WKU ECON 202 Final - Assignment Essays

question

Marginal cost tells us the

answer

amount by which total cost rises when output is increased by one unit.

question

Accountants often ignore implicit costs

answer

True

question

Total revenue equals

answer

price x quantity.

question

As the number of workers increases

answer

total output increases but at a decreasing rate

question

For a firm the production function represents the relationship between,

answer

quantity of inputs and quantity of output.

question

If a firm produces nothing

answer

it still incurs its fixed costs.,True

question

The marginal-cost curve intersects the average-fixed-cost curve at the minimum of marginal cost

answer

False

question

In the long run

answer

inputs that were fixed in the short run become variable.

question

Refer to Table 13-7. What is the value of A?

answer

$50

question

Economies of scale occur when a firm's

answer

long-run average total costs are decreasing as output increases.

question

Ryan sells 200 plastic ball point pens at $0.50 each. His total costs are $25. His profits are

answer

$75.

question

Refer to Table 13-2. What is the marginal product of the third worker?

answer

100 units

question

Carol Anne makes candles. If she charges $20 for each candle her total revenue will be,

answer

$500 if she sells 25 candles.

question

Assume Jack received all As in his classes last semester. If Jack gets all Bs in his classes this semester

answer

his GPA may or may not fall,True

question

Total cost is the

answer

market value of the inputs a firm uses in production.

question

In the long run a firm should exit the industry if its total costs exceed its total revenues,

answer

True

question

Refer to Figure 14-1. If the market price falls below $4.50 the firm will earn

answer

negative economic profits in the short run and shut down.

question

Firms in competitive markets can only earn economic profits in the long run once the market is in equilibrium.

answer

False

question

Consider a firm that operates in a perfectly competitive market. Currently the firm is producing 50 units of output and at that output level marginal revenue is $6. Suppose that the firm increases output by 50%. Total revenue will be

answer

$450

question

Firms in a competitive market are said to be price takers because there are many sellers in the market and the goods offered by the firms are very similar if not identical

answer

True

question

When economic profits are zero in equilibrium the firm's revenue must be sufficient to cover all opportunity costs.

answer

True

question

Refer to Figure 14-1. The firm's short-run supply curve is its marginal cost curve above

answer

$4.50

question

Refer to Figure 14-4. The firm will earn positive economic profits if the price is

answer

(i) only

question

If a competitive firm is currently producing a level of output at which marginal cost exceeds marginal revenue then

answer

decreasing output would increase the firm's profit.

question

A profit-maximizing firm in a competitive market will earn zero accounting profits in the long run

answer

False

question

VIf a competitive firm is currently producing a level of output at which marginal revenue exceeds marginal cost then

answer

a one-unit increase in output will increase the firm's profit.

question

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

answer

Entry is limited.

question

Refer to Figure 14-9. If there are 400 identical firms in this market what level of output will be supplied to the market when price is $2.00?

answer

80,000

question

A firm is currently producing 100 units of output per day. The manager reports to the owner that producing the 100th unit costs the firm $5. The firm can sell the unit for $6. The firm should produce more than 100 units in order to maximize its profits (or minimize its losses).

answer

true

question

Suppose a firm in each of the two markets listed below were to increase its price by 15 percent. In which pair would the firm in the first market listed experience a dramatic decline in sales but the firm in the second market listed would not?

answer

#2 lead pencils and college textbooks

question

Why does a firm in a competitive industry charge the market price?

answer

All of the above are correct.

question

If your local gasoline station raised its price by 20 percent its sales of gasoline would decrease substantially because your local gas station

answer

All of the above are correct

question

Refer to Table 14-17. Based upon this information if the firm is producing the profit maximizing output, how much profit does the firm make?

answer

question

Refer to Figure 14-1. If the market price is $6.30 the firm will earn

answer

zero economic profits in the short run.

question

Refer to Table 14-3. For this firm the marginal revenue is

answer

$13

question

In order for a firm to maximize profits through price discrimination the firm must have some market power and be able to prevent arbitrage.

answer

True

question

Refer to Figure 15-4. Profit will be maximized by charging a price equal to

answer

question

Monopoly firms have

answer

downward-sloping demand curves so they can sell only the specific price-quantity combinations that lie on the demand curve.

