microecon 2

The flashcards below were created by user Angele1990 on FreezingBlue Flashcards.

  1. Under perfect competition in the short run

    A. firms can enter or leave the industry.
    B. None of these conditions prevail.
    C. most firms make zero economic profits.
    D. all firms are losing money.
    E. all firms are making a profit.
    B. None of these conditions prevail.
    (this multiple choice question has been scrambled)
  2. Under perfect competition, if some firms are taking losses in the short run, in the long run

    A. firms will leave the industry until all firms are making a profit.
    B. those firms will cut back their output until they get to the level at which marginal cost equals price.
    C. those firms will earn losses until demand increases
    D. equilibrium price will rise until all firms are earning zero economic profits.
    D. equilibrium price will rise until all firms are earning zero economic profits
    (this multiple choice question has been scrambled)
  3. Image Upload 1
    Total profit

    A. is the rectangle bounded by EFIJ.
    B. is the rectangle bounded by FGHI.
    C. is the rectangle bounded by GHMO.
    D. cannot be found on this graph.
    A. is the rectangle bounded by EFIJ
    (this multiple choice question has been scrambled)
  4. If a perfectly competitive firm were to raise its price above the market price, it would

    A. sell slightly more than at the market price.
    B. sell slightly less than at the market price.
    C. sell significantly less than at the market price.
    D. sell nothing.
    D. sell nothing.
    (this multiple choice question has been scrambled)
  5. If the perfect competitor is taking a loss, its output will be _______ it's most efficient output.

    A. equal to
    B. less than
    C. greater than
    B. less than
    (this multiple choice question has been scrambled)
  6. Which of the following is NOT a basic characteristic of perfect competition?

    A. A large number of buyers and sellers
    B. No barriers to the entry or exit of firms
    C. A standardized or identical product
    D. Considerable non-price competition
    D. Considerable non-price competition
    (this multiple choice question has been scrambled)
  7. If the market price is below the break-even point, in the long run we should expect

    A. no change in the number of firms in this industry.
    B. firms to leave the industry, market supply to fall, and product price to rise.
    C. firms to enter the industry, market supply to rise, and product price to fall.
    D. firms to leave the industry, market supply to rise, and product price to fall.
    B. firms to leave the industry, market supply to fall, and product price to rise
    (this multiple choice question has been scrambled)
  8. If marginal cost is greater than marginal revenue

    A. the firm should expand output.
    B. the firm should hold output constant.
    C. the firm should contract output.
    D. there is no way to determine if the firm should expand output, contract output, or hold output constant.
    C. the firm should contract output.
    (this multiple choice question has been scrambled)
  9. Image Upload 2
    Marginal revenue at the profit-maximizing/loss-minimizing amount is

    A. $8.
    B. $7.
    C. $6.
    D. $5.
    C. $6.
    (this multiple choice question has been scrambled)
  10. Image Upload 3
    When operating at the profit-maximizing/loss-minimizing level of output, total revenue minus total cost
    is a little under

    A. $200.
    B. -$45.
    C. $100.
    D. $45.
    E. -$100.
    A. $200.
    (this multiple choice question has been scrambled)
  11. Image Upload 4The average total cost at the profit-maximizing/loss-minimizing amount is a little over

    A. $10 per unit.
    B. $9 per unit.
    C. $11 per unit.
    D. $8 per unit.
    B. $9 per unit.
    (this multiple choice question has been scrambled)
  12. Image Upload 5
    Which statement is true?

