardized product, and free entry and exit.

question

In a perfectly competitive market, _____.

answer

buyers and sellers are fully informed about the price and availability of all resources and products

question

In _____, a firm is so small relative to the size of the market that the firm's decision about how much to produce has no effect on the market price.

answer

perfect competition

question

In a perfectly competitive market, the market demand curve is _____, while an individual firm's demand curve is _____.

answer

downward sloping; horizontal

question

The demand curve facing a perfectly competitive firm is:

answer

perfectly elastic.

question

Each firm tries to maximize economic profit. Economic profit equals:

answer

the difference between total revenue and total cost.

question

To maximize total profit in the short run, a perfectly competitive firm must find:

answer

the quantity at which total revenue exceeds total cost by the greatest amount.

question

In a perfectly competitive market, each firm tries to maximize profit by:

answer

controlling its quantity supplied.

question

The total revenue earned by a firm can be calculated by:

answer

multiplying the total output produced by the firm by the market price of a product.

question

Which of the following is true of a perfectly competitive market?

answer

Marginal revenue equals market price.

question

If marginal revenue exceeds marginal cost, then a profit-maximizing perfectly competitive firm should:

answer

increase output.

question

Profit is maximized at the rate of output where _____.

answer

marginal revenue equals marginal cost

question

The profit-maximizing rate of output for a firm in a perfectly competitive market is found where:

answer

price equals marginal cost.

question

If price is less than marginal cost, a profit-maximizing perfectly competitive firm should:

answer

decrease output

question

A perfectly competitive firm will choose to shut down if _____ at all rates of output.

answer

its average variable cost exceeds the price

question

_____ is the sunk cost for a perfectly competitive firm in the short run, whether the firm produces or shuts down.

answer

Fixed cost

question

In the short run, a perfectly competitive firm will shut down if:

answer

total revenue is less than total variable cost.

question

A perfectly competitive firm should produce in the short run:

answer

as long as price exceeds average variable cost.

question

The perfectly competitive firm's supply curve is:

answer

that portion of the marginal cost curve that intersects and rises above the average variable cost curve.

question

Identify the correct statement about the short-run supply curve of a firm.

answer

It is an upward-sloping curve.

question

The short-run industry supply curve is the:

answer

horizontal sum of all the firms' short-run supply curves.

question

In short-run equilibrium, under perfect competition, _____.

answer

economic profit earned by firms can be negative, zero, or positive

question

In a perfectly competitive market, equilibrium price is determined:

answer

at the point of intersection of the market demand and the market supply curves.

question

In a perfectly competitive market, a firm operating in the long run is forced by competition to adjust its scale of operation:

answer

until average cost is minimized.

question

Which of the following is true of the long-run equilibrium for firms and an industry in perfect competition?

answer

Firms produce output where price equals marginal cost, which also corresponds to the point where the marginal cost curve intersects the long-run average cost curve.

question

In a perfectly competitive market, as a result of a decrease in demand, _____ in the long run.

answer

some firms are forced out of business

question

Which of the following industry types features a horizontal long-run supply curve?

answer

A constant-cost industry

question

Which of the following is true of a constant cost industry?

answer

Each firm's long-run average cost curve does not shift as industry output changes.

question

The long-run supply curve of firms in an increasing cost industry is:

answer

upward sloping.

question

Which of the following is true of perfect competition?

answer

It guarantees both allocative efficiency and productive efficiency in the long run.

question

_____ efficiency occurs when a firm produces at the minimum point on its long-run average cost curve.

answer

Productive

question

_____ will ensure that each firm produces at the minimum point of its long-run average cost curve in a perfectly competitive market.

answer

The entry and exit of firms

question

Allocative efficiency occurs when firms produce the output corresponding to the point:

answer

where marginal benefit equals marginal cost.

question

If resources are allocated in such a way that there is no other way to increase the total utility of consumers, _____.

answer

a market is said to be allocatively efficient

question

Everything below is chapter 9

answer

---------

question

A monopolized market is characterized by:

answer

a sole supplier, no close substitutes, and barriers to entry.

question

Which of the following is true of a monopolist?

answer

A monopolist has the exclusive right to supply a good or service if it has a patent on the good or service.

