ECON EXAM #3 (From HW) - Assignment Essays

question

Average variable cost is at a minimum when _______.

answer

marginal cost equals average variable cost

question

The rising price of grain ______ the average total cost and ______ the marginal cost of producing breakfast cereals.

answer

increases; increases

question

The market in which the firms that sell
orange juice operate is

answer

perfect competition

question

The firms that sell shampoo operate in

answer

monopolistic competition

question

Firms that sell dog food operate in

answer

oligopoly

question

Producers of vitamins operate in

answer

monopolistic competition

question

The only restaurant in a small town is an example of

answer

monopoly

question

Competition among online music retailers _______ economic profit.

answer

decreases

question

If the price of oil remains low for some years and ethanol producers are incurring an economic loss, then in the long run ______.

answer

some producers will exit the market, supply will decrease, and the price will rise

question

A monopoly ______.

answer

that produces a good that cannot be resold might choose to price discriminate

question

A monopoly sets its price such that demand for the good produced is ______.

answer

elastic

question

Monopolistic competition differs from ______.

answer

perfect competition because the goods or services produced are differentiated.

question

A firm in monopolistic competition maximizes its profit by ______.

answer

producing the quantity at which marginal cost equals marginal revenue and charging the highest price at which it can sell that quantity

question

Brand names help consumers by _______.

answer

providing consumers with information about the quality of a product

question

Brand names change the behavior of producers by _______.

answer

providing an incentive to achieve a consistent quality standard

question

It would be inefficient to make brand names illegal if ________.

answer

the marginal benefit from brand names equals the marginal cost of brand names.

question

If firms in oligopoly form a cartel, it will likely break down because ________________.

answer

with price exceeding marginal cost, a firm might expand production to increase its profit

question

______ is an attempt by a firm to drive out its competitors so that the firm can operate as a monopoly.

answer

Attempt to monopolize

question

______ is making an agreement with competitors to set a specified price and not to vary it.

answer

Price Fixing

question

______ is setting a low price to drive competitors out of business with the intention of setting a monopoly price when the competition has gone

answer

Predatory Pricing

question

With perfect price discrimination, a monopoly can charge the _____________ price each consumer is willing to pay and thereby obtain the entire ______________ surplus.

answer

Maximum; Consumer

question

One characteristic of monopolistic competition is that it has

answer

many firms producing a slightly differentiated product.

question

To maintain their economic profits, firms in monopolistic competition must continually engage in

answer

product development and marketing

question

A cartel is most likely to occur in

answer

oligopoly as firms act together to raise prices and increase profits.

question

A cartel is

answer

an agreement among firms to limit output, raise prices, and increase economic output

question

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

answer

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

question

For an oligopoly, barriers to entry are often caused by

answer

economies of scale

question

Firms in which of the following industries can earn an economic profit in the long run?

answer

monopoly

question

Game theory is used to analyze the interactions among firms in ____.

answer

oligopoly

question

If a firm in monopolistic competition quits engaging in product development then its costs

answer

shift the ATC curve downward

question

If a firm in monopolistic competition quits engaging in product development then its demand curve

answer

slowly shifts to the left.

question

If firms in an oligopolistic industry successfully collude and form a cartel, what price and output will result?

answer

the monopoly price and output

question

In an oligopoly,

answer

firms are interdependent

question

An industry is considered monopolistic competition if the four-firm concentration ratio

answer

is less than 40%

question

A Nash equilibrium in the duopoly game occurs when

answer

each player takes the best possible action regardless of the strategy chosen by other firms

question

One of the major benefits of monopolistic competition is

answer

product differentation

question

The primary reason why monopolistically competitive firms cannot earn an economic profit in the long run is because

answer

there is freedom of entry in this market structure

question

Setting a price so low that competitors are driven out of a market and then boosting the price is called

answer

predatory pricing

question

Which of the following is ALWAYS illegal?

answer

Price fixing

question

A firm's cost of production equals ______.

answer

the costs of all resources used by the firm whether bought in the marketplace or owned by the firm

question

A single-price monopoly maximizes profit by producing the quantity at which ______.

answer

marginal revenue equals marginal cost and setting the price equal to the most people are willing to pay for that quantity

