Micro Economics presession exam 2

question

Movie theaters charge lower prices to see a movie in the afternoon than in the evening because there is an:

answer

Elastic demand to see movies in the afternoon

question

Refer to the above graph. If the demand increased, then:

answer

Price would stay the same and total revenues of sellers would increase

question

A 4 percent reduction in the price of a product has zero effect on the dollar amount of consumer expenditure on the product. The price elasticity of demand is:

answer

Equal to 1

question

The price elasticity of demand for a textbook is estimated to be 1 no matter what the price or quantity demanded. In this case:

answer

A 10 percent increase in price will result in a 10 percent decrease in the quantity demanded

question

The total revenue received by sellers of a good is the same amount as the:

answer

Total amount spent on the good by the buyers

question

When the price of a product is increased 10 percent, the quantity demanded decreases 15 percent. The price-elasticity of demand coefficient for this product is:

answer

1.5

question

The Bear Corporation finds that its total spending on machine parts increases after the price of machine parts falls, other things being equal. Which of the following is true about the Bear Corporation's demand for machine parts with the price change?

answer

It is price elastic

question

Refer to the total revenue graph above. If the quantity of product X demanded falls from 14,000 to 10,000 units, then it suggests that the price of X was:

answer

Increased and the demand is inelastic

question

A negative income elasticity of demand coefficient indicates that:

answer

The product is an inferior good

question

When the price of movie tickets in a certain town was reduced, the movie-theaters' revenues did not change. This suggests that the demand for movie tickets in that town has a price-elasticity coefficient of:

answer

1.0

question

If 100 shirts are sold when unit price is $10, while 75 shirts are sold when the unit price is $15, one can conclude that in this price range:

answer

Demand for the shirts is inelastic

question

Which of the following statements is inconsistent with an elastic demand curve?

answer

The price-elasticity coefficient is less than 1

question

Refer to the graph above. Which demand curve is perfectly inelastic?

answer

question

If a 5 percent cut in the price of a product causes the quantity demanded to rise by 10 percent, the demand is:

answer

Elastic

question

Considering the price-elasticity of demand for wheat, we would expect that if the supply of wheat increases, other factors constant, then wheat farmers' total revenues would:

answer

Decrease because the demand is price-inelastic

question

The marginal utility of the last unit of apples consumed is 12, and the marginal utility of the last unit of bananas consumed is 8. What set of prices for apples and bananas, respectively, would be consistent with consumer equilibrium?

answer

$6 and $4

question

An indifference map implies that

answer

curves farther from the origin yield higher levels of total utility.

question

The theory of consumer behavior assumes that

answer

consumers behave rationally, attempting to maximize their satisfaction.

question

The law of diminishing marginal utility states that

answer

beyond some point, additional units of a product will yield less and less extra satisfaction to a consumer.

question

Suppose you have money income of $10, all of which you spend on Coke and popcorn. In the diagram, the prices of Coke and popcorn, respectively, are

answer

$.50 and $1.00.

question

In moving along a given budget line,

answer

the prices of both products and money income are assumed to be constant.

question

A consumer who has a limited budget will maximize utility or satisfaction when the

answer

ratios of the marginal utility of each product purchased divided by its price are equal.

question

increases in product prices shift the consumer's

answer

indifference curves to the right.

question

If the prices of X and Y are $2 and $4 per unit, respectively, and this consumer has $10 in income to spend, to maximize total utility, this consumer should buy

answer

1 unit of X and 2 units of Y.

question

If the consumer has money income of $52 and the prices of J and K are $8 and $4 respectively, the consumer will maximize her utility by purchasing

answer

4 units of J and 5 units of K

question

What do the income effect, the substitution effect, and diminishing marginal utility have in common?

answer

They all help explain the downsloping demand curve.

question

Refer to the data. The value for X is

answer

question

The first Pepsi yields Craig 18 units of utility and the second yields him an additional 12 units of utility. His total utility from three Pepsis is 38 units of utility. The marginal utility of the third Pepsi is

answer

8 units of utility.

