question
When bond prices rise
answer
interest rates must fall
question
"Plowback" is a preferred source of financing a corporation because
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it is fairly easy, compared to issuing stocks.
question
The competitive firm has no influence over price because
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its output is so insignificant relative to the market as a whole.
question
The perfectly competitive firm's short-run shutdown rule is to shut down immediately if
answer
TR < SRVC.
question
The short-run supply curve of the perfectly competitive firm is the firm's
answer
MC curve above the minimum point on the AVC curve.
question
The entry of firms into a perfectly competitive industry causes the supply curve to
answer
move farther toward the right.
question
In long-run equilibrium, the perfectly competitive firm produces
answer
d. All of the above are correct.
a. where P= MC = AC.
b. at the lowest point on its long-run average cost curve.
c. where its long-run average cost curve is tangent to its horizontal demand curve.
a. where P= MC = AC.
b. at the lowest point on its long-run average cost curve.
c. where its long-run average cost curve is tangent to its horizontal demand curve.
question
A tax on polluting firms
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would shift the LRAC curve upward.
question
Pure monopoly
answer
d. All of the above are correct.
a. is defined as having only one supplier.
b. has no close substitutes for its product.
c. exists when entry and survival of potential competitors is extremely unlikely.
a. is defined as having only one supplier.
b. has no close substitutes for its product.
c. exists when entry and survival of potential competitors is extremely unlikely.
question
At his current level of output, a monopolist has an MR of $10, an MC of $6, and an economic profit of zero.
If the market demand curve is downward sloping and his marginal cost curve upward sloping, the monopolist
If the market demand curve is downward sloping and his marginal cost curve upward sloping, the monopolist
answer
could increase his profit by increasing his output.
question
Which of the following is true for a profit-maximizing competitive firm in the long run but not a monopolist?
answer
MC = P
question
Monopolistic competitors and perfect competitors are alike in
answer
zero economic profit in the long run.
question
The demand curve for a monopolistic competitor slopes downward because
answer
there are close but not perfect substitutes for the product.
question
The monopolistically competitive firm in short-run equilibrium
answer
a. faces a downward-sloping demand curve.
b. has a marginal revenue curve which lies below its demand curve.
c. maximizes profit where MR = MC.
d. All of the above are correct
b. has a marginal revenue curve which lies below its demand curve.
c. maximizes profit where MR = MC.
d. All of the above are correct
question
Oligopolists
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must take rivals' reactions into account
question
The Organization of Petroleum Exporting Countries is a
answer
a cartel
question
The difficulty in analyzing oligopolistic behavior arises from the
answer
interdependent nature of oligopolistic decisions.
question
In the cigarette industry either R. J. Reynolds or Phillip Morris, for a time, raised prices twice a year by about
50 cents per carton. The other firms in the industry raised their prices by the same amount. Economists call
this
50 cents per carton. The other firms in the industry raised their prices by the same amount. Economists call
this
answer
price leadership.
question
According to the kinked demand curve model, an oligopolist may face
answer
more elastic demand if she raises her price than if she lowers her price.
question
The payoff matrix is a fundamental tool of
answer
game theory. Raymond
question
The maximin criterion can be defined as which of the following?
answer
One seeks the maximum of the minimum payoffs to the various available strategies.
question
A market is contestable if
answer
there is free entry and exit.
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