question

Refer to Figure 15-4. If the monopoly firm is currently producing Q4 units of output then a decrease in output will necessarily cause profit to

answer

increase as long as the new level of output is atleast Q2

question

In order to sell more of its product a monopolist must

answer

Lower its price

question

Marginal revenue for a monopolist is computed as

answer

change in total revenue per one unit increase in quantity sold.

question

Which of the following is not a difference between monopolies and perfectly competitive markets?

answer

Monopolies choose to produce the quantity at which marginal revenue equals marginal cost while perfectly competitive firms do not.

question

Refer to Figure 15-6. How much output will the monopolist produce?

answer

question

Perfect price discrimination

answer

eliminates deadweight loss.

question

The three main sources of barriers to entry are monopoly resources government regulation and the firm's production process.

answer

True

question

The socially efficient quantity is found where the demand curve intersects the marginal cost curve.

answer

True

question

Because many good substitutes exist for a competitive firm's product the demand curve that it faces is

answer

Perfectly Elastic

question

Because monopoly firms do not have to compete with other firms the outcome in a market with a monopoly is often

answer

All of the above are correct

question

A monopolist is able to choose whatever price that it wishes and is only constrained by its greed.

answer

False

question

Which of the following is not correct?

answer

Public ownership is the most common public policy toward monopolies in the United States.

question

If government officials break up a natural monopoly into four smaller firms then

answer

the average cost of production will increase

question

Refer to Scenario 15-3. At Q = 500

answer

the firm's profit is, $13,000

question

Refer to Figure 15-1. The shape of the average total cost curve reveals information about the nature of the barrier to entry that might exist in a monopoly market. Which of the following monopoly types best coincides with the figure?

answer

natural monopoly

question

A monopolist produces where P > MC = MR.

answer

True

question

Refer to Figure 15-9. The deadweight loss caused by a profit-maximizing monopoly amounts to

answer

$500

question

Tommy's Tie Company a monopolist has the following cost and revenue information. Assume that Tommy's is able to engage in perfect price discrimination.

answer

$450

question

A firm cannot price discriminate if it

answer

operates in a competitive market

question

Suppose that the DeBeers company faces very little competition from other firms in the wholesale diamond market. Why isn't the price of wholesale diamonds $10000 per carat?

answer

because the company would sell so few diamonds that it would earn higher profits by selling at a lower price

question

The fundamental source of monopoly power is

answer

Barriers to entry

question

Splitting up a monopoly is often justified on the grounds that

answer

Competition is inherently efficent

question

The product-variety externality states the benefits to consumers from the introduction of a new product.

answer

True

question

In which of the following market structures can a firm earn an economic profit in the short run?

answer

All of these market structures can earn an economic profit in the short run

question

The business-stealing externality states that entry of a new firms imposes a cost on existing firms because they lose customers.

answer

true

question

When an oligopoly market reaches a Nash equilibrium

answer

a firm will have chosen its best strategy, given the strategies chosen by other firms in the market.

question

Once a cartel is formed the market is in effect served by

answer

a monopoly

question

Which of the following markets impose deadweight losses on society?

answer

(ii) and (iii) only

question

Which of the following conditions is characteristic of a monopolistically competitive firm in both the short-run and the long run?

answer

P>MC

question

In an oligopoly each firm knows that its profits

answer

depend on both how much output it produces and how much output its rival firms produce.

question

An agreement among firms in a market about quantities to produce or prices to charge is called

answer

Collusion

question

A downward-sloping demand curve

answer

is a feature of all monopolistically competitive firms

question

Cartels with a small number of firms have a greater probability of reaching the monopoly outcome than do cartels with a larger number of firms.

answer

True

question

Imperfectly competitive firms are characterized by

answer

Price Making ability

question

Refer to Table 17-5. Assume there are two digital cable TV companies operating in this market. If they are able to collude on the quantity of subscriptions that will be sold and on the price that will be charged for subscriptions then their agreement will stipulate that

answer

each firm will charge a price of $90 and each firm will sell 4,500 subscriptions.

question

Which of the following is an example of a monopolistically competitive industry?

answer

Movies

question

Refer to Figure 16-11. The graph depicts a monopolistically competitive firm in the short run. Which of the following explanations best describes the long run adjustment?

answer

More firms will enter this market and each firm will have a smaller share of the total market demand, shifting this firm's demand curve to the left.

question

A monopolistically competitive firm's choice of output level is virtually identical to the choice made by

answer

A monopolist

question

A dominant strategy is one that

answer

is best for the player, regardless of what strategies other players follow

question

In the prisoners' dilemma game self-interest leads

answer

All of the above are correct

question

In the case of oligopolistic markets self-interest makes cooperation difficult and it often leads to an undesirable outcome for the firms that are involved.

answer

true

question

In general game theory is the study of

answer

how people behave in strategic situations

question

Which of the following is true about a monopolistically competitive firm?

answer

It can earn an economic profit in the short run, but not the long run.

