Microeconomics Unit 3 Exam - Assignment Essays

question

Perfect competition is a market structure:

answer

in which individual buyers and sellers have no effect on the market price.

question

A firm in a perfectly competitive industry is a:

answer

price taker.

question

All of the following are characteristics of a perfectly competitive market except:

answer

high barriers to entry and exit.

question

Which of the following is closest to a perfectly competitive market?

answer

the market for broccoli

question

The demand curve for a perfectly competitive industry is:

answer

downward-sloping.

question

The demand curve facing the perfectly competitive firm is:

answer

is perfectly elastic.

question

The perfectly competitive firm's total revenue curve is:

answer

linear and upward sloping, has a constant slope, and has a positive slope.

question

The perfectly competitive demand curve has:

answer

a slope of 0.

question

The goal of the perfectly competitive firm is:

answer

to maximize total profits.

question

The rate of production that maximizes the positive difference between total revenues and total costs is the:

answer

profit-maximizing rate of production.

question

Marginal revenue is:

answer

change in total revenue / change in output.

question

Marginal revenue:

answer

is the change in total revenues resulting in a change in output.

question

Under what conditions are profits maximized?

answer

at the rate of output at which marginal revenue equals marginal cost

question

A perfectly competitive firm is selling 300 units of output at $4 each. At this level of output total fixed cost is $100 and total variable cost is $500. The firm:

answer

is earning a profit, but not necessarily the maximum profit.

question

For a perfectly competitive firm facing the short-run break even price:

answer

it has an economic profit of zero.

question

An increasing cost industry will have:

answer

an upward sloping supply curve in the long run.

question

A decreasing cost industry will have:

answer

a downward sloping supply curve in the long run.

question

When a perfectly competitive firm experiences zero economic profits:

answer

firms have no incentive to enter or exit the industry.

question

The motive that drives firms to enter or exit and industry is:

answer

economic profit.

question

In the long run, all firms in a perfectly competitive industry:

answer

break even.

question

A situation in which the price charged is equal to society's opportunity cost is known as:

answer

marginal cost pricing.

question

Public goods are not produced perfectly competitive markets because:

answer

these markets would be inefficient.

question

In a monopoly market structure, the firm (the monopolist) always:

answer

is the whole industry.

question

A firm that is the only seller of a good with no close substitutions is a(n):

answer

monopolist

question

An association of producers such as OPEC that agrees to set common pricing or output goals is referred to as:

answer

a cartel.

question

All of the following are barriers to entry in an industry EXCEPT:

answer

low marginal tax rates

question

The demand curve faced by the monopolist

answer

slopes downward

question

Legal or governmental restrictions that give monopolistic advantages to a firm include all of the following EXCEPT:

answer

economies of scale

question

A firm that faces a downward sloping demand curve is :

answer

a price searcher

question

The monopolist should never produce in the:

answer

inelastic segment of its demand curve because further lowering of the price reduces total revenue

question

Assume that a monopoly is producing at profit maximizing output level. If the firm's total fixed costs decrease, the firm:

answer

should continue to produce at the same level.

question

If the monopolist is producing at an output rate at which P=ATC:

answer

It's economic profit will be zero

question

A firm that can determine the price-output combination in order to maximize profits is known as a:

answer

price searcher.

question

Selling a product at different prices when the price difference is unrelated to costs is a practice known as:

answer

price discrimination

question

Price discrimination exists when:

answer

prices a firm charges different buyers differs but costs do not

question

A firm will practice price discrimination when it believe that by doing so it will be able to increase total:

answer

profits

question

A monopolist charges a price that is _______________ and produces ______________ than a perfect competitor,

answer

higher ; less

question

The difference between the total amount that people would have been willing to pay for the total quantity produced and consumed in a market and what they actually pay at the market clearing price is called:

answer

consumer surplus

question

The portion of consumer surplus that would have existed in a perfectly competitive market but is unobtainable by anyone in society under a monopoly is known as:

answer

a deadweight loss

question

Which of the following is NOT a feature of a monopolistic competitor?

answer

homogeneous product

question

The type of product sold by a monopolistically competitive business:

answer

is differentiated

question

Monopolistic competition means:

answer

a large number of firms producing differentiated products

question

In a monopolistically competitive market entry into the industry is:

answer

relatively easy

question

A market situation in which a large number of firms produce similar but not identical products is:

answer

monopolistically competitive

question

A monopolistic competitor would face a demand curve with a:

answer

negative slope

question

For a monopolistically competitive firm

answer

price is greater than marginal revenue for all levels of production

question

In the long run the economic profits of a monopolistically competitive firm:

answer

equal zero

question

In the long run a monopolistically competitive firm will produce to the point at which

answer

average total costs are higher than the minimum possible ATC

question

The goal of advertising is to:

answer

reduce the price elasticity of demand for the firm's product

question

Typically a mix of informational and persuasive advertising is used for:

answer

credence goods

question

Which of the following is most likely to be the subject of informational advertising?

answer

a search good

question

An example of direct marketing is:

answer

the use of personalized advertising by using mailing lists.

question

A market structure characterized by a small number of interdependent sellers is called a(n):

answer

oligopoly

question

Strategic dependence is found in:

answer

oligopolistic market structures

question

Which of the following is NOT a cause for an oligopoly to exist?

answer

structural dependence

question

The joining of firms that are producing or selling a similar product is

answer

a horizontal merger

question

All of the following are characteristics of an oligopoly EXCEPT:

answer

diseconomies of scale over all ranges of output

question

The higher the concentration ratio is in an industry, the more likely it is that:

answer

the industry has an oligopoly

question

Economies of scale:

answer

are commonplace and often a barrier to entry in oligopolistic market structures

1 of 59

question

Perfect competition is a market structure:

answer

in which individual buyers and sellers have no effect on the market price.