question

The utility of a good or service

answer

satisfaction or pleasure one gets from consuming it

question

Most economists contend that

answer

noncash gifts are less efficient than cash gifts.

question

Which of the following best explains the difference between neoclassical economics and behavioral economics?

answer

Neoclassical economics assumes that people are rational in their decision making, while behavioral economics believes people make systematic errors.

question

Anchoring

answer

can influence decision making with irrelevant information.

question

Which of the following is not an implication of hardwired heuristics?

answer

Getting people to make better decisions is simply a matter of providing more information and more options.

question

Behavioral economists believe that the human brain is generally

answer

efficient but prone to errors.

question

According to prospect theory, firms are more likely to shrink packages than raise prices because

answer

consumers feel the loss of a price increase more than they feel the loss of buying a smaller package for their money.

question

Which of the following supermarket strategies to increase sales would be most consistent with a behavioral economics (versus neoclassical economics) approach?

answer

positioning frequently purchased items at the back of the store

question

According to prospect theory, people tend to favor default options. This is known as the

answer

status quo bias.

question

According to behavioral economists, the human brain frequently employs heuristics because

answer

they save energy and time in decision making.

question

Dan was certain that his upcoming economics test would be so easy that he could wait to study until the night before and still do well on the exam. When he cracked open his book and notes the night before the exam, he realized he should've started studying earlier. According to behavioral economics, Dan's error was caused primarily by

answer

a planning fallacy.

question

Why do cereals marketers most prefer to have their brand occupy the shelf-space a foot or two below a typical adult's eye-level?

answer

Because they are targeting the children who go shopping with adults.

question

Which of the following cognitive biases refers to people's tendency to attribute their successes to personal ability and effort, and failures to forces outside their control?

answer

self-serving bias

question

The persistence of some "urban legends" and some myths is a reflection of the

answer

confirmation bias.

question

According to behavioral economics, placement of goods in retail stores is often designed to accomplish which of the following?

answer

maximize impulse buying by consumers

question

Dorothy likes to invest in gold as part of her overall financial investment portfolio, as her gut tells her it will increase dramatically in value. Her favorite and generally only source of investment advice is Wizard's Gold Hour on the OZ cable channel. As a result of this advice, Dorothy's portfolio mix is suboptimal, as it is too heavily weighted in gold. Behavioral economists would say that Dorothy suffers from

answer

confirmation bias.

question

For economists, "myopia" refers to

answer

people's difficulty in conceptualizing the future.

question

Implicit and explicit costs are different in that

answer

the former refer to nonexpenditure costs and the latter to monetary payments.

question

In the figure, curves 1, 2, 3, and 4 represent the

answer

MC, ATC, AVC, and AFC curves respectively.

question

Which of the following types of firms are least likely to have their MC, AVC, and ATC curves affected by fluctuations in gasoline prices?

answer

firms like iTunes that distribute their products over the Internet

question

Marginal cost is the

answer

change in total cost that results from producing one more unit of output

question

If in the short run a firm's total product is increasing, then its

answer

marginal product could be either increasing or decreasing.

question

Refer to the diagram. At output level Q, total variable cost is

answer

0BEQ.

question

In the diagram, curves 1, 2, and 3 represent the

answer

marginal, average, and total product curves respectively.

question

Refer to the provided graph. If the firm is producing at Q1, the area 0ADQ1 represents

answer

total costs.

question

Answer the question on the basis of the following output data for a firm. Assume that the amounts of all nonlabor resources are fixed.Diminishing marginal returns become evident with the addition of the

answer

third worker.

question

The short run is characterized by

answer

fixed plant capacity

question

Fixed cost is

answer

any cost that does not change when the firm changes its output.

question

When total product is increasing at a decreasing rate, marginal product is

answer

positive and decreasing.

question

The first, second, and third workers employed by a firm add 24, 18, and 9 units to total product, respectively. Therefore, we can conclude that

answer

marginal product of the third worker is 9.

question

What do wages paid to factory workers, interest paid on a bank loan, forgone interest, and the purchase of component parts have in common?

answer

All are opportunity costs.

