Intro to Microeconomics Final

In long-run equilibrium, consumers pay the lowest price possible price and ____________ equals ___________

Perfect competition achieves an efficient ________

_______ are used efficiently when we produce goods and services in the quantities that people value most highly

New technologies lower __________, increase ______, and in the long run ______ the price and increase the quantity

A permanent _____ in demand leads to a smaller market output and a smaller number of firms

A permanent _______ in demand leads to a larger market output and larger number of firms.

In _________, economic profit is zero. There is no entry or exit

Entry increases _______ and lowers _____ and ______

Economic profit induces _____ and economic loss induce s ______

A firm might make a positive economic profit, a zero economic profit, or incur an _________

The ________ shows the sum if the quantities supplied by each firm at each price

At prices below the minimum average variable cost, a firm's supply curve runs along the ________; at prices above minimum average cost; a firm's supply curve is its _________

If price is less than ______________, the firm temporarily shuts down

In _______ a firm can make a economic profit, incur an economic loss, or break even

The firm produces the output at which marginal revenue (price) equals _______

A ____________ marginal revenue always equals the market price

A perfectly competitive firm is a _______

In ___________ , many firms sell identical products to many buyers; there are no restrictions on entry; sellers and buyers are well informed about prices

Average product _______ as the quantity of labor ________, but eventually average product diminishes

Marginal product _________ because an increasing quantity of labor must share a _________ quantity of capital -- the law or diminishing returns

A ________________ shows the quantity a firm can produce with a given quantity of capital and different quantities of labor

The marginal product of labor ____ as the quantity of labor increase, because of ______ specialization and the division of labor

In the short run, the quantity of at least one factor of production is ____ and the quantities of the other factors of production can be _____

In the long run, the quantities of _____ factors of production can be _____

As output increases, total fixed cost is _____, and total variable cost and total cost ______

As output increases, average fixed cost _____ and average variable cost, average total cost, and marginal cost _____ at low outputs and _____ at high outputs. These cost curves are _______

*When the marginal product of labor is greater than the average product of labor, the

*For a perfectly competitive firm, price is the same as

*In a perfectly competitive market,

*If the price elasticity of demand is less than 1, a monopoly's

*Food stamps provided by the U.S. Department of Agriculture are an example of

*A monopoly has two key features, which are

*Which of the following is a characteristic of monopoly

*In an oligopoly,

*Which of the following is true for a single-price monopolist?

*A good or service or a resource is excludable if

*Price cap regulation is a type of regulation that

*The social interest theory of regulation suggests that the political process and regulations will ____ and the capture theory of regulation suggests that the political process and regulations will _____

*In the short run, a perfectly competitive firm can

*When external benefits exist, which of the following can produce the efficient amount of output?
1. Vouchers 2. Private subsidies 3. Taxes 4. Marketable permits

*A monopolistically competitive firm is like an oligopolistic firm insofar as

*The law of diminishing returns implies that, with the quantity of capital fixed, as the use of labor rises,

*Suppose that the marginal social benefit from another unit of a public good is less than the marginal social cost of producing it. Then

*If it is impossible to prevent someone from benefitting from a good regardless of whether or not the person paid for it, then the good is

*Public goods are those for which

*Antitrust law is law for which

*Public universities, by charging tuition ____ the marginal cost of education, ____ the number of students

*Relative to a perfectly competitive market with the same cost and demand, a single-price monopolist produces ___ output and has a ____ price

*Ann and Lynn have been arrested by the police, who have evidence that will convict them of robbing a bank. If convicted, each will receive a sentence of 6 years for the robbery. During questioning, the police suspect that Ann and Lynn are responsible for a series of bank robberies. If both confess to the series, each will receive 12 years in jail. If only one confesses, she will receive 4 years and the one who does not confess will receive 14 years. What is the equilibrium for this game?

*Electric utility companies have built larger and larger electric generating stations and, as a result, the long-run average cost of producing each kilowatt hour decreased. This is an example of

*Suppose your neighbor has a beautiful garden. The benefit that she enjoys from her garden is called ____ and the benefits the rest of the neighborhood enjoys is called ____

*A natural monopoly under rate of return regulation has no incentive to

*In a prisoners' dilemma game, in the Nash equilibrium

*Which of the following is the BEST example of a private good?
A) Fish in the ocean B) A house C) Air traffic control D) A bridge during rush hour

*A perfectly competitive firm is definitely making an economic profit when

*When the total product curve is drawn in a figure that measures employment along the horizontal axis, it is a graph that shows the

*The Clayton Act of 1914 prohibits _____ if it substantially lessens competition or creates a monopoly

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

*An externality can be a cost or benefit arising from the production of a good that falls upon

*Total cost is equal to the

*Antitrust law is the law that regulates ____ and prevents them from becoming ____

*Marginal cost eventually increases because

*Rent seeking

*Economies of scale

*Total product is

*The capture theory of regulation implies that

*The outcome of a prisoner's dilemma game with a Nash equilibrium is that ____

*The principle of minimum differentiation

*In the political market place, typical voters

*In the short run, a perfectly competitive firm will shut down if at the profit maximizing quantity the

*The fact that you may not know who your congressional representative is represents

*The value of resources devoted to rent seeking will

*Suppose that recycling rubber for sneakers creates an external benefit of $2.00 per ton of rubber. There are no external costs. The efficient amount of rubber will be recycled when the government creates a

*When the government prohibits certain kinds of market behavior such as monopoly and monopolistic practices it generally does so through

*If a natural monopoly is allowed to set its price above its average total cost, then

*Which of the following is a characteristic of a single-price monopoly?