1 of 81

question

Marginal cost tells us the

answer

amount by which total cost rises when output is increased by one unit.

question

Accountants often ignore implicit costs

answer

True

question

Total revenue equals

answer

price x quantity.

question

As the number of workers increases

answer

total output increases but at a decreasing rate

question

For a firm the production function represents the relationship between,

answer

quantity of inputs and quantity of output.

question

If a firm produces nothing

answer

it still incurs its fixed costs.,True

question

The marginal-cost curve intersects the average-fixed-cost curve at the minimum of marginal cost

answer

False

question

In the long run

answer

inputs that were fixed in the short run become variable.

question

Refer to Table 13-7. What is the value of A?

answer

$50

question

Economies of scale occur when a firm's

answer

long-run average total costs are decreasing as output increases.

question

Ryan sells 200 plastic ball point pens at $0.50 each. His total costs are $25. His profits are

answer

$75.

question

Refer to Table 13-2. What is the marginal product of the third worker?

answer

100 units

question

Carol Anne makes candles. If she charges $20 for each candle her total revenue will be,

answer

$500 if she sells 25 candles.

question

Assume Jack received all As in his classes last semester. If Jack gets all Bs in his classes this semester

answer

his GPA may or may not fall,True

question

Total cost is the

answer

market value of the inputs a firm uses in production.

question

In the long run a firm should exit the industry if its total costs exceed its total revenues,

answer

True

question

Refer to Figure 14-1. If the market price falls below $4.50 the firm will earn

answer

negative economic profits in the short run and shut down.

question

Firms in competitive markets can only earn economic profits in the long run once the market is in equilibrium.

answer

False

question

answer

$450

question

Firms in a competitive market are said to be price takers because there are many sellers in the market and the goods offered by the firms are very similar if not identical

answer

True

question

When economic profits are zero in equilibrium the firm's revenue must be sufficient to cover all opportunity costs.

answer

True

question

Refer to Figure 14-1. The firm's short-run supply curve is its marginal cost curve above

answer

$4.50

question

Refer to Figure 14-4. The firm will earn positive economic profits if the price is

answer

(i) only

question

If a competitive firm is currently producing a level of output at which marginal cost exceeds marginal revenue then

answer

decreasing output would increase the firm's profit.

question

A profit-maximizing firm in a competitive market will earn zero accounting profits in the long run

answer

False

question

VIf a competitive firm is currently producing a level of output at which marginal revenue exceeds marginal cost then

answer

a one-unit increase in output will increase the firm's profit.

question

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

answer

Entry is limited.

question

Refer to Figure 14-9. If there are 400 identical firms in this market what level of output will be supplied to the market when price is $2.00?

answer

80,000

question

answer

true

question

answer

#2 lead pencils and college textbooks

question

Why does a firm in a competitive industry charge the market price?

answer

All of the above are correct.

question

If your local gasoline station raised its price by 20 percent its sales of gasoline would decrease substantially because your local gas station

answer

All of the above are correct

question

Refer to Table 14-17. Based upon this information if the firm is producing the profit maximizing output, how much profit does the firm make?

answer

question

Refer to Figure 14-1. If the market price is $6.30 the firm will earn

answer

zero economic profits in the short run.

question

Refer to Table 14-3. For this firm the marginal revenue is

answer

$13

question

In order for a firm to maximize profits through price discrimination the firm must have some market power and be able to prevent arbitrage.

answer

True

question

Refer to Figure 15-4. Profit will be maximized by charging a price equal to

answer

question

Monopoly firms have

answer

downward-sloping demand curves so they can sell only the specific price-quantity combinations that lie on the demand curve.

question

Refer to Figure 15-4. If the monopoly firm is currently producing Q4 units of output then a decrease in output will necessarily cause profit to

answer

increase as long as the new level of output is atleast Q2

question

In order to sell more of its product a monopolist must

answer

Lower its price

question

Marginal revenue for a monopolist is computed as

answer

change in total revenue per one unit increase in quantity sold.