question

When a firm does more of something, it gets better at it. This learning-by-doing is

answer

a source of economies of scale.

question

Which point in the accompanying graph is the shutdown point for the firm?

answer

question

Refer to the provided graph for a purely competitive firm in the short run. If the firm is maximizing profit, the price of the product is:

answer

question

According to the accompanying diagram, to maximize profit or minimize losses, this firm will produce

answer

E units at price A.

question

Refer to the diagram for a purely competitive producer. The lowest price at which the firm should produce (as opposed to shutting down) is

answer

question

If the demand curve faced by an individual firm is downward-sloping, the firm cannot be

answer

a purely competitive firm.

question

In the graph, the amount of profit is measured by the gap between

answer

d and e.

question

The demand curve in a purely competitive industry is ________, while the demand curve to a single firm in that industry is ________.

answer

downsloping; perfectly elastic

question

Which of the following is not a characteristic of pure competition?

answer

pricing strategies by firms

question

In the short run, the individual competitive firm's supply curve is that segment of the

answer

marginal cost curve lying above the average variable cost curve.

question

The firm represented in this diagram, which gives short-run data, is selling under conditions of

answer

pure competition.

question

An industry comprising 40 firms, none of which has more than 3 percent of the total market for a differentiated product, is an example of

answer

monopolistic competition.

question

The accompanying graph shows the cost curves for a competitive firm. If the market price falls to $0.55, the optimal output is

answer

question

An industry comprising a small number of firms, each of which considers the potential reactions of its rivals in making price-output decisions, is called

answer

oligopoly.

question

When a firm is maximizing profit, it will necessarily be

answer

maximizing the difference between total revenue and total cost.

question

Refer to the accompanying diagram. The firm's supply curve is the segment of the

answer

MC curve above its intersection with the AVC curve

question

An exclusive legal right as sole producer for 20 years granted to an inventor of a product is called a

answer

patent.

question

Which of the following best approximates a pure monopoly?

answer

the only grocery store in a small isolated town

question

Which of the following does not necessarily apply to a pure monopoly?

answer

The firm will charge the highest price possible.

question

Refer to the two diagrams for individual firms. Figure 1 pertains to ________, while Figure 2 refers to ________.

answer

a purely competitive firm; an imperfectly competitive firm

question

Assume a pure monopolist is currently operating at a price-quantity combination on the inelastic segment of its demand curve. If the monopolist is seeking maximum profits, it should

answer

charge a higher price.

question

If the industry depicted in the graph is purely monopolistic, the profit-maximizing price and quantity will be

answer

P3 and Q3.

question

Refer to the graphs of D and MR for a monopolist. Which of the following statements is true?

answer

Demand is elastic at a price of P1.

question

Refer to the diagram for a pure monopolist. If the monopolist is unregulated, it will maximize profits by charging

answer

price P3 and producing output Q3

question

Pure monopolists may obtain economic profits in the long run because

answer

of barriers to entry.

question

Pure monopoly refers to

answer

a single firm producing a product for which there are no close substitutes.

question

In the short-run equilibrium, a monopolist's profits

answer

may be positive, negative, or zero.

question

Which of the following is not a barrier to entry?

answer

X-inefficiency

question

The demand curve faced by a pure monopolist

answer

is less elastic than that faced by a single purely competitive firm.

question

One major barrier to entry under pure monopoly arises from

answer

ownership of essential resources.

question

If a regulatory commission wants to provide a natural monopoly with a fair return, it should establish a price that is equal to

answer

average total cost.

question

Dequam likes product variety, while Natasha is most concerned about paying the lowest price possible for a good. This suggests that

answer

Dequam prefers monopolistically competitive industries, while Natasha prefers purely competitive industries.

question

In the short run, a profit-maximizing monopolistically competitive firm sets it price

answer

above marginal cost.

question

Which of the following characteristics provide a monopolistically competitive firm some monopoly power?

