exam 3

Question 1

which market model has the least number of firms

Answer 1

pure monopoly

Question 2

there is no control over price by firms in

Answer 2

pure competition

Question 3

which is true under conditions or pure competition

Answer 3

no single firm can influence the market price by changing the output

Question 4

competitive firms are assumed to

Answer 4

have identical products

Question 5

the demand curve faced by a purely competitive firm

Answer 5

demand = marginal revenue

Question 6

if a firm is a price taker, then the demand curve for the firm’s product is

Answer 6

perfectly elastic

Question 7

refer to the above graph for a firm in pure competition. Line A represents

Answer 7

total revenue

Question 8

assume the price of a product sold by a purely competitive firm is $5. given the data in the accompanying table, at what output is total profit highest in the short run

Answer 8

40`

Question 9

refer to the above table. if the firm shuts down in the short run, the total cost will be

Answer 9

2500

Question 10

refer to the above table. if the product sells for $1200 a unit, the firm’s profit maximizing output is

Answer 10

4

Question 11

refer to the above table. if the product sells for $1200 a unit, the firm’s profit maximizing output is

Answer 11

4

Question 12

in a typical graph for a purely competitive firm, where the total cost and total revenue curves intersect, there is a

Answer 12

normal profit

Question 13

Refer to the above table. the equilibrium price of the product is

Answer 13

40

Question 14

refer to the above table. the marginal revenue from the third unit of output is

Answer 14

40

Question 15

a profit maximizing firm in the short run will expand output

Answer 15

as long as marginal revenue is greater than marginal cost

Question 16

a firm sells a product in a purely competitive market. the marginal cost of the product at the current output is 5 dollars and the market price is 5. what should the firm do

Answer 16

shut down if the minimum possible average variable cost is 5.25

Question 17

Refer to the above graph. The level of output at which this firm will produce is

Answer 17

OC

Question 18

Refer to the above graph. the level of output at which this firm will shut down is

Answer 18

OA

Question 19

Refer to the graph above. The level of output at which this firm is maximizing an economic profit is

Answer 19

OC

Question 20

Refer to the above cost chart. If the marginal revenue is $6, what output level will the firm produce

Answer 20

14

Question 21

the individual firm’s short - run supply curve is that part of its

Answer 21

marginal cost curve lying above its average variable cost curve

Question 22

the individual firm’s short - run supply curve is that part of its

Answer 22

marginal cost curve lying above its average variable cost curve

Question 23

Refer to the above graph. to maximize profits, the firm would produce

Answer 23

OE units which will equals profits ABGH

Question 24

based on the graph above, the firm earning is

Answer 24

O economic profit

Question 25

Refer to the above graph. if represents a profit - maximizing firm producing under conditions or pure competition. When the firm is in equilibrium in the short run, its average fixed cost is

Answer 25

DE

Question 26

Refer to the above graph. It represents a profit - maximizing firm producing under conditions of pure competition. when the firm is in equilibrium in the short run, its average variable cost is

Answer 26

DB

Question 27

Refer to the above graph. It shows the cost curves for a competitive firm. if the market price falls to $.55 the optimal output rate is

Answer 27

0

Question 28

Refer to the graph above the graph. it shows the short - run cost curves for a purely competitive firm together with a number with a number of different prices. At what price is the firm making only normal profit

Answer 28

P3

Question 29

refer to the above graph. it shows the short - run cost curves for a purely competitive firm together with a number of different prices. At what price is the shut down point for the firm

Answer 29

P1 shut down

Question 30

The long run supply curve would be perfectly elastic

Answer 30

Constant cost industry

Question 31

Allocative efficiency occurs when the

Answer 31

Marginal cost equals the marginal benefit to society

Question 32

In long - run equilibrium under conditions of pure competition and productive efficiency, all firms produce at minimum

Answer 32

Average total cost

Question 33

In long - run equilibrium under conditions of pure competition and productive efficiency, all firms produce at minimum

Answer 33

Average total cost

Question 34

One feature of pure monopoly is that the monopolist is

Answer 34

A price maker

Question 35

On defining characteristic of pure monopoly is that

Answer 35

produce products with no close substitutes

Question 36

the classic example of a private, unregulated monopoly is

Answer 36

DE beers

Question 37

Natural monopolies result from

Answer 37

extensive economies of scale in production

Question 38

Natural monopolies result from

Answer 38

extensive economies of scale in production

Question 39

One feature of pure monopoly is that the demand curve

Answer 39

Slopes downward

Question 40

a pure monopoly firm will never change a price in the inelastic range of its demand carve because lowering price to get into this region will

Answer 40

decrease total revenue, increase total cost, and decrease profit

Question 41

refer to the above graph showing the short - run revenue for a monopolist. what price should be charged in order to maximize total revenue

Answer 41

P3

Question 42

Refer to the above table. what is the change in total revenue if she lowers the price from $20 to $18

Answer 42

30

Question 43

at the profit - maximizing level of output, a monopolist will always operate where

Answer 43

price is greater than marginal cost

Question 44

at the profit - maximizing level of output, a monopolist will always operate where

Answer 44

price is greater than marginal cost

Question 45

A profit maximizing monopolist facing the situation shown in the graph above should

Answer 45

Shut down in the short run

Question 46

The supply curve for a monopolist

Answer 46

nonexistent

Question 47

monopolist are said to be allocatively inefficient because

Answer 47

at the profit maximizing output, the marginal benefit to society from increasing output is greater than the marginal cost to society

Question 48

based on the graph above, what is the difference between the purely competitive equilibrium level of output an the pure monopolist equilibrium level of output

Answer 48

20

Question 49

Refer to the above graph. if the monopoly shown is able to begin practicing [erfect price discrimination, what will the profit - maximizing quantity be

Answer 49

q2

Question 50

for the last unit sold by a perfectly price discriminating monopolist, price will be

Answer 50

p=mc

Question 51

a major characteristic of monopolistic competition is

Answer 51

a relatively large number of firm selling the product

Question 52

which assumption is part of the model of monopolistic competition

Answer 52

no collision

Question 53

one difference between monopolistic competition and pure competition is that

Answer 53

there is some control over price in monopolistic competition

Question 54

refer to the above graph. a successful advertising campaign by a monopolistic competitive firm will cause the demand curve to shift from

Answer 54

A to B and becomes less elastic

Question 55

refer to the above graph. in the short run, this monopolistic competitive firm will set price at

Answer 55

65 and produce 35 units of output

Question 56

refer to the above graph. in the short run, this monopolistic competitive firm will set price at

Answer 56

65 and produce 35 units of output

Question 57

53

Answer 57

525

Question 58

54

Answer 58

earn a normal profit but not an economic profit

Question 59

55

Answer 59

a

Question 60

56

Answer 60

firm produce at an output level less than the least cost output

Question 61

57

Answer 61

few sells

Question 62

58

Answer 62

oligopoly competition

Question 63

59

Answer 63

mutual independence

Question 64

60

Answer 64

2600

Question 65

61

Answer 65

over some interval, a change in the oligopolists marginal cost will not cause a change in the oligopolist profit - maximizing price

Question 66

62

Answer 66

p3 mr = mc

Question 67

63

Answer 67

follow the price cut but ignores a price increase embodies the possibility that changes in unit costs will have no effect on equilibrium price and output

Question 68

64

Answer 68

be self - concealing and contribute to economic inefficiency

Question 69

65

Answer 69

pure economic profit