    A. The firm is taking a loss in the long run.
    B. The firm is taking a loss in the short run.
    C. The firm is making a profit in the short run.
    D. The firm is breaking even in the long run.
    E. The firm is making a profit in the long run.
    D. The firm is breaking even in the long run.
    (this multiple choice question has been scrambled)
  13. Image Upload 6At an output of 55, AVC is $41 and MC is $38. At an output of 56, AVC is $42 and MC is $43. We may
    conclude that at the shutdown point AVC is

    A. less than $41.
    B. less than $42.
    C. less than $43.
    D. greater than $43.
    A. less than $41
    (this multiple choice question has been scrambled)
  14. Image Upload 7At an output of 19, MC = $39 and AVC = $44. At an output of 20, MC = $50 and AVC = $45. At the
    shutdown point, AVC is

    A. more than $45.
    B. $45.
    C. between $44 and $45.
    D. less than $44.
    E. $44.
    D. less than $44
    (this multiple choice question has been scrambled)
  15. A firm with explicit costs of $3,000,000, no implicit costs, and total revenue of $3,000,000 would
    have

    A. accounting profits equal to economic profits, in this case both zero.
    B. zero economic profit.
    C. zero accounting profit.
    D. All of the choices are true of this firm.
    D. All of the choices are true of this firm
    (this multiple choice question has been scrambled)
  16. Which statement is false?

    A. The monopolist produces at the minimum point of its ATC curve.
    B. The monopolist's demand and marginal revenue curves are two separate curves.
    C. The monopolist can sell more output only by lowering price.
    D. None of these statements are false.
    A. The monopolist produces at the minimum point of its ATC curve
    (this multiple choice question has been scrambled)
  17. Which statement is true?

    A. Price is always read off the demand curve.
    B. Monopolies are always large firms.
    C. The monopolist operates at the minimum point of its average total cost curve.
    D. Once a monopoly is set up, it is impossible to dislodge it.
    A. Price is always read off the demand curve.
    (this multiple choice question has been scrambled)
  18. Which statement is true?

    A. None of these statements are true
    B. All monopolists have control over an essential resource.
    C. The monopolist's most efficient output is its most profitable output as well.
    D. The monopolist charges a higher price than the perfect competitor in the long run.
    D. The monopolist charges a higher price than the perfect competitor in the long run.
    (this multiple choice question has been scrambled)
  19. Which statement is false?

    A. None of these statements are false.
    B. The two main justifications for monopoly are economies of scale and natural monopoly.
    C. Economies of scale and high capital requirements are significant barriers to entry.
    D. Natural monopolies can provide cheaper service as monopolies than could several competing firms.
    A. None of these statements are false.
    (this multiple choice question has been scrambled)
  20. When more substitutes become available, a monopolist has __________ power to raise price.

    A. less
    B. more
    C. infinite
    A. less
    (this multiple choice question has been scrambled)
  21. Image Upload 8
    If the marginal cost were $14, output would be

    A. 5.
    B. 2.
    C. 1.
    D. 4.
    E. 3.
    A. 5
    (this multiple choice question has been scrambled)
  22. If a monopolist's price were $8, it is likely that in equilibrium

    A. MC = MR, and both are more than $8.
    B. MC = MR, and both are equal to $8.
    C. MC = MR, and both are less than $8.
    D. None of the choices are correct
    C. MC = MR, and both are less than $8.
    (this multiple choice question has been scrambled)
  23. A natural monopoly

    A. is usually subject to antitrust suits.
    B. has an average cost curve that reaches minimum possible average cost at a low level of output.
    C. is usually allowed to choose its price so as to maximize profits in the United States.
    D. occurs when a single firm can supply the entire market demand for a product at a lower average cost
    E. has a marginal cost curve that is steeply upward sloping.
    than would be possible if two or more firms supplied the market.
    D. occurs when a single firm can supply the entire market demand for a product at a lower average cost than would be possible if two or more firms supplied the market.
    (this multiple choice question has been scrambled)
  24. Image Upload 9
    If the marginal cost were $13, how many units of output would this firm produce?