answer

product differentiation

question

Refer to the above graphs. A short-run equilibrium that would produce profits for a monopolistically competitive firm would be represented by graph

answer

question

Herfindahl Index

answer

gives much greater weight to larger firms than to smaller firms in an industry

question

In the long run, a representative firm in a monopolistically competitive industry will end up

answer

earning a normal profit, but not an economic profit.

question

A monopolistically competitive industry combines elements of both competition and monopoly. The monopoly element results from

answer

product differentiation.

question

Refer to the diagram for a monopolistically competitive firm in short-run equilibrium. This firm's profit-maximizing price will be

answer

$16.

question

In which of these continuums of degrees of competition (highest to lowest) is monopolistic competition properly placed?

answer

pure competition, monopolistic competition, oligopoly, pure monopoly

question

Compared to a purely competitive firm in long-run equilibrium, the monopolistic competitor has a

answer

higher price and lower output.

question

Monopolistic competition means

answer

many firms producing differentiated products.

question

Refer to the above graphs. The differences in the long-run equilibrium positions for a monopolistically competitive firm and for a purely competitive firm are illustrated by graphs

answer

B and C.

question

Refer to the diagram for a monopolistically competitive firm in short-run equilibrium. The profit-maximizing output for this firm will be

answer

160

question

Which of the following is not a basic characteristic of monopolistic competition?

answer

recognized mutual interdependence

question

Refer to the above graphs. A short-run equilibrium that would result in losses for a monopolistically competitive firm would be represented by graph

answer

question

The product in an oligopolistic market

answer

may be homogeneous or differentiated.

question

Which of the following nations is not a member of the OPEC oil cartel?

answer

Norway

question

A defining characteristic of an oligopolistic market is that there are

answer

few sellers.

question

When firms in an industry reach an agreement to fix prices, divide up market share, or otherwise restrict competition, they are practicing the strategy of

answer

collusion.

question

The study of how people (or firms) behave in strategic situations is called

answer

game theory.

question

A major reason that firms form a cartel is to

answer

Maximize joint profits

question

Three major means of collusion by oligopolists are

answer

cartels, informal understandings, and price leadership.

question

Refer to the diagram, where the numerical data show profits in millions of dollars. Beta's profits are shown in the northeast corner and Alpha's profits in the southwest corner of each cell. If Beta commits to a high-price policy, Alpha will gain the largest profit by

answer

adopting a low-price policy.

question

Oligopolistic firms engage in collusion to

answer

earn greater profits

question

efer to the diagram, where the numerical data show profits in millions of dollars. Beta's profits are shown in the northeast corner and Alpha's profits in the southwest corner of each cell. If both firms follow a high-price policy,

answer

each will realize a $20 million profit.

question

Oligopolistic industries are characterized by:

answer

a few dominant firms and substantial entry barriers.

question

The copper, aluminum, cement, and industrial alcohol industries are examples of

answer

homogeneous oligopoly.

question

Suppose the only three existing manufacturers of video game players signed a written contract by which each agreed to charge the same price for products and to distribute their products only in the geographical area assigned them in the contract. This best describes

answer

a cartel.

question

One inherent factor that tends to destroy collusion among oligopolists is the

answer

incentive to cheat.

question

The term oligopoly indicates:

answer

a few firms producing either a differentiated or a homogeneous product.

1 of 120

question

Movie theaters charge lower prices to see a movie in the afternoon than in the evening because there is an:

answer

Elastic demand to see movies in the afternoon

question

Refer to the above graph. If the demand increased, then:

answer

Price would stay the same and total revenues of sellers would increase

question

A 4 percent reduction in the price of a product has zero effect on the dollar amount of consumer expenditure on the product. The price elasticity of demand is:

answer

Equal to 1

question

The price elasticity of demand for a textbook is estimated to be 1 no matter what the price or quantity demanded. In this case:

answer

A 10 percent increase in price will result in a 10 percent decrease in the quantity demanded

question

The total revenue received by sellers of a good is the same amount as the:

answer

Total amount spent on the good by the buyers

question

When the price of a product is increased 10 percent, the quantity demanded decreases 15 percent. The price-elasticity of demand coefficient for this product is:

answer

1.5

question

answer

It is price elastic

question

Refer to the total revenue graph above. If the quantity of product X demanded falls from 14,000 to 10,000 units, then it suggests that the price of X was:

answer

Increased and the demand is inelastic

question

A negative income elasticity of demand coefficient indicates that:

answer

The product is an inferior good

question

answer

1.0

question

If 100 shirts are sold when unit price is $10, while 75 shirts are sold when the unit price is $15, one can conclude that in this price range:

answer

Demand for the shirts is inelastic

question

Which of the following statements is inconsistent with an elastic demand curve?

