question
Which of the following equations best describes the relationship between economic and accounting profit?
answer
Economic Profit= Accounting Profit - Implicit costs
question
Marginal cost is calculated as
answer
The increase in total costs divided by the increase in the quantity
question
A perfectly competitive firm does best to charge a price
answer
equal to its competitors
question
which of the following is true of monopolistically competitive firms
answer
The price they charge is greater than marginal cost
question
Firms can cooperate in "prisoners dilemma" type situations if...
answer
They expect to interact over and over again
question
An advantage of the herfindahl-Hirschman Index over the four-firm concentration ratio is that it...
answer
Uses information from all firms in the industry
question
Oligopolists are unique among firms because they...
answer
Must pay close attention to their customers' actions
question
Economists usually assume that the goal of a firm is to...
answer
Maximize profits
question
With no price discrimination, the monopolist sells every unit at the same price. Assuming that monopolist faces a downward-sloping demand curve, we know:
answer
Price is greater than marginal revenue
question
in an oligopoly situation, the logic of self-interest will usually lead to a total output level that...
answer
Exceeds the monopoly level of output, but falls short of the competitive level of output
question
What term describes a game in which players want to choose the same option as other players in the game?
answer
Coordination game
question
Which of the following measures the degree of market power in a market?
answer
Both concentration ratios and Herfinahl-Hirschman index
question
Private information is the cause of:
answer
Both the adverse selection problem and the moral hazard problem
question
What problem related to private information would Quacklack find among its buyers of unemployment insurance?
answer
More high-cost buyers than low-cost buyers would choose to buy insurance
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