Midterm 2 Econ - Assignment Essays

question

Competitive firms cannot individually affect market price because

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Their individual production is insignificant relative to the production of the industry

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Which of the following is an example of perfect competition

answer

Mini small firms all produce the same good

question

If Pepsi and Coca-Cola are the only two soft drink producers they could be considered

answer

A doupoly

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If there are only four companies that produce tennis balls in market could be considered

answer

A oligopoly

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Which of the following is an example of monopolistic competition

answer

Many firms supply similar products each with some customers who show significant brand loyalty

question

Which of the following is not characteristic of a perfectly competitive market

answer

A significant degree of brand loyalty for each firm

question

In which of the following industries is the firm referred to as a price taker

answer

Perfect competition

question

Which of the following is the best example of a perfectly competitive market

answer

Dairy farming

question

A perfectly competitive firm currently sells 30,000 cartons of eggs at $1.25 each, if the firm wants to sell one more carton of eggs the firm

answer

Should price the carton at $1.25

question

A horizontal demand curve for a firm indicates that

answer

The firm has no market power

question

In the perfectly competitive cat fish market the market demand curve is

answer

Downward sloping

question

If a perfectly competitive firm produces and sells more output it's ___________________ will definitely increase

answer

Total revenue

question

If a perfectly competitive firm wanted to maximize its total revenues it would produce

answer

As much output as it is capable of producing

question

A perfectly competitive producer tries to maximize profits by operating at an output where

answer

Marginal cost equals Price

question

If price equals average total cost and marginal cost then

answer

Economic profits would be zero

question

The law of diminishing returns helps explain why

answer

Marginal cost increases in the short run as more output is produced

question

If marginal cost equals price then _________ is at a maximum

answer

Profit

question

If price is greater than marginal cost a competitive firm should increase output because additional unit of output will

answer

Add to the firms profits or reduce losses

question

Profit per unit equals

answer

price minus average total cost

question

A right word shift in market supply curve could be caused by

answer

An improvement in technology

question

For a competitive firm the marginal cost curve

answer

Is the short run supply curve at all viable production levels

question

Which of the following is not true for a competitive firm

answer

The marginal cost curve is horizontal at the equilibrium price.

question

If the cost of insecticide decreases for tomato farmers tomato farmer should do which of the following to maximize profits

answer

Increase output

question

The market supply curve is calculated by

answer

Summing the marginal cost curves of all firms.

question

Market supply in a competitive market is determined by

answer

The cost of the factor inputs

question

If a perfectly competitive firms earn economic profit in the short run then we would expect that in a long run

answer

New firms will enter the market

question

In a perfectly competitive market where firms are earning economic loss which of the following is likely as the industry moves towards a long run equilibrium

answer

A higher price and fewer firms

question

Over the long run a perfectly competitive market equilibrium

answer

Price equals the minimum of average total cost

question

Economic profits it disappear when

answer

Price falls to the level of minimum average total cost

question

In the long run a perfectly competitive market with economic losses will experience

answer

An increase in equilibrium price as firms exit

question

Which of the following is not considered a barrier to entry

answer

Marginal cost pricing

question

Based on the newswire article "catfish farmers quitting" what should happen to the equilibrium price and quantity of catfish overtime

answer

Equilibrium price should go up and equilibrium quantity should go down

question

Which of the following firms is likely to have the greatest market power?

answer

the sole producer of the latest computer microchip technology

question

The demand curve for an individual monopolist

answer

is the same as the market demand curve.

question

Which of the following is NOT true for a monopoly?

answer

It is a price taker

question

In order to sell one additional unit of output, a profit-maximizing monopolist must

answer

reduce the price of all units sold.

question

The marginal revenue of a monopolist is

answer

less than price because to sell more output the firm must reduce the price on all units sold.

question

Suppose a monopoly firm produces software and can sell 10 items per month at a price of $50 each. In order to increase sales by one item per month, the monopolist must lower the price of its software by $1 to $49. The marginal revenue of the 11th item is

answer

$39

question

Which of the following is true for a monopolist?

answer

Profit is maximized at a production level where marginal cost equals marginal revenue.

question

Why would a monopolist never set a price on a point in the inelastic portion of the demand curve?

answer

Marginal revenue would be negative and therefore well below the marginal cost curve.