answer

The price-elasticity coefficient is less than 1

question

Refer to the graph above. Which demand curve is perfectly inelastic?

answer

question

If a 5 percent cut in the price of a product causes the quantity demanded to rise by 10 percent, the demand is:

answer

Elastic

question

Considering the price-elasticity of demand for wheat, we would expect that if the supply of wheat increases, other factors constant, then wheat farmers' total revenues would:

answer

Decrease because the demand is price-inelastic

question

answer

$6 and $4

question

An indifference map implies that

answer

curves farther from the origin yield higher levels of total utility.

question

The theory of consumer behavior assumes that

answer

consumers behave rationally, attempting to maximize their satisfaction.

question

The law of diminishing marginal utility states that

answer

beyond some point, additional units of a product will yield less and less extra satisfaction to a consumer.

question

Suppose you have money income of $10, all of which you spend on Coke and popcorn. In the diagram, the prices of Coke and popcorn, respectively, are

answer

$.50 and $1.00.

question

In moving along a given budget line,

answer

the prices of both products and money income are assumed to be constant.

question

A consumer who has a limited budget will maximize utility or satisfaction when the

answer

ratios of the marginal utility of each product purchased divided by its price are equal.

question

increases in product prices shift the consumer's

answer

indifference curves to the right.

question

If the prices of X and Y are $2 and $4 per unit, respectively, and this consumer has $10 in income to spend, to maximize total utility, this consumer should buy

answer

1 unit of X and 2 units of Y.

question

If the consumer has money income of $52 and the prices of J and K are $8 and $4 respectively, the consumer will maximize her utility by purchasing

answer

4 units of J and 5 units of K

question

What do the income effect, the substitution effect, and diminishing marginal utility have in common?

answer

They all help explain the downsloping demand curve.

question

Refer to the data. The value for X is

answer

question

answer

8 units of utility.

question

The utility of a good or service

answer

satisfaction or pleasure one gets from consuming it

question

Most economists contend that

answer

noncash gifts are less efficient than cash gifts.

question

Which of the following best explains the difference between neoclassical economics and behavioral economics?

answer

Neoclassical economics assumes that people are rational in their decision making, while behavioral economics believes people make systematic errors.

question

Anchoring

answer

can influence decision making with irrelevant information.

question

Which of the following is not an implication of hardwired heuristics?

answer

Getting people to make better decisions is simply a matter of providing more information and more options.

question

Behavioral economists believe that the human brain is generally

answer

efficient but prone to errors.

question

According to prospect theory, firms are more likely to shrink packages than raise prices because

answer

consumers feel the loss of a price increase more than they feel the loss of buying a smaller package for their money.

question

Which of the following supermarket strategies to increase sales would be most consistent with a behavioral economics (versus neoclassical economics) approach?

answer

positioning frequently purchased items at the back of the store

question

According to prospect theory, people tend to favor default options. This is known as the

answer

status quo bias.

question

According to behavioral economists, the human brain frequently employs heuristics because

answer

they save energy and time in decision making.

question

answer

a planning fallacy.

question

Why do cereals marketers most prefer to have their brand occupy the shelf-space a foot or two below a typical adult's eye-level?

answer

Because they are targeting the children who go shopping with adults.

question

Which of the following cognitive biases refers to people's tendency to attribute their successes to personal ability and effort, and failures to forces outside their control?

answer

self-serving bias

question

The persistence of some "urban legends" and some myths is a reflection of the

answer

confirmation bias.

question

According to behavioral economics, placement of goods in retail stores is often designed to accomplish which of the following?

answer

maximize impulse buying by consumers

question

answer

confirmation bias.

question

For economists, "myopia" refers to

answer

people's difficulty in conceptualizing the future.

question

Implicit and explicit costs are different in that

answer

the former refer to nonexpenditure costs and the latter to monetary payments.

question

In the figure, curves 1, 2, 3, and 4 represent the

answer

MC, ATC, AVC, and AFC curves respectively.

question

Which of the following types of firms are least likely to have their MC, AVC, and ATC curves affected by fluctuations in gasoline prices?

answer

firms like iTunes that distribute their products over the Internet

question

Marginal cost is the

answer

change in total cost that results from producing one more unit of output

question

If in the short run a firm's total product is increasing, then its

answer

marginal product could be either increasing or decreasing.

question

Refer to the diagram. At output level Q, total variable cost is

answer

0BEQ.

question

In the diagram, curves 1, 2, and 3 represent the

answer

marginal, average, and total product curves respectively.

question

Refer to the provided graph. If the firm is producing at Q1, the area 0ADQ1 represents

answer

total costs.

question

answer

third worker.

question

The short run is characterized by

answer

fixed plant capacity

question

Fixed cost is

answer

any cost that does not change when the firm changes its output.

question

When total product is increasing at a decreasing rate, marginal product is

answer

positive and decreasing.

question

The first, second, and third workers employed by a firm add 24, 18, and 9 units to total product, respectively. Therefore, we can conclude that

answer

marginal product of the third worker is 9.

question

What do wages paid to factory workers, interest paid on a bank loan, forgone interest, and the purchase of component parts have in common?

answer

All are opportunity costs.

question

When a firm does more of something, it gets better at it. This learning-by-doing is

answer

a source of economies of scale.

question

Which point in the accompanying graph is the shutdown point for the firm?

answer

question

Refer to the provided graph for a purely competitive firm in the short run. If the firm is maximizing profit, the price of the product is:

answer

question

According to the accompanying diagram, to maximize profit or minimize losses, this firm will produce

answer

E units at price A.

question

Refer to the diagram for a purely competitive producer. The lowest price at which the firm should produce (as opposed to shutting down) is

answer

question

If the demand curve faced by an individual firm is downward-sloping, the firm cannot be

answer

a purely competitive firm.

question

In the graph, the amount of profit is measured by the gap between

answer

d and e.

question

The demand curve in a purely competitive industry is ________, while the demand curve to a single firm in that industry is ________.

answer

downsloping; perfectly elastic

question

Which of the following is not a characteristic of pure competition?

answer

pricing strategies by firms

question

In the short run, the individual competitive firm's supply curve is that segment of the

answer

marginal cost curve lying above the average variable cost curve.

question

The firm represented in this diagram, which gives short-run data, is selling under conditions of

answer

pure competition.

question

An industry comprising 40 firms, none of which has more than 3 percent of the total market for a differentiated product, is an example of

answer

monopolistic competition.

question

The accompanying graph shows the cost curves for a competitive firm. If the market price falls to $0.55, the optimal output is

answer

question

An industry comprising a small number of firms, each of which considers the potential reactions of its rivals in making price-output decisions, is called

answer

oligopoly.

question

When a firm is maximizing profit, it will necessarily be

answer

maximizing the difference between total revenue and total cost.

question

Refer to the accompanying diagram. The firm's supply curve is the segment of the

answer

MC curve above its intersection with the AVC curve

question

An exclusive legal right as sole producer for 20 years granted to an inventor of a product is called a

answer

patent.

question

Which of the following best approximates a pure monopoly?

answer

the only grocery store in a small isolated town

question

Which of the following does not necessarily apply to a pure monopoly?

answer

The firm will charge the highest price possible.

question

Refer to the two diagrams for individual firms. Figure 1 pertains to ________, while Figure 2 refers to ________.

answer

a purely competitive firm; an imperfectly competitive firm

question

Assume a pure monopolist is currently operating at a price-quantity combination on the inelastic segment of its demand curve. If the monopolist is seeking maximum profits, it should

answer

charge a higher price.

