Principles of Microeconomics chapters 8,9,10.

Which of the diagrams correctly portrays a pure monopolist’s demand (D) and marginal revenue (MR) curves?

A) A

B) B

C) C

D) D

Refer to the diagram for a pure monopolist. Monopoly output will be A) f

B) Between f and g

C) g

D) h

Price discrimination refers to

A) Selling a given product for different prices at two different times.

B) The difference between the prices of a purely competitive seller and a purely monopolistic seller would charge.

C) Any price above that which is equal to a minimum average total cost

D) The selling of a given product to different customers at different prices that do not reflect cost differences.

Many people believe that monopolies charge any price they want to without affecting sales. In fact, the output and sales level for a profit-maximizing monopoly is codetermined with price where

A) Marginal revenue = average cost

B) Average total cost = price

C) Marginal cost = price

D) Marginal cost = marginal revenue

Refer to the above graph. This monopolistically competitive firm is: A) suffering an economic loss.

B) earning an economic profit.

C) allocatively and productively efficient.

D) neither allocatively nor productively efficient.

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

A) the same as the profits for a monopolist.

B) slightly less than the profits of a monopolist.

C) the same as the profits for a purely competitive firm.

D) slightly more than the profits of a purely competitive firm.

Monopolistic competition is characterized by excess capacity because:

A) firms are always profitable in the long run.

B) firms charge a price that is less than marginal cost.

C) firms produce at an output level less than the least-cost output.

D) the demand for a product is perfectly elastic in this type of industry.

Mutual interdependence means that each firm in an oligopolistic industry:

A. faces a perfectly inelastic demand for its product.

B. considers the reactions of its rivals when it determines its price policy.

C. makes a product identical to those produced by its rivals.

D. makes a product similar but not identical to those produced by its rivals.

If an oligopolist's demand curve has a "kink" in it, then:

A. the oligopolist's marginal cost curve has a break in it.

B. the oligopolist need not fear entry into the industry by new firms.

C. the oligopolist's competitors will not react to its price changes, either up or down.

D. over some interval, a change in the oligopolist's marginal cost will not cause a change in the oligopolist's profit-maximizing price.

Refer to the above payoff matrix. If firm A and firm B act in their own private interest, what will each firm charge?

A. Firm A and firm B will each charge $40

B. Firm A and firm B will each charge $35

C. Firm A will charge $40 and firm B will charge $35

D. Firm A will charge $35 and firm B will charge $40

Which constitutes an obstacle to collusion among oligopolists?

A. A standardized product

B. A large number of firms

C. Prosperous economic conditions

D. Trademarks and copyrights

Marginal revenue product describes the:

A. output produced by the last unit of input employed.

B. revenue received for the last unit of output produced.

C. price a consumer paid for the last unit of output produced.

D. revenue received for the output produced by the last unit of labor employed.

Refer to the above graph. What will shift D1 to D2?

A. A decrease in productivity

B. An increase in product demand

C. An increase in the price of complementary input

D. A decrease in the price of a substitute input (if the substitution effect is greater than the output effect)

In pure competition, a profit-maximizing firm will equate the marginal revenue product of labor with the:

A. wage rate.

B. profits produced by the employment of an extra worker.

C. cost of producing one extra unit of output.

D. price received from selling one extra unit of output.

What is the marginal revenue product of the fifth worker?

A. $6

B. $7

C. $8

D. $9

MRP = ∆TR/∆LTR(4) = 19 x $8 = $152TR(5) = 23 x $7 = $161MRP = (161-152)/(5-4) = $9.

The level of employment in the monopsony labor market shown above will be:

A. A.

B. B.

C. C.

D. D.

Compared to a purely competitive firm, a monopsonist will pay:

A. a higher wage rate to its workers.

B. lower wages but hire more workers than the purely competitive firm.

C. lower wage rates and hire fewer workers than the purely competitive firm.

D. lower wages while hiring the same quantity of workers as the purely competitive firm.

In the labor market shown above, if a minimum wage level is set at Wm, it will cause:

A. employment to decrease from C to A.

B. employment to decrease from C to B.

C. employment to decrease from B to A.

D. BC workers to be hired.

The marginal revenue product of labor in a competitive market decreases as a firm increases the quantity of labor used because of the:

A. law of diminishing returns.

B. law of diminishing marginal utility.

C. homogeneity of the product.

D. free mobility of resources.