question

For a firm, the price of a product is $10, and marginal revenue equals marginal cost at $7 and a quantity of 400 lbs. If the firm's profit at that level of production is $800, find the average total cost.

answer

question

In terms of pricing, which of the following is NOT true for a monopolist?

answer

In the long run, economic profit is impossible.

question

Total profit can be calculated as

answer

the difference between price and average total cost multiplied by the quantity sold.

question

For a monopoly in long-run equilibrium, economic profits are likely to be

answer

greater than zero

question

Which of the following statements is true, assuming the same cost and demand conditions?

answer

A monopoly produces less output than a competitive firm.

question

Which of the following helps to keep potential competitors out of a monopoly market?

answer

bundled products

question

Which of the following is consistent with a perfectly competitive industry?

answer

marginal cost pricing

question

Compared to a competitive market with the same long-run costs and market demand, a monopolist has

answer

less pressure to reduce costs and less incentive to improve quality.

question

An industry in which one firm can achieve economies of scale over the entire range of output is referred to as

answer

a natural monopoly

question

In some situations a monopoly might be considered more desirable than a perfectly competitive firm

answer

if economies of scale exist and can only be realized by a single firm

question

If you want to fly to Los Angeles, a place most airlines fly in and out of, the airline industry is likely _____, but if you want to fly to a small town in North Dakota, where only one airline flies, the airline industry is likely _____.

answer

competitive; monopolistic

question

If American Airlines engages in predatory pricing, it might

answer

lower fares when a new carrier enters the market and then raise fares once the new carrier is driven out of business.

question

Refer to the Monopoly Costs and Revenue table. Profit maximization is achieved at a production rate of

answer

3 planes per month

question

Refer to the Monopoly Costs and Revenue table. The maximum profit that can be achieved is

answer

$11 million per month.

question

Refer to the table. Using the profit-maximization rule, a monopolist will charge a price of

answer

$80

question

Refer to the table. At the profit-maximizing rate of output, marginal revenue is

answer

$60

question

Refer to the figure. The profit per unit for this profit-maximizing monopolist is closest to

answer

$3.50 per unit

question

Refer to the figure. If this monopolist were forced to behave as if it operated in perfect competition, the profit-maximizing rate of output would be

answer

5 units per hour.

question

Refer to the figure. If this monopolist were forced to behave as if it operated in perfect competition, the profit-maximizing price would be

answer

$8 per unit

question

Assume the market price is $65, marginal cost is $35, marginal revenue is $35, and average total cost is $39. In this market, the monopolist will

answer

operate at a profit

1 of 60

question

Competitive firms cannot individually affect market price because

answer

Their individual production is insignificant relative to the production of the industry

question

Which of the following is an example of perfect competition

answer

Mini small firms all produce the same good

question

If Pepsi and Coca-Cola are the only two soft drink producers they could be considered

answer

A doupoly

question

If there are only four companies that produce tennis balls in market could be considered

answer

A oligopoly

question

Which of the following is an example of monopolistic competition

answer

Many firms supply similar products each with some customers who show significant brand loyalty

question

Which of the following is not characteristic of a perfectly competitive market

answer

A significant degree of brand loyalty for each firm

question

In which of the following industries is the firm referred to as a price taker

answer

Perfect competition

question

Which of the following is the best example of a perfectly competitive market

answer

Dairy farming

question

A perfectly competitive firm currently sells 30,000 cartons of eggs at $1.25 each, if the firm wants to sell one more carton of eggs the firm

answer

Should price the carton at $1.25

question

A horizontal demand curve for a firm indicates that

answer

The firm has no market power

question

In the perfectly competitive cat fish market the market demand curve is

answer

Downward sloping

question

If a perfectly competitive firm produces and sells more output it's ___________________ will definitely increase

answer

Total revenue

question

If a perfectly competitive firm wanted to maximize its total revenues it would produce

answer

As much output as it is capable of producing

question

A perfectly competitive producer tries to maximize profits by operating at an output where

answer

Marginal cost equals Price

question

If price equals average total cost and marginal cost then

answer

Economic profits would be zero

question

The law of diminishing returns helps explain why

answer

Marginal cost increases in the short run as more output is produced

question

If marginal cost equals price then _________ is at a maximum

answer

Profit

question

If price is greater than marginal cost a competitive firm should increase output because additional unit of output will

answer

Add to the firms profits or reduce losses

question

Profit per unit equals

answer

price minus average total cost

question

A right word shift in market supply curve could be caused by

answer

An improvement in technology

question

For a competitive firm the marginal cost curve

answer

Is the short run supply curve at all viable production levels

question

Which of the following is not true for a competitive firm

answer

The marginal cost curve is horizontal at the equilibrium price.