question

If the industry depicted in the graph is purely monopolistic, the profit-maximizing price and quantity will be

answer

P3 and Q3.

question

Refer to the graphs of D and MR for a monopolist. Which of the following statements is true?

answer

Demand is elastic at a price of P1.

question

Refer to the diagram for a pure monopolist. If the monopolist is unregulated, it will maximize profits by charging

answer

price P3 and producing output Q3

question

Pure monopolists may obtain economic profits in the long run because

answer

of barriers to entry.

question

Pure monopoly refers to

answer

a single firm producing a product for which there are no close substitutes.

question

In the short-run equilibrium, a monopolist's profits

answer

may be positive, negative, or zero.

question

Which of the following is not a barrier to entry?

answer

X-inefficiency

question

The demand curve faced by a pure monopolist

answer

is less elastic than that faced by a single purely competitive firm.

question

One major barrier to entry under pure monopoly arises from

answer

ownership of essential resources.

question

If a regulatory commission wants to provide a natural monopoly with a fair return, it should establish a price that is equal to

answer

average total cost.

question

Dequam likes product variety, while Natasha is most concerned about paying the lowest price possible for a good. This suggests that

answer

Dequam prefers monopolistically competitive industries, while Natasha prefers purely competitive industries.

question

In the short run, a profit-maximizing monopolistically competitive firm sets it price

answer

above marginal cost.

question

Which of the following characteristics provide a monopolistically competitive firm some monopoly power?

answer

product differentiation

question

Refer to the above graphs. A short-run equilibrium that would produce profits for a monopolistically competitive firm would be represented by graph

answer

question

Herfindahl Index

answer

gives much greater weight to larger firms than to smaller firms in an industry

question

In the long run, a representative firm in a monopolistically competitive industry will end up

answer

earning a normal profit, but not an economic profit.

question

A monopolistically competitive industry combines elements of both competition and monopoly. The monopoly element results from

answer

product differentiation.

question

Refer to the diagram for a monopolistically competitive firm in short-run equilibrium. This firm's profit-maximizing price will be

answer

$16.

question

In which of these continuums of degrees of competition (highest to lowest) is monopolistic competition properly placed?

answer

pure competition, monopolistic competition, oligopoly, pure monopoly

question

Compared to a purely competitive firm in long-run equilibrium, the monopolistic competitor has a

answer

higher price and lower output.

question

Monopolistic competition means

answer

many firms producing differentiated products.

question

Refer to the above graphs. The differences in the long-run equilibrium positions for a monopolistically competitive firm and for a purely competitive firm are illustrated by graphs

answer

B and C.

question

Refer to the diagram for a monopolistically competitive firm in short-run equilibrium. The profit-maximizing output for this firm will be

answer

160

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Which of the following is not a basic characteristic of monopolistic competition?

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recognized mutual interdependence

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Refer to the above graphs. A short-run equilibrium that would result in losses for a monopolistically competitive firm would be represented by graph

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question

The product in an oligopolistic market

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may be homogeneous or differentiated.

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Which of the following nations is not a member of the OPEC oil cartel?

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Norway

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A defining characteristic of an oligopolistic market is that there are

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few sellers.

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When firms in an industry reach an agreement to fix prices, divide up market share, or otherwise restrict competition, they are practicing the strategy of

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collusion.

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The study of how people (or firms) behave in strategic situations is called

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game theory.

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A major reason that firms form a cartel is to

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Maximize joint profits

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Three major means of collusion by oligopolists are

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cartels, informal understandings, and price leadership.

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adopting a low-price policy.

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Oligopolistic firms engage in collusion to

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earn greater profits

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each will realize a $20 million profit.

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Oligopolistic industries are characterized by:

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a few dominant firms and substantial entry barriers.

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The copper, aluminum, cement, and industrial alcohol industries are examples of

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homogeneous oligopoly.

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a cartel.

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One inherent factor that tends to destroy collusion among oligopolists is the

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incentive to cheat.

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The term oligopoly indicates:

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a few firms producing either a differentiated or a homogeneous product.

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