question

Which of the following is true of a patent in the United States?

answer

It grants the holder the exclusive right to sell a product for 20 years.

question

Which of the following is true of the shape of the demand curve facing a monopolist?

answer

It is downward sloping.

question

The demand curve faced by a monopolist is the same as the:

answer

market demand curve.

question

For a monopolist, _____.

answer

marginal revenue is less than average revenue

question

For a monopolist, _____.

answer

marginal revenue is less than average revenue

question

Which of the following is a similarity between a monopoly firm and a perfectly competitive firm?

answer

The demand curve is the average revenue curve for both firms.

question

For a monopolist, marginal revenue is:

answer

less than price.

question

Which of the following is a difference between monopoly and perfect competition?

answer

A perfectly competitive firm's marginal revenue equals price, while a monopolist's marginal revenue is less than price.

question

When a monopolist's marginal revenue is zero, _____.

answer

total revenue is at a maximum

question

At the rate of output where a monopolist's marginal revenue equals zero, the price elasticity of demand for the monopolist's product is _____.

answer

equal to one

question

In order to increase total revenue, a profit-maximizing monopolist should never expand output to the:

answer

inelastic portion of the demand curve for a good.

question

A monopolist's profit-maximizing level of output occurs at the point where:

answer

marginal revenue equals marginal cost.

question

A firm that is the only seller in a market _____.

answer

is likely to charge a price that is limited by consumer demand

question

For a monopolist producing output at a level where profit is maximized, _____.

answer

price exceeds marginal cost.

question

A monopoly firm will shut down in the short run if:

answer

price falls below the average variable cost.

question

The supply curve for a monopolist:

answer

cannot be constructed.

question

A monopolist is likely to shut down in the short run if:

answer

the average variable cost curve is above the average revenue curve at all output rates.

question

Which of the following is likely to ensure that a monopolist earns positive economic profits in the long run?

answer

High barriers that block new entry

question

A monopolist produces:

answer

less output than a perfectly competitive firm and charges a higher price.

question

Allocative inefficiency arises in a:

answer

monopoly as it produces less output than a perfectly competitive firm and charges a higher price.

question

The output produced by a profit-maximizing monopolist:

answer

is less than the level that would maximize social welfare.

question

The deadweight or social loss of a monopoly:

answer

arises as monopolists restrict output and increase prices.

question

A monopolist might keep prices below the profit-maximizing level:

answer

because of government intervention and scrutiny.

question

To practice price discrimination, a firm must:

answer

have different groups of customers with different price elasticities of demand.

question

Which of the following correctly describes price discrimination?

answer

Selling the same good or service for different prices to different consumers for reasons unrelated to cost

question

Which of the following is an example of price discrimination?

answer

Charging lower admission prices to movies from senior citizens

question

Everything below is chapter 10

answer

--------

question

In monopolistic competition:

answer

there are many close substitutes for the products offered by each firm.

question

From the following, identify the correct statement.

answer

Firms under monopolistic competition can enter or leave the market with ease in the long run.

question

Firms that operate in a monopolistically competitive market:

answer

are price makers and not price takers.

question

Which of the following can serve as a product differentiation tool in the hands of sellers in a monopolistically competitive market?

answer

The package design

question

Which of the following exemplifies the spatial differentiation used by firms under monopolistic competition to differentiate their product in the market?

answer

A diamond jeweler offering products online and at retail stores situated at convenient locations

question

Which of the following is an example of product differentiation based on services offered by firms in a monopolistically competitive market?

answer

A cash back guarantee offered by a watch manufacturer in case of manufacturing defects

question

Which of the following is true of the profit-maximizing level of output selected by a monopolistically competitive firm in the short run?

answer

Output is set in the short run where marginal cost equals marginal revenue.

question

Which of the following is true of a monopolistically competitive firm in the short run?

answer

As long as price exceeds average variable cost, the firm in the short run loses less by producing than by shutting down

question

Like a perfect competitor, a monopolistic competitor:

answer

earns zero economic profit in the long run.

question

Which of the following is true about long-run profits for monopolistically competitive firms?

answer

Monopolistically competitive firms always experience zero economic profits in the long run.