question

A firm in a perfectly competitive industry is a:

answer

price taker.

question

All of the following are characteristics of a perfectly competitive market except:

answer

high barriers to entry and exit.

question

Which of the following is closest to a perfectly competitive market?

answer

the market for broccoli

question

The demand curve for a perfectly competitive industry is:

answer

downward-sloping.

question

The demand curve facing the perfectly competitive firm is:

answer

is perfectly elastic.

question

The perfectly competitive firm's total revenue curve is:

answer

linear and upward sloping, has a constant slope, and has a positive slope.

question

The perfectly competitive demand curve has:

answer

a slope of 0.

question

The goal of the perfectly competitive firm is:

answer

to maximize total profits.

question

The rate of production that maximizes the positive difference between total revenues and total costs is the:

answer

profit-maximizing rate of production.

question

Marginal revenue is:

answer

change in total revenue / change in output.

question

Marginal revenue:

answer

is the change in total revenues resulting in a change in output.

question

Under what conditions are profits maximized?

answer

at the rate of output at which marginal revenue equals marginal cost

question

A perfectly competitive firm is selling 300 units of output at $4 each. At this level of output total fixed cost is $100 and total variable cost is $500. The firm:

answer

is earning a profit, but not necessarily the maximum profit.

question

For a perfectly competitive firm facing the short-run break even price:

answer

it has an economic profit of zero.

question

An increasing cost industry will have:

answer

an upward sloping supply curve in the long run.

question

A decreasing cost industry will have:

answer

a downward sloping supply curve in the long run.

question

When a perfectly competitive firm experiences zero economic profits:

answer

firms have no incentive to enter or exit the industry.

question

The motive that drives firms to enter or exit and industry is:

answer

economic profit.

question

In the long run, all firms in a perfectly competitive industry:

answer

break even.

question

A situation in which the price charged is equal to society's opportunity cost is known as:

answer

marginal cost pricing.

question

Public goods are not produced perfectly competitive markets because:

answer

these markets would be inefficient.

question

In a monopoly market structure, the firm (the monopolist) always:

answer

is the whole industry.

question

A firm that is the only seller of a good with no close substitutions is a(n):

answer

monopolist

question

An association of producers such as OPEC that agrees to set common pricing or output goals is referred to as:

answer

a cartel.

question

All of the following are barriers to entry in an industry EXCEPT:

answer

low marginal tax rates

question

The demand curve faced by the monopolist

answer

slopes downward

question

Legal or governmental restrictions that give monopolistic advantages to a firm include all of the following EXCEPT:

answer

economies of scale

question

A firm that faces a downward sloping demand curve is :

answer

a price searcher

question

The monopolist should never produce in the:

answer

inelastic segment of its demand curve because further lowering of the price reduces total revenue

question

Assume that a monopoly is producing at profit maximizing output level. If the firm's total fixed costs decrease, the firm:

answer

should continue to produce at the same level.

question

If the monopolist is producing at an output rate at which P=ATC:

answer

It's economic profit will be zero

question

A firm that can determine the price-output combination in order to maximize profits is known as a:

answer

price searcher.

question

Selling a product at different prices when the price difference is unrelated to costs is a practice known as:

answer

price discrimination

question

Price discrimination exists when:

answer

prices a firm charges different buyers differs but costs do not

question

A firm will practice price discrimination when it believe that by doing so it will be able to increase total:

answer

profits

question

A monopolist charges a price that is _______________ and produces ______________ than a perfect competitor,

answer

higher ; less

question

answer

consumer surplus

question

The portion of consumer surplus that would have existed in a perfectly competitive market but is unobtainable by anyone in society under a monopoly is known as:

answer

a deadweight loss

question

Which of the following is NOT a feature of a monopolistic competitor?

answer

homogeneous product

question

The type of product sold by a monopolistically competitive business:

answer

is differentiated

question

Monopolistic competition means:

answer

a large number of firms producing differentiated products

question

In a monopolistically competitive market entry into the industry is:

answer

relatively easy

question

A market situation in which a large number of firms produce similar but not identical products is:

answer

monopolistically competitive

question

A monopolistic competitor would face a demand curve with a:

answer

negative slope

question

For a monopolistically competitive firm

answer

price is greater than marginal revenue for all levels of production

question

In the long run the economic profits of a monopolistically competitive firm:

answer

equal zero

question

In the long run a monopolistically competitive firm will produce to the point at which

answer

average total costs are higher than the minimum possible ATC

question

The goal of advertising is to:

answer

reduce the price elasticity of demand for the firm's product

question

Typically a mix of informational and persuasive advertising is used for:

answer

credence goods

question

Which of the following is most likely to be the subject of informational advertising?

answer

a search good

question

An example of direct marketing is:

answer

the use of personalized advertising by using mailing lists.

question

A market structure characterized by a small number of interdependent sellers is called a(n):

answer

oligopoly

question

Strategic dependence is found in:

answer

oligopolistic market structures

question

Which of the following is NOT a cause for an oligopoly to exist?

answer

structural dependence

question

The joining of firms that are producing or selling a similar product is

answer

a horizontal merger

question

All of the following are characteristics of an oligopoly EXCEPT:

answer

diseconomies of scale over all ranges of output

question

The higher the concentration ratio is in an industry, the more likely it is that:

answer

the industry has an oligopoly

question

Economies of scale:

answer

are commonplace and often a barrier to entry in oligopolistic market structures

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