question

Which of the following is not a difference between monopolies and perfectly competitive markets?

answer

Monopolies choose to produce the quantity at which marginal revenue equals marginal cost while perfectly competitive firms do not.

question

Refer to Figure 15-6. How much output will the monopolist produce?

answer

question

Perfect price discrimination

answer

eliminates deadweight loss.

question

The three main sources of barriers to entry are monopoly resources government regulation and the firm's production process.

answer

True

question

The socially efficient quantity is found where the demand curve intersects the marginal cost curve.

answer

True

question

Because many good substitutes exist for a competitive firm's product the demand curve that it faces is

answer

Perfectly Elastic

question

Because monopoly firms do not have to compete with other firms the outcome in a market with a monopoly is often

answer

All of the above are correct

question

A monopolist is able to choose whatever price that it wishes and is only constrained by its greed.

answer

False

question

Which of the following is not correct?

answer

Public ownership is the most common public policy toward monopolies in the United States.

question

If government officials break up a natural monopoly into four smaller firms then

answer

the average cost of production will increase

question

Refer to Scenario 15-3. At Q = 500

answer

the firm's profit is, $13,000

question

answer

natural monopoly

question

A monopolist produces where P > MC = MR.

answer

True

question

Refer to Figure 15-9. The deadweight loss caused by a profit-maximizing monopoly amounts to

answer

$500

question

Tommy's Tie Company a monopolist has the following cost and revenue information. Assume that Tommy's is able to engage in perfect price discrimination.

answer

$450

question

A firm cannot price discriminate if it

answer

operates in a competitive market

question

Suppose that the DeBeers company faces very little competition from other firms in the wholesale diamond market. Why isn't the price of wholesale diamonds $10000 per carat?

answer

because the company would sell so few diamonds that it would earn higher profits by selling at a lower price

question

The fundamental source of monopoly power is

answer

Barriers to entry

question

Splitting up a monopoly is often justified on the grounds that

answer

Competition is inherently efficent

question

The product-variety externality states the benefits to consumers from the introduction of a new product.

answer

True

question

In which of the following market structures can a firm earn an economic profit in the short run?

answer

All of these market structures can earn an economic profit in the short run

question

The business-stealing externality states that entry of a new firms imposes a cost on existing firms because they lose customers.

answer

true

question

When an oligopoly market reaches a Nash equilibrium

answer

a firm will have chosen its best strategy, given the strategies chosen by other firms in the market.

question

Once a cartel is formed the market is in effect served by

answer

a monopoly

question

Which of the following markets impose deadweight losses on society?

answer

(ii) and (iii) only

question

Which of the following conditions is characteristic of a monopolistically competitive firm in both the short-run and the long run?

answer

P>MC

question

In an oligopoly each firm knows that its profits

answer

depend on both how much output it produces and how much output its rival firms produce.

question

An agreement among firms in a market about quantities to produce or prices to charge is called

answer

Collusion

question

A downward-sloping demand curve

answer

is a feature of all monopolistically competitive firms

question

Cartels with a small number of firms have a greater probability of reaching the monopoly outcome than do cartels with a larger number of firms.

answer

True

question

Imperfectly competitive firms are characterized by

answer

Price Making ability

question

answer

each firm will charge a price of $90 and each firm will sell 4,500 subscriptions.

question

Which of the following is an example of a monopolistically competitive industry?

answer

Movies

question

Refer to Figure 16-11. The graph depicts a monopolistically competitive firm in the short run. Which of the following explanations best describes the long run adjustment?

answer

More firms will enter this market and each firm will have a smaller share of the total market demand, shifting this firm's demand curve to the left.

question

A monopolistically competitive firm's choice of output level is virtually identical to the choice made by

answer

A monopolist

question

A dominant strategy is one that

answer

is best for the player, regardless of what strategies other players follow

question

In the prisoners' dilemma game self-interest leads

answer

All of the above are correct

question

In the case of oligopolistic markets self-interest makes cooperation difficult and it often leads to an undesirable outcome for the firms that are involved.

answer

true

question

In general game theory is the study of

answer

how people behave in strategic situations

question

Which of the following is true about a monopolistically competitive firm?

answer

It can earn an economic profit in the short run, but not the long run.

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