question

If the cost of insecticide decreases for tomato farmers tomato farmer should do which of the following to maximize profits

answer

Increase output

question

The market supply curve is calculated by

answer

Summing the marginal cost curves of all firms.

question

Market supply in a competitive market is determined by

answer

The cost of the factor inputs

question

If a perfectly competitive firms earn economic profit in the short run then we would expect that in a long run

answer

New firms will enter the market

question

In a perfectly competitive market where firms are earning economic loss which of the following is likely as the industry moves towards a long run equilibrium

answer

A higher price and fewer firms

question

Over the long run a perfectly competitive market equilibrium

answer

Price equals the minimum of average total cost

question

Economic profits it disappear when

answer

Price falls to the level of minimum average total cost

question

In the long run a perfectly competitive market with economic losses will experience

answer

An increase in equilibrium price as firms exit

question

Which of the following is not considered a barrier to entry

answer

Marginal cost pricing

question

Based on the newswire article "catfish farmers quitting" what should happen to the equilibrium price and quantity of catfish overtime

answer

Equilibrium price should go up and equilibrium quantity should go down

question

Which of the following firms is likely to have the greatest market power?

answer

the sole producer of the latest computer microchip technology

question

The demand curve for an individual monopolist

answer

is the same as the market demand curve.

question

Which of the following is NOT true for a monopoly?

answer

It is a price taker

question

In order to sell one additional unit of output, a profit-maximizing monopolist must

answer

reduce the price of all units sold.

question

The marginal revenue of a monopolist is

answer

less than price because to sell more output the firm must reduce the price on all units sold.

question

answer

$39

question

Which of the following is true for a monopolist?

answer

Profit is maximized at a production level where marginal cost equals marginal revenue.

question

Why would a monopolist never set a price on a point in the inelastic portion of the demand curve?

answer

Marginal revenue would be negative and therefore well below the marginal cost curve.

question

answer

question

In terms of pricing, which of the following is NOT true for a monopolist?

answer

In the long run, economic profit is impossible.

question

Total profit can be calculated as

answer

the difference between price and average total cost multiplied by the quantity sold.

question

For a monopoly in long-run equilibrium, economic profits are likely to be

answer

greater than zero

question

Which of the following statements is true, assuming the same cost and demand conditions?

answer

A monopoly produces less output than a competitive firm.

question

Which of the following helps to keep potential competitors out of a monopoly market?

answer

bundled products

question

Which of the following is consistent with a perfectly competitive industry?

answer

marginal cost pricing

question

Compared to a competitive market with the same long-run costs and market demand, a monopolist has

answer

less pressure to reduce costs and less incentive to improve quality.

question

An industry in which one firm can achieve economies of scale over the entire range of output is referred to as

answer

a natural monopoly

question

In some situations a monopoly might be considered more desirable than a perfectly competitive firm

answer

if economies of scale exist and can only be realized by a single firm

question

answer

competitive; monopolistic

question

If American Airlines engages in predatory pricing, it might

answer

lower fares when a new carrier enters the market and then raise fares once the new carrier is driven out of business.

question

Refer to the Monopoly Costs and Revenue table. Profit maximization is achieved at a production rate of

answer

3 planes per month

question

Refer to the Monopoly Costs and Revenue table. The maximum profit that can be achieved is

answer

$11 million per month.

question

Refer to the table. Using the profit-maximization rule, a monopolist will charge a price of

answer

$80

question

Refer to the table. At the profit-maximizing rate of output, marginal revenue is

answer

$60

question

Refer to the figure. The profit per unit for this profit-maximizing monopolist is closest to

answer

$3.50 per unit

question

Refer to the figure. If this monopolist were forced to behave as if it operated in perfect competition, the profit-maximizing rate of output would be

answer

5 units per hour.

question

Refer to the figure. If this monopolist were forced to behave as if it operated in perfect competition, the profit-maximizing price would be

answer

$8 per unit

question

Assume the market price is $65, marginal cost is $35, marginal revenue is $35, and average total cost is $39. In this market, the monopolist will

answer

operate at a profit

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