question

Which of the following is a possible reason for zero economic profit earned by a monopolistically competitive firm in the long run?

answer

Low barriers to entry

question

A firm in a monopolistically competitive industry is likely to earn zero economic profit in the long run if:

answer

enough firms enter the industry.

question

In the long run, a monopolistically competitive firm will:

answer

produce less than a perfectly competitive firm.

question

The difference between a firm's profit-maximizing quantity and the quantity that minimizes average cost is called:

answer

excess capacity.

question

A monopolistically competitive firm with excess capacity can reduce its average cost of production by:

answer

increasing the quantity of output produced

question

Oligopoly is a market structure characterized by a _____ number of firms who behave _____.

answer

small; interdependently

question

Identify a statement that is true of an oligopoly.

answer

Any change in the price of a product by an oligopoly firm may prompt a reaction from its rivals.

question

A market structure characterized by a very few firms who behave interdependently is known as:

answer

an oligopoly.

question

Which of the following is a possible effect of costly advertisement campaigns by a new firm to promote a new product in a market dominated by well established brands?

answer

Costly advertisement campaigns may cripple a new firm if the product fails.

question

New firms may find it difficult to enter an oligopoly industry if:

answer

the total investment required to reach the minimum efficient scale is high.

question

If firms in an oligopolistic industry face high fixed costs, then:

answer

competition is likely to be low.

question

Oligopolies compete with existing rivals and try to block new entry by:

answer

offering a variety of products.

question

Suppose, Nelson & Robinson, a renowned manufacturer of herbal products, introduces 16 new varieties of facial cleansers and shower gels within the same year. This will:

answer

allow the company to crowd out new entrants in the market.

question

Competition in an oligopolistic industry is likely to be high if:

answer

the cost incurred to get to minimum efficient scale is low.

question

Which of the following correctly defines a cartel?

answer

A group of firms that agree to coordinate their production and pricing decision to reap monopoly profits

question

Which of the following is one of the problems encountered by the Organization for Petroleum Exporting Countries (OPEC) oil cartel?

answer

There has been considerable cheating by OPEC members on their quantity allocations.

question

It is easier for firms to form and maintain a cartel when:

answer

there are greater barriers to entry.

question

A firm whose price is matched by other firms in the market as a form of tacit collusion is called:

answer

a price leader.

question

Which of the following is a possible reason for price leadership as a means of collusion to be less effective?

answer

High level of product differentiation among sellers

question

Identify a statement that is true of price leadership.

answer

A price leader may lose business if other firms do not follow its pricing decisions.

question

In game theory, the outcome achieved when each player's choice does not depend on what the other player does is called:

answer

the dominant-strategy equilibrium.

question

_____ is a situation in which a firm or a player in game theory chooses the best strategy given the strategies chosen by others.

answer

Nash equilibrium

question

Which of the following is true of Nash equilibrium?

answer

In some games, the outcome achieved at the equilibrium may not be optimal for all the players.

question

Compared to perfect competition, in oligopoly:

answer

both price and profits are normally higher.

question

Oligopoly _____ than perfect competition due to the efficiency arising from the economies of scale of its large firms.

answer

enjoys higher profits

question

An oligopoly firm that enjoys huge brand loyalty will:

answer

earn long-run economic profit.

question

With regard to economic growth, what is the current state of the economy?

answer

expansion

question

How long has the economy been in this condition?

answer

10 years and 5 months as of November 2019

question

is the current condition of the economy above or below average in length?

answer

above

question

How do you know if the current condition of the economy is above or below average in length?

answer

Average length expansions since wwii has lasted 58 months (5 years)

question

What is the current unemployment rate?

answer

The unemployment rate is 3.5% for November 2019

question

Is this relatively high or low rate of unemployment?

answer

low

question

How do you know if the current rate is relatively high or low?

answer

Economists believe that any rate of unemployment between 3-6% constitutes full employment

question

What is the current rate of inflation?

answer

For the 12 month period ending in October 2019, the rate of inflation was 1.8%

question

Is this relatively high or low rate of inflation?

answer

low

question

How do you know if the inflation rate is relatively high or low?

answer

Economists believe that any rate of inflation of 3% or less constitutes price stability

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