*In the United States, a collusive agreement to restrict output and increases prices is

*If the price elasticity of demand is greater than 1, a monopoly's

*A free rider is someone who

*Brand names are an example of

*When Sidney's Sweaters, Inc. makes exactly zero economic profit, Sidney, the owner,

*Price discrimination takes place when a firm

*Which of the following is true of a natural monopoly

*Bubba's BBQ has fallen on some hard times. Bubba has analyzed his past revenue and cost information and know that if he shuts down, he will incur an economic loss equal to $20,000 in remaining lease payments. Apparently, Bubba's current planning horizon is

*When only a small number of producers compete with each other is a defining characteristic of

*Price taking behavior exists in

*Homer's Holesome Donuts has determined that its profit-maximizing quantity is 10,000 donuts per year. Homer's earn $12,000 in revenue from the sale of those donuts. Homer's has two costs. First he pays $16,000 in annual rental payments for its five-year lease on its store. Second Homer incurs an additional cost of $5,000 for ingredients. Homer's fixed cost is equal to

*With competitive rent seeking under monopoly
A) A monopoly uses all of what would be its economic profit to prevent other firms from taking its economic rent
B) The full deadweight loss of monopoly is larger than in the absence of rent seeking
C) The monopolist's average total costs will increase so that its average total cost curve is tangent to the demand curve at the profit-maximizing price
D) All of the above

*A cartel is an arrangement

*If marginal cost is less than average variable cost and output increases, average total cost _____ and average variable cost _____

*The Sherman Act of 1890 was passed to prohibit

*Consider the prisoner's dilemma model where two criminals have two options (confess or deny), and each criminal must make their decision without speaking to the other criminal first. If they both confess they each get 3 years, if only one confesses then he gets 1 and his partner gets 10, and if neither confesses then they each get 0. They are in fact both guilty. In this game, the Nash equilibrium is where

*In the case of a perfectly price-discriminating monopoly, there is no

*In which of the following markets are external benefits most likely to exist?

*According to social interest theory,

*A school of tuna swimming in the ocean is

*The simplest prisoners' dilemma is a game that, in part, requires

*A single-price monopoly

*Price cap regulation is a

*The attempt to capture consumer surplus, producer surplus, or economic profit is called

*One difference between oligopoly and monopolistic competition is that

*Which of the following types of economic regulation is most likely to encourage a natural monopoly to NOT inflate its costs?

*Game theory is used to explain firms' decisions in

*In part, an antitrust laws

*The social interest theory of regulation assumes that

________ explains how voters, firms, politicians, and bureaucrats interact in the political marketplace and why government failure might occur

A ____________ is a good or service that is rival and excludable

A __________ is a good or service that is nonrival and non excludable

A _________ is a private good or service that creates an external benefit or external cost

Because a public good is a good or service that is _________ and __________, it creates a _________ problem

A _______ is when no one has an incentive to pay their share of the cost of providing a public good

The efficient level of provision of a public is that at which ____________ equals ____________

_________ provide external benefits

Benefits that are received by people other than the consumer of a good or service

Marginal social benefit _____ marginal private benefit ______ marginal external benefit

External benefits arise from ______ and ________

_________ provided to households can achieve a more efficient provision of education and health care than public production or subsidies to private producers

U.S expenditure per person on health care is more than _____ that of other rich countries and U.S public expenditure exceeds that of other countries, but U.S health outcomes are similar to those in other countries

_______ is a market in which a small number of firms compete

A __________ maximizes profit by producing the output at which marginal revenue equals marginal cost and by charging the maximum price that consumers are willing to pay for that output

Oligopoly is studied by using ______

________ converts consumer surplus into economic profit

______ is a method of analyzing strategic behavior

A single-price monopoly ______ output and creates a _____________

In _______ both firms cheat and output and price are the same as in perfect competition

A single-price monopoly charges a ________ price and produces a ______ quantity than a ____________

In _________ two prisoners acting in their own self-interest harm their joint interest

The _________ uses guidelines such as the Herfindahl-Hirschman Index to determine which mergers to investigate and possibly block

Firms' decision about advertising and R&D can be studied by using ______

_________ is unlikely to occur because it brings losses and only temporary potential gains

In a ________ a small number of firms can behave like firms perfect competition

Tying arrangements can enable a _______ to price discriminate and increase profit, but in many cases, tying would not increase ______

What was the first Antitrust law and when was it passed ?

All _______ are violations of the Sherman Act, and no acceptable excuse exists

What strengthened The Sherman Act and when were they created?