    A. 1
    B. 3
    C. 4
    D. 2
    E. 5
    C. 4
    (this multiple choice question has been scrambled)
  25. Image Upload 10
    If the marginal cost were $21, output would be

    A. 2.
    B. 1.
    C. 3.
    D. 4.
    E. 5.
    A. 2.
    (this multiple choice question has been scrambled)
  26. Image Upload 11
    The profit-maximizing firm will be earning total revenue of

    A. OFJM.
    B. OGHM.
    C. OFIN.
    D. OFKL.
    E. NIKL.
    D. OFKL.
    (this multiple choice question has been scrambled)
  27. If the government attempts to break up a natural monopoly to enforce competition in an industry

    A. the average cost of producing the good will increase.
    B. the smallest firm will have a significant cost advantage over the larger, less efficient firms.
    C. the price paid by consumers will be expected to remain the same.
    D. the average cost of producing the good will decrease.
    A. the average cost of producing the good will increase.
    (this multiple choice question has been scrambled)
  28. Image Upload 12
    If this firm were a perfect competitor, at what output would it produce in the long run?

    A. None of the choices are correct.
    B. OM
    C. OL
    D. OP
    C. OL
    (this multiple choice question has been scrambled)
  29. Image Upload 13
    The profit-maximizing firm's output will be about

    A. 625.
    B. 450.
    C. 500.
    D. 750.
    E. 550.
    B. 450.
    (this multiple choice question has been scrambled)
  30. Image Upload 14
    Assuming the monopolist shown in the graph adjusts output to maximize profits, it is

    A. earning profits in the short-run.
    B. earning profits in the long-run.
    C. having losses in the short-run.
    D. earning profits and could be in the short-run or long-run.
    D. earning profits and could be in the short-run or long-run.
    (this multiple choice question has been scrambled)
  31. Image Upload 15
    The profit-maximizing firm will operate at an output of

    A. 0M.
    B. 0J.
    C. 0K.
    D. 0L.
    B. 0J.
    (this multiple choice question has been scrambled)
  32. Which statement is the most accurate?

    A. The monopolist breaks even in the long run.
    B. The monopolist faces the entire industry demand curve.
    C. Nearly all monopolists are very large firms.
    D. The monopolist produces at the minimum point of its average total cost curve.
    B. The monopolist faces the entire industry demand curve
    (this multiple choice question has been scrambled)
  33. Image Upload 16
    If the firm is maximizing profits or minimizing losses, it is producing _____ units of output and charging
    a price of _____.

    A. 50; $10
    B. 50; $18.40
    C. 60; $12
    D. 60; $16.80
    B. 50; $18.40
  34. Which of the following is false?

    A. If a monopolist is losing money, it is in the long run.
    B. The monopolist and perfect competitor both produce where MC equals MR.
    C. A monopoly is a firm that produces all the output in an industry.
    D. Price is read off the demand curve for the monopolist
    A. If a monopolist is losing money, it is in the long run.
    (this multiple choice question has been scrambled)
  35. Which of the following is true?

    A. The most efficient output is found where MC and MR cross.
    B. Monopolists never lose money regardless of short-run or long-run.
    C. Legal barriers are the basis for monopoly in the automobile industry.
    D. Monopolies can be overcome by market forces or by government action.
    D. Monopolies can be overcome by market forces or by government action.
    (this multiple choice question has been scrambled)
  36. Which is the most accurate statement about Wal-Mart?

    A. It proves the case that bigness is always bad.
    B. It proves the case that bigness is always good.
    C. It has used its monopoly power to force price increases.
    D. Directly and indirectly it saves American consumers up to $100 billion a year.
    D. Directly and indirectly it saves American consumers up to $100 billion a year.
    (this multiple choice question has been scrambled)
  37. Image Upload 17
    If this firm were a perfect competitor, at what output would it produce in the long run?

    A. 40 units
    B. 60 units
    C. 50 units
    D. 70 units
    C. 50 units
    (this multiple choice question has been scrambled)
  38. Image Upload 18
    The marginal revenue that would be derived from production of the second unit would be

    A. $27
    B. $21
    C. $18
    D. $24
    E. $30
    D. $24
    (this multiple choice question has been scrambled)
  39. Which of the following is true?