1 of 41

question

Average variable cost is at a minimum when _______.

answer

marginal cost equals average variable cost

question

The rising price of grain ______ the average total cost and ______ the marginal cost of producing breakfast cereals.

answer

increases; increases

question

The market in which the firms that sell
orange juice operate is

answer

perfect competition

question

The firms that sell shampoo operate in

answer

monopolistic competition

question

Firms that sell dog food operate in

answer

oligopoly

question

Producers of vitamins operate in

answer

monopolistic competition

question

The only restaurant in a small town is an example of

answer

monopoly

question

Competition among online music retailers _______ economic profit.

answer

decreases

question

If the price of oil remains low for some years and ethanol producers are incurring an economic loss, then in the long run ______.

answer

some producers will exit the market, supply will decrease, and the price will rise

question

A monopoly ______.

answer

that produces a good that cannot be resold might choose to price discriminate

question

A monopoly sets its price such that demand for the good produced is ______.

answer

elastic

question

Monopolistic competition differs from ______.

answer

perfect competition because the goods or services produced are differentiated.

question

A firm in monopolistic competition maximizes its profit by ______.

answer

producing the quantity at which marginal cost equals marginal revenue and charging the highest price at which it can sell that quantity

question

Brand names help consumers by _______.

answer

providing consumers with information about the quality of a product

question

Brand names change the behavior of producers by _______.

answer

providing an incentive to achieve a consistent quality standard

question

It would be inefficient to make brand names illegal if ________.

answer

the marginal benefit from brand names equals the marginal cost of brand names.

question

If firms in oligopoly form a cartel, it will likely break down because ________________.

answer

with price exceeding marginal cost, a firm might expand production to increase its profit

question

______ is an attempt by a firm to drive out its competitors so that the firm can operate as a monopoly.

answer

Attempt to monopolize

question

______ is making an agreement with competitors to set a specified price and not to vary it.

answer

Price Fixing

question

______ is setting a low price to drive competitors out of business with the intention of setting a monopoly price when the competition has gone

answer

Predatory Pricing

question

With perfect price discrimination, a monopoly can charge the _____________ price each consumer is willing to pay and thereby obtain the entire ______________ surplus.

answer

Maximum; Consumer

question

One characteristic of monopolistic competition is that it has

answer

many firms producing a slightly differentiated product.

question

To maintain their economic profits, firms in monopolistic competition must continually engage in

answer

product development and marketing

question

A cartel is most likely to occur in

answer

oligopoly as firms act together to raise prices and increase profits.

question

A cartel is

answer

an agreement among firms to limit output, raise prices, and increase economic output

question

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

answer

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

question

For an oligopoly, barriers to entry are often caused by

answer

economies of scale

question

Firms in which of the following industries can earn an economic profit in the long run?

answer

monopoly

question

Game theory is used to analyze the interactions among firms in ____.

answer

oligopoly

question

If a firm in monopolistic competition quits engaging in product development then its costs

answer

shift the ATC curve downward

question

If a firm in monopolistic competition quits engaging in product development then its demand curve

answer

slowly shifts to the left.

question

If firms in an oligopolistic industry successfully collude and form a cartel, what price and output will result?

answer

the monopoly price and output

question

In an oligopoly,

answer

firms are interdependent

question

An industry is considered monopolistic competition if the four-firm concentration ratio

answer

is less than 40%

question

A Nash equilibrium in the duopoly game occurs when

answer

each player takes the best possible action regardless of the strategy chosen by other firms

question

One of the major benefits of monopolistic competition is

answer

product differentation

question

The primary reason why monopolistically competitive firms cannot earn an economic profit in the long run is because

answer

there is freedom of entry in this market structure

question

Setting a price so low that competitors are driven out of a market and then boosting the price is called

answer

predatory pricing

question

Which of the following is ALWAYS illegal?

answer

Price fixing

question

A firm's cost of production equals ______.

answer

the costs of all resources used by the firm whether bought in the marketplace or owned by the firm

question

A single-price monopoly maximizes profit by producing the quantity at which ______.

answer

marginal revenue equals marginal cost and setting the price equal to the most people are willing to pay for that quantity

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