question
Which of the following is most likely to occur if the firm increases production beyond 10 units?
answer
The firm would have to lower its price to sell more than 10 units
question
If the firm produces 10 units of output, its economic profits will equal
answer
$50
question
The condition for allocative efficiency is violated when
answer
a) firms are price makers (price searchers)
question
Which of the following statements relating to a firm in an imperfectly competitive market and a firm in a perfectly competitive market is true?
answer
An imperfectly competitive firm must lower its price to increase sales, while a perfectly competitive firm can increase sales by increasing output at the current price.
question
Which of the following statements relating to a firm in an imperfectly competitive market and a firm in a perfectly competitive market is true?
answer
When an imperfectly competitive firm raises the price, it will likely continue to sell some units of output, but when a perfectly competitive firm raises the price, it will sell no output.
question
If Zeta, a single producer, had exclusive control of a key resource needed to produce good Z , a likely result would be which of the following?
answer
There would be a barrier to entry, and Zeta would have a monopoly on good Z
.
.
question
Which of the following is a source of monopoly power?
answer
barriers to entry
question
Which of the following areas shows the consumer surplus?
answer
AP1B
question
If the marginal cost curve of a monopolist shifts up, which of the following will occur to the monopolist's price and output?
answer
Price: Increase/Output: Decrease
question
Which of the following is true for a monopoly but NOT for a perfectly competitive firm?
answer
The firm faces a downward-sloping demand curve.
question
The price of an airline ticket is typically lower if a traveler buys the ticket several weeks before the flight's departure date rather than on the day of departure. This pricing strategy is based on the assumption that
answer
travelers' demand becomes less elastic as the departure date approaches
question
If the monopolist could engage in perfect price discrimination, the monopolist's total output and the price charged for the last unit of output sold would be
answer
Q2 and P3
question
Which of the following is necessary for a firm to practice price discrimination?
answer
the firm can prevent resale of its goods.
question
Which of the following enables a seller to capture the entire consumer surplus in a market?
answer
perfect price discrimination
question
Based on the information in the graph above, what are the profit-maximizing output quantities for a single-price monopolist and for a monopolist that engages in perfect price discrimination?
answer
For a single-price monopolist, Q0. With perfect price discrimination, Q3
question
An industry consists of 100 small firms, and the largest firm accounts for only 2 percent of sales. Brand names are considered a signal of quality. The industry described is best classified as
answer
Monopolistically competetive
question
A monopolistically competitive profit-maximizing firm is currently producing and selling 2,000 units of output. At this output level, marginal revenue is $9, average revenue is $10, and the average variable cost is $8. The product price is
answer
$10
question
Which of the following is true for both a monopolistically competitive firm and a perfectly competitive firm in long-run equilibrium?
answer
price is equal to average total cost
question
The graph above depicts cost and revenue curves for a typical firm in a monopolistically competitive industry. Suppose that the firm is producing 0M units of output. To maximize profits, it should do which of the following to output and price?
answer
Output: Decrease/ Price: Increase
question
Which of the following statements correctly identifies a difference between perfect competition and monopolistic competition?
answer
In perfect competition the firms all sell products that are exactly the same, but in monopolistic competition each firm sells a slightly differentiated product.
question
Suppose that the two biggest producers of gold, Bmine and Gmine, form a cartel to set price. However, each has the option to cheat or to not cheat on the agreement. The table below shows the payoffs from these strategies, with the first entry in each cell representing the payoff to Bmine and the second representing the payoff to Gmine.
Which of the following correctly describes the dominant strategy of each firm?
Which of the following correctly describes the dominant strategy of each firm?
answer
Gmine's dominant strategy is to not cheat; Bmine's dominant strategy is to cheat.
question
The payoff matrix above shows the profits associated with the strategic decisions of two oligopoly firms, Bright Company and Sparkle Company. The first entries in each cell show the profits to Bright and the second the profits to Sparkle. What are the dominant strategies for Bright and Sparkle, respectively?
answer
Bright: No dominant strategy/ Sparkle: Strategy 1
question
The following table shows the profits associated with the pricing strategies of two oligopolistic firms, Agronomia and Farmingdale. Each firm has two possible strategies: to charge a low price or a high price. The first entry in each cell shows the profits to Agronomia and the second the profits to Farmingdale.
If the two firms do not cooperate, as a result of the firms' pricing decisions the profits of each firm will be which of the following?
If the two firms do not cooperate, as a result of the firms' pricing decisions the profits of each firm will be which of the following?
answer
Agronomia's Profit: $100/ Farmindale's Profit: $100
question
If the three largest widget producers control 85 percent of the total widget market, then these producers are operating in
answer
an oligopoly
question
The payoff matrix below gives the profits associated with the strategic choices of two firms in an oligopolistic industry. The first entry in each cell is the profit to Firm A and the second to Firm B.
If each firm simultaneously chooses its pricing strategy without collusion, Firm A's and Firm B's profits would be which of the following?
If each firm simultaneously chooses its pricing strategy without collusion, Firm A's and Firm B's profits would be which of the following?
answer
Firm A's Profit: $50/ Firm B's Profit: $50
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