    A. Monopolies can only be overcome by government action.
    B. Having a recognizable brand name is a barrier to entry that can preserve monopoly power.
    C. Patents are granted to investors who have control over an essential resource.
    D. Monopolists never lose money in the short-run or long-run.
    B. Having a recognizable brand name is a barrier to entry that can preserve monopoly power.
    (this multiple choice question has been scrambled)
  40. Statement I. Patents are granted to investors so that they have a chance to get rich before someone else
    uses their ideas.
    Statement II. Patents are essential to pharmaceutical companies, which may spend hundreds of millions
    of dollars developing a drug.

    A. Statement II is true and statement I is false.
    B. Both statements are false.
    C. Statement I is true and statement II is false.
    D. Both statements are true.
    D. Both statements are true
    (this multiple choice question has been scrambled)
  41. Price discrimination means

    A. exploiting the working masses by charging the highest single price possible.
    B. paying wages according to race or sex rather than productivity.
    C. eliminating all costs so that only profits are realized.
    D. charging different prices for identical goods that have identical production costs.
    D. charging different prices for identical goods that have identical production costs.
    (this multiple choice question has been scrambled)
  42. Which statement is true?
    A. Monopolistic competitors produce an identical product.
    B. There are many firms in a monopolistically competitive industry.
    C. In order for product differentiation to take place, there must be clear physical differences among the
    products sold.
    D. None of these statements are true.
    B. There are many firms in a monopolistically competitive industry.
    (this multiple choice question has been scrambled)
  43. Which statement is true?

    A. None of these statements are true.
    B. Most firms in the U.S. are not monopolistic competitors.
    C. The monopolistic competitor is often a large firm.
    D. Price discrimination is impossible under monopolistic competition.
    A. None of these statements are true.
    (this multiple choice question has been scrambled)
  44. Long-run equilibrium for firms in monopolistically competitive industries is similar to that for firms in
    perfect competition in that

    A. marginal revenue equals average total cost.
    B. price equals minimum possible average total cost.
    C. price equals average total cost.
    D. price equals marginal cost.
    C. price equals average total cost.
    (this multiple choice question has been scrambled)
  45. Image Upload 19
    If the firm is maximizing profits, this firm charges a price of

    A. $16.
    B. $12.
    C. $13.
    D. $25.
    D. $25.
    (this multiple choice question has been scrambled)
  46. Image Upload 20
    This firm maximizes profits (or minimizes losses) by producing a quantity of about _____ units.

    A. 150
    B. 200
    C. 300
    D. 250
    D. 250
    (this multiple choice question has been scrambled)
  47. An important result in long-run equilibrium in monopolistic competition is that the equilibrium point
    results in

    A. ATC = MC.
    B. ATC = MR.
    C. price is greater than ATC.
    D. price = ATC.
    E. price = MR.
    D. price = ATC.
    (this multiple choice question has been scrambled)
  48. Which would be an example of perfect price discrimination?

    A. When doctors charge rich and poor patients different prices for the same medical services
    B. None of the choices are examples of price discrimination.
    C. When movies charge different prices at different times
    D. When airlines charge different prices for seats on the same flight
    B. None of the choices are examples of price discrimination.
    (this multiple choice question has been scrambled)
  49. Image Upload 21
    If demand curve D2 represents a monopolistic competitor and demand curve D3 represents a monopoly,
    then

    A. the monopolistic competitor has a more elastic demand curve than the monopolist.
    B. None of these choices are true.
    C. the monopolist and the monopolistic competitor have identical elasticity in their demand curves.
    D. the monopolist has a more elastic demand curve than the monopolistic competitor.
    A. the monopolistic competitor has a more elastic demand curve than the monopolist.
    (this multiple choice question has been scrambled)
  50. In the long run the monopolistic competitor ________ at peak efficiency and the perfect competitor
    ________ at peak efficiency.

