Practice Test 4

Question 1

Revenue, costs, and profit for avocado producers. The market for avocados is perfectly competitive. The market price of a bushel of avocados is $18. At the profit, maximizing quantity of output in the figure, the farmers total revenue is.——-his total cost is——-and his economic profit is———

Answer 1

$90,70,20

Question 2

Erica is price taking owner of a cherry orchard. The price of cherries high enough that Aric is earning positive economic profits. In the long run, Erica should expect.——-cherry prices due to the——— firms

Answer 2

Lower, entry of new

Question 3

Adams perfectly competitive surfboard factories, making positive economic profits. If the price of a surfboard is $900, Adams output is 300 surfboards per month and its monthly average total cost is $700, what is his monthly profit?

Answer 3

$60,000

Question 4

If Jimmy cell 300 pounds in a perfectly competitive market for one dollar each than his marginal revenue is

Answer 4

One dollar

Question 5

A——-actions have no effect on the market price of the good or service that they buy.

Answer 5

Price taking Consumers

Question 6

Imperfect competition

Answer 6

Price and average revenue are the same

Question 7

Reception of the model of perfect competition is

Answer 7

Many buyers and sellers

Question 8

The marginal decision rule for Apple farmers. Given the market price of P one,B is the—— curve? (B is horizontal straight.)

Answer 8

Demand

Question 9

Profit maximization for fabulous fins, flower firm in the short run. The ATC curve is represented by.

Answer 9

 Curve in the top switched shaped curve

Question 10

And a long run equilibrium, economic profits in a perfectly competitive industry are

Answer 10

Zero

Question 11

Jennifer Sunglass hut operates in a perfectly competitive industry and has standard cost curves. The variable cost at Jennifer Sunglass hut increases, so all the cost curves except fixed cost shift upward. The demand for Jennifer sunglasses does not change and what is the firm shut down. To maximize profit after the variable cost increases Jennifer Sunglass hut will.——its price and—— it’s levels of production

Answer 11

Not change, decrease

Question 12

In the short run, if P= ATC, a perfectly competitive firm

Answer 12

Produces the optimal quantity of output and earns zero economic profit

Question 13

The perfectly competitive organic produce farm. The figure shