Micro Exam IV - Assignment Essays

question

The market model with the largest number of firms is:

answer

Pure competition

question

In pure competition, the marginal revenue of a firm always equals:

answer

Total revenue

question

What is a feature of a competitive market?

answer

Product's are standardize or homogeneous

question

A firm sells a product in a purely competitive market. The marginal cost of the product at the current output of 800 units is $3.50. The minimum possible average variable cost is $3.00. The market price of the product is $4.00. To maximize profit or minimize losses, the firm should

answer

produce more than 800 units

question

A profit-maximizing firm in the short run will expand output

answer

as long as marginal revenue is greater than marginal cost

question

If firms enter a purely competitive industry, then in the long run this change will shift the industry:

answer

supply curve to the right, and the market price will decrease

question

The long-run supply curve would be downsloping in

answer

A decreasing-cost industry

question

In long-run equilibirum under conditions of pure competition and productive efficiency, all firms produce at minimum

answer

average total cost

question

A profit-maximizing firm will shut down in the short run if

answer

Price is less than average variable cost

question

An indication that a perfectly competitive firm is in long-run equilibrium?

answer

Price equals marginal cost, which equals average total cost.

question

The production of agriculture products such as wheat or corn would best be described by which market model?

answer

Pure competition

question

If the demand curve facing a firm is perfectly elastic, then:

answer

its marginal revenue will equal price

question

Price is constant or given to the individual firm selling in a purely competitive market because:

answer

each seller supplies a negligible fraction of total supply

question

If the total revenue for a output of 2 is $40, and a output of 3 is $120, the marginal revenue from the third output is

answer

$40

question

A firm sells a product in a purely competitive market. The marginal cost of the product at the current output of 1,000 units is $2.50. The minimum possible average variable cost is $2.00. The market price of the product is $2.50. To maximize profit or minimize losses, the firm should:

answer

continue producing 1000 units

question

A purely competitive firm will be willing to produce at a loss in the short run provided...

answer

the loss is no greater than its total variable costs

question

If firms are losing money in a purely competitive industry, then in the long run this situation will shift the industry:

answer

Supply curve to the left, and the market price will increase

question

Assume that the market for corn is purely competitive. Currently, firms growing corn are suffering economic losses. In the long run, we can expect:

answer

...

question

Assume that the market for soybeans is purely competitive. Currently, firms growing soybeans are experiencing economic profits. In the long run, we can expect the market's

answer

Supply to increase

question

If there is allocative efficiency in a purely competitive market for a product, the minimum price producers are willing to accept is:

answer

...

question

If there is allocative efficiency in a purely competitive market for a product, the maximum price consumers are willing to accept is:

answer

...

question

Which market model has the least number of firms?

answer

pure monopoly

question

If a firm is a price taker, then the demand curve for the firm's product is

answer

perfectly elastic

question

A firm sells a product in a purely competitive market. The marginal cost of the product at the current output of 500 units is $1.50. The minimum possible average variable cost is $1.00. The market price of the product is $1.25. To maximize profit or minimize losses, the firm should

answer

produce less than 500 units

question

A purely competitive firm will break even when

answer

MC = ATC

question

The long-run supply curve would be upsloping in

answer

increasing-cost industry

question

Resources are efficiently allocated when production occurs at the output at which

answer

P equals MC

question

One defining characteristic of pure monopoly is that:

answer

the monopolist produces a product with no close substitutes

question

In many large U.S. cities, taxicab companies operate as near monopolies because of

answer

licenses

question

What do economies of scale, the ownership of essential raw materials, and patents have in common?

answer

they are all barriers to entry

question

Suppose that a monopolist calculates that at present output and sales, marginal cost is $1.00 and marginal revenue is $2.00. She could maximize profits by

answer

increasing price and decreasing output

question

One feature of pure monopoly is that the monopolist is:

answer

a price maker

question

A monopoly is most likely to emerge and be sustained when:

answer

economies of scale are large relative to market demand

question

Other things equal, which reduces competition in an industry

answer

patent laws

question

Suppose a monopolist calculates that at present output and sales levels, marginal revenue is $1.00 and marginal cost is $2.00. He could maximize profits (or minimize losses) by

answer

increasing price and decreasing output

question

A monopolist seeks maximum unit profits.

answer

False

question

When compared with the purely competitive industry with identical costs of production, a monopolist will produce:

answer

less output and charge a higher price

question

price discrimination is:

answer

only illegal if used to lessen or eliminate competition.

question

What piece of federal legislation aims to prevent monopolization and restraint of trade

answer

Sherman Act

question

Which is a characteristic of monopolistic competition?

answer

Relatively easy entry

question

A major difference between pure competition and monopolistic competition is that under pure competition:

answer

individual firms have more elastic demand curves

question

A monopolistically competitive firm in the short run is producing where the price is $3.00 and marginal cost is $1.50. To maximize profits:

answer

the firm should produce the level of output where marginal revenue equals marginal cost

question

In the long run, profits for a monopolistic competitor will be:

answer

slightly more than the profits of a purely competitive firm

question

The characteristic of MP most closely associated with oligopoly is

answer

a few large producers

question

Mutual interdependence means that each oligopolistic firm:

answer

must consider the possible reaction of rivals when establishing price policy

question

A major prediction of the kinked-demand curve is:

answer

...

question

A major reason that firms form a cartel is to:

answer

Maximize joint profits

question

A positive effect of advertising for society is that it:

answer

provides useful information to reduce search cost for consumers

question

How would many economists view inefficiency in oligopoly?

answer

P>MC and P>minimum ATC

question

The characteristic most closely associated with oligopoly is

answer

A few large producers

question

A major prediction of the kinked-demand curve model is:

answer

stable purchasing behavior by consumers over time

1 of 51

question

The market model with the largest number of firms is:

answer

Pure competition

question

In pure competition, the marginal revenue of a firm always equals:

answer

Total revenue

question

What is a feature of a competitive market?

answer

Product's are standardize or homogeneous

question

answer

produce more than 800 units

question

A profit-maximizing firm in the short run will expand output

answer

as long as marginal revenue is greater than marginal cost

question

If firms enter a purely competitive industry, then in the long run this change will shift the industry:

answer

supply curve to the right, and the market price will decrease

question

The long-run supply curve would be downsloping in

answer

A decreasing-cost industry

question

In long-run equilibirum under conditions of pure competition and productive efficiency, all firms produce at minimum

answer

average total cost

question

A profit-maximizing firm will shut down in the short run if

answer

Price is less than average variable cost

question

An indication that a perfectly competitive firm is in long-run equilibrium?

answer

Price equals marginal cost, which equals average total cost.

question

The production of agriculture products such as wheat or corn would best be described by which market model?

answer

Pure competition

question

If the demand curve facing a firm is perfectly elastic, then:

answer

its marginal revenue will equal price

question

Price is constant or given to the individual firm selling in a purely competitive market because:

answer

each seller supplies a negligible fraction of total supply

question

If the total revenue for a output of 2 is $40, and a output of 3 is $120, the marginal revenue from the third output is

answer

$40

question

answer

continue producing 1000 units

question

A purely competitive firm will be willing to produce at a loss in the short run provided...

answer

the loss is no greater than its total variable costs

question

If firms are losing money in a purely competitive industry, then in the long run this situation will shift the industry:

answer

Supply curve to the left, and the market price will increase

question

Assume that the market for corn is purely competitive. Currently, firms growing corn are suffering economic losses. In the long run, we can expect:

answer

...

question

Assume that the market for soybeans is purely competitive. Currently, firms growing soybeans are experiencing economic profits. In the long run, we can expect the market's

answer

Supply to increase

question

If there is allocative efficiency in a purely competitive market for a product, the minimum price producers are willing to accept is:

answer

...

question

If there is allocative efficiency in a purely competitive market for a product, the maximum price consumers are willing to accept is:

answer

...

question

Which market model has the least number of firms?

answer

pure monopoly

question

If a firm is a price taker, then the demand curve for the firm's product is

answer

perfectly elastic

question

answer

produce less than 500 units

question

A purely competitive firm will break even when

answer

MC = ATC

question

The long-run supply curve would be upsloping in

answer

increasing-cost industry

question

Resources are efficiently allocated when production occurs at the output at which

answer

P equals MC

question

One defining characteristic of pure monopoly is that:

answer

the monopolist produces a product with no close substitutes

question

In many large U.S. cities, taxicab companies operate as near monopolies because of

answer

licenses

question

What do economies of scale, the ownership of essential raw materials, and patents have in common?

answer

they are all barriers to entry

question

Suppose that a monopolist calculates that at present output and sales, marginal cost is $1.00 and marginal revenue is $2.00. She could maximize profits by

answer

increasing price and decreasing output

question

One feature of pure monopoly is that the monopolist is:

answer

a price maker

question

A monopoly is most likely to emerge and be sustained when:

answer

economies of scale are large relative to market demand

question

Other things equal, which reduces competition in an industry

answer

patent laws

question

Suppose a monopolist calculates that at present output and sales levels, marginal revenue is $1.00 and marginal cost is $2.00. He could maximize profits (or minimize losses) by

answer

increasing price and decreasing output

question

A monopolist seeks maximum unit profits.

answer

False

question

When compared with the purely competitive industry with identical costs of production, a monopolist will produce:

answer

less output and charge a higher price

question

price discrimination is:

answer

only illegal if used to lessen or eliminate competition.

question

What piece of federal legislation aims to prevent monopolization and restraint of trade

answer

Sherman Act

question

Which is a characteristic of monopolistic competition?

answer

Relatively easy entry

question

A major difference between pure competition and monopolistic competition is that under pure competition:

answer

individual firms have more elastic demand curves

question

A monopolistically competitive firm in the short run is producing where the price is $3.00 and marginal cost is $1.50. To maximize profits:

answer

the firm should produce the level of output where marginal revenue equals marginal cost

question

In the long run, profits for a monopolistic competitor will be:

answer

slightly more than the profits of a purely competitive firm

question

The characteristic of MP most closely associated with oligopoly is

answer

a few large producers

question

Mutual interdependence means that each oligopolistic firm:

answer

must consider the possible reaction of rivals when establishing price policy

question

A major prediction of the kinked-demand curve is:

answer

...

question

A major reason that firms form a cartel is to:

answer

Maximize joint profits

question

A positive effect of advertising for society is that it:

answer

provides useful information to reduce search cost for consumers

question

How would many economists view inefficiency in oligopoly?

answer

P>MC and P>minimum ATC

question

The characteristic most closely associated with oligopoly is

answer

A few large producers

question

A major prediction of the kinked-demand curve model is:

answer

stable purchasing behavior by consumers over time

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