    A. operates; does not operate
    B. does not operate; does not operate
    C. operates; operates
    D. does not operate; operates
    D. does not operate; operates
    (this multiple choice question has been scrambled)
  51. Monopolistically competitive firms prevent the efficient use of resources because in long-run
    equilibrium

    A. marginal cost is less than average total cost.
    B. price equals marginal cost.
    C. price is greater than marginal cost.
    D. price is less than marginal cost.
    C. price is greater than marginal cost.
    (this multiple choice question has been scrambled)
  52. Product differentiation

    A. is rare under monopolistic competition.
    B. is based solely on deceiving the buyer.
    C. takes place in the minds of the buyers.
    D. takes place in the minds of the sellers.
    C. takes place in the minds of the buyers
    (this multiple choice question has been scrambled)
  53. Each of the following is an example of price discrimination except

    A. lower-priced movie tickets at "rush hour" to attract customers at dinner time.
    B. high-priced tickets just behind the bench of the NBA championship team.
    C. student rates for subscriptions to Business Week.
    D. senior citizen discounts at restaurants.
    B. high-priced tickets just behind the bench of the NBA championship team
    (this multiple choice question has been scrambled)
  54. Image Upload 22
    This profit-maximizing (loss-minimizing) firm produces a quantity of about _______ units.

    A. 30
    B. 50
    C. 80
    D. 100
    C. 80
    (this multiple choice question has been scrambled)
  55. Statement I: The trend toward customization is taking product differentiation one step further.

    Statement II: Americans are provided with about the same amount of product differentiation as people in
    most other countries.

    A. Both statements are false.
    B. Both statements are true.
    C. Statement II is true and statement I is false.
    D. Statement I is true and statement II is false.
    D. Statement I is true and statement II is false.
    (this multiple choice question has been scrambled)
  56. Image Upload 23
    This profit-maximizing firm produces a quantity of about ________ units.

    A. 50
    B. 45
    C. 55
    D. 40
    A. 50
    (this multiple choice question has been scrambled)
  57. Image Upload 24
    This monopolistic competitor is in the

    A. long run making a profit.
    B. long run breaking even
    C. long run taking a loss.
    D. short run taking a loss.
    E. short run making a profit.
    B. long run breaking even
    (this multiple choice question has been scrambled)
  58. Image Upload 25
    This profit-maximizing (loss-minimizing) firm produces a quantity of about ________ units.

    A. 70
    B. 90
    C. 100
    D. 80
    A. 70
    (this multiple choice question has been scrambled)
  59. You could conclude that

    A. existing firms will leave the industry.
    B. new firms will enter the industry.
    C. the industry is in the long run.
    C. the industry is in the long run.
    (this multiple choice question has been scrambled)
  60. Providing better service, ambience, or a convenient location are all forms of

    A. economies of scale
    B. consumer surplus
    C. product differentiation
    D. price discrimination
    C. product differentiation
    (this multiple choice question has been scrambled)
  61. Which of the following statements are true?

    A. In the long run the monopolistic competitor is as efficient as the perfect competitor.
    B. The demand curve of a monopolistic competitor is identical to its marginal revenue curve.
    C. In the long run the monopolistic competitor will definitely make a profit.
    D. The demand curve of a monopolistic competitor is more horizontal (flatter) than a monopolist's demand curve.
    D. The demand curve of a monopolistic competitor is more horizontal (flatter) than a monopolist's demand curve.
    (this multiple choice question has been scrambled)
  62. In the long run if some firms are losing money in monopolistic competition

    A. the industry supply curve cannot increase because of high barriers to entry.
    B. the industry supply curve will decrease and market price will rise.
    C. the industry supply curve will increase and market price will fall.
    D. the industry supply curve cannot decease because of high barriers to entry.
    B. the industry supply curve will decrease and market price will rise.
    (this multiple choice question has been scrambled)
  63. Image Upload 26
    This profit-maximizing firm produces a quantity of a little over _______ units.

    A. 125
    B. 110
    C. 85
    D. 65
    C. 85
    (this multiple choice question has been scrambled)
  64. Image Upload 27
    If this firm produced at its most efficient output level it would produce _______ units.

    A. 80
    B. 50
    C. 140
    D. 115
    A. 80
    (this multiple choice question has been scrambled)
  65. Statement I: The absence of significant barriers to entry ensures that long run profits will be competed
    away for the monopolistic competitor.

    Statement II: Providing better service, ambience, or a convenient location are all forms of price
    discrimination.

    A. Statement II is true and statement I is false.
    B. Statement I is true and statement II is false.
    C. Both statements are false.
    D. Both statements are true.
    B. Statement I is true and statement II is false
    (this multiple choice question has been scrambled)
  66. Which one of these firms would be an oligopolist?

    A. Proctor & Gamble
    B. A family farm
    C. A McDonald's restaurant in Manhattan
    D. The only dentist in Hendry County, Florida
    A. Proctor & Gamble
    (this multiple choice question has been scrambled)
  67. The demand curve facing an oligopoly will be less elastic

    A. the smaller its share of the market and the less differentiated the product.
    B. the smaller its share of the market and the more differentiated the product.
    C. the larger its share of the market and the more differentiated the product.
    D. the larger its share of the market and the less differentiated the product.
    C. the larger its share of the market and the more differentiated the product
    (this multiple choice question has been scrambled)
  68. Image Upload 28
    The highest Herfindahl-Hirschman Index

    A. is in Industry Z.
    B. cannot be determined.
    C. is in Industry X.
    D. is in Industry Y.
    C. is in Industry X.
    (this multiple choice question has been scrambled)
  69. The strong interdependence of oligopolistic firms is shown by

    A. their willingness to change prices frequently.
    B. the vulnerability of their sales to the actions of their rivals.
    C. their inability to form a price conspiracy.
    D. their reluctance to advertise.
    B. the vulnerability of their sales to the actions of their rivals.
    (this multiple choice question has been scrambled)
  70. Image Upload 29
    Which statement is true?

    A. Industry Y has a Herfindahl-Hirschman Index of 95.
    B. Industry Y has an H-H-I of 100.
    C. Industry Y has an H-H-I of 2,738.
    D. Industry Y has an H-H-I of 1,000.
    C. Industry Y has an H-H-I of 2,738.
    (this multiple choice question has been scrambled)
  71. Which is the most accurate statement?

    A. The most important aspect of oligopoly is product differentiation.
    B. An oligopolistic industry cannot have more than five firms.
    C. There are a whole range of oligopolistic models, from a cartel to cutthroat competition.
    D. There are virtually no oligopolies in the U.S.
    C. There are a whole range of oligopolistic models, from a cartel to cutthroat competition.
    (this multiple choice question has been scrambled)
  72. Statement I. Most cars sold in the United States were made in Japan or assembled in the United States by
    Japanese-owned companies.

    Statement II. Imports of fuel-efficient cars made in Japan reduced the concentration ratio in the United
    States that was dominated by G.M., Ford, and Chrysler.

    A. Statement II is true and statement I is false.
    B. Statement I is true and statement II is false.
    C. Both statements are false.
    D. Both statements are true.
    C. Both statements are false.
    (this multiple choice question has been scrambled)
  73. Which statement is true?

    A. The lower the concentration ratio, the higher the degree of oligopolization.
    B. There is no relationship between the concentration ratio and the degree of oligopolization.
    C. The higher the concentration ratio, the higher the degree of oligopolization.
    D. The concentration ratio remains constant as the degree of oligopolization rises.
    C. The higher the concentration ratio, the higher the degree of oligopolization.
    (this multiple choice question has been scrambled)
  74. The higher the degree of oligopolization

    A. the greater the likelihood of collusion. B. the smaller the likelihood of collusion. C. the greater the likelihood of product differentiation.
    D. the greater the likelihood of cut-throat competition.
    A. the greater the likelihood of collusion.
  75. Image Upload 30
    The highest Herfindahl-Hirschman index

    A. is in Industry Y.
    B. is in Industry X.
    C. cannot be determined.
    D. is in Industry Z.
    D. is in Industry Z.
    (this multiple choice question has been scrambled)
Author
ID
123101
Card Set
microecon 2
Description
Final
Updated
Show Answers