ECON202 - Exam 2 - Review Flashcards
Monopolistic competition means:
many firms producing differentiated products.
Nonprice competition refers to:
advertising, product promotion, and changes in the real or perceived characteristics of a product.
A monopolistically competitive firm’s marginal revenue curve:
is downsloping and lies below the demand curve.
Monopolistically competitive firms:
may realize either profits or losses in the short run, but realize normal profits in the long run.
If all monopolistically competitive firms in the industry have profit circumstances similar to the firm shown above:
new firms will enter the industry.
In long-run equilibrium, production for the firm shown in the diagram above is:
less efficient than in a purely competitive market.
A significant benefit of monopolistic competition compared with pure competition is:
greater product variety.
In an oligopolistic market:
products may be standardized or differentiated.
Mutual interdependence means that each oligopolistic firm:
must consider the reactions of its rivals when it determines its price policy.
If the four-firm concentration ratio for industry X is 80:
the four largest firms account for 80 percent of total sales.
Assume six firms comprising an industry have market shares of 30, 30, 10, 10, 10, and 10 percent. The Herfindahl Index for this industry is:
2,200
The study of how people (or firms) behave in strategic situations is called:
game theory.
Refer to the above diagram where the numerical data show profits in millions of dollars. Beta’s profits are shown in the northeast corner and Alpha’s profits in the southwest corner of each cell. If Alpha and Beta engage in collusion, the outcome of the game will be at cell:
A.
Refer to the above diagram where the numerical data show profits in millions of dollars. Beta’s profits are shown in the northeast corner and Alpha’s profits in the southwest corner of each cell. If Alpha and Beta agree to a high-price policy through collusion, the temptation to cheat on that agreement is demonstrated by the fact that:
Beta can increase its profit by lowering its price.
One would expect that collusion among oligopolistic producers would be easiest to achieve in which of the following cases?
a very small number of firms producing a homogeneous product
Three major means of collusion by oligopolists are:
cartels, tacit understandings, and price leadership.
If the firms in an oligopolistic industry can establish an effective cartel, the resulting output and price will approximate those of:
a pure monopoly.
Cartels are difficult to maintain in the long run because:
individual members may find it profitable to cheat on agreements.
Which of the following correctly arrays the various market structures in terms of their similarities to one another?
pure monopoly, oligopoly, monopolistic competition, pure competition
Under which of the following market structures will the long-run equilibrium price be equal to marginal cost?
pure competition
Resource pricing is important because:
resource prices are a major determinant of money incomes.
resource prices allocate scarce resources among alternative uses.
resource prices, along with resource productivity, are important to firms in minimizing their costs.
(of all of the above reasons.)
The demand for labor is derived from:
consumer demand for the product or service it is helping to produce.
Marginal revenue product measures the:
amount by which the extra production of one more worker increases a firm’s total revenue.
Refer to the above information. Which of the following must pertain if the firm is to minimize the cost of producing any output?
MPC/PC=MPL/PL.
The productivity and real wages of workers in the U. S. have risen historically partly because:
workers have been able to use larger quantities of capital equipment.
Refer to the above diagrams. The firm:
is a “wage taker.”
The economic term for a sole employer in a nonunion community is:
monopsonist.
Refer to the above diagram. The MRC curve lies above the labor supply curve because:
the higher wage needed to attract additional workers must also be paid to the workers already employed.
A union may increase the demand for the services of its constituents by all of the tactics below except:
increasing the price of products that are complements for the one it is producing.
Inclusive unionism is practiced mostly by:
industrial unions.
Refer to the above data. The collective willingness of this society to pay for the 2nd unit of this public good is:
$6.
Refer to the above data. For Plan D marginal costs and marginal benefits are:
$28,000 and $12,000 respectively.
Refer to the above diagram in which S is the market supply curve and S1 is a supply curve comprising all costs of production, including external costs. Assume that the number of people affected by these external costs is large. Without government interference, this market will result in:
an overallocation of resources to this product.
Refer to the above P.D. Game matrix wherein the numerical data show profits in millions of dollars. Firm A’s profits are shown on the right and Firm B’s profits on the left in each cell. If Firm A commits to a high-price policy, Firm B will gain the largest profit by:
also adopting a high-price policy.
Refer to the above information. The MP of the second barber is:
18.
Refer to the above information. The MRP of the second barber:
is$108.
Refer to the above information. Jones should:
hire the second barber because he will add $28 to profits.
Refer to the above data. How many workers will this firm choose to employ?
3
Refer to the above data. How many units of output will the firm produce?
39
Refer to the above data. What will be the equilibrium wage rate?
$3
Refer to the above data. What will be the selling price of the product?
$1.60
Refer to the above data. We can conclude that:
both the product and resource markets are imperfectly competitive.
Refer to the above diagram. Suppose that the demand for loanable funds is D0 and the supply of loanable funds initially is S0. If the supply of loanable funds declines to S1, the
equilibrium interest rate will:
increase from F to G.
Refer to the above data. On the basis of cost-benefit analysis government should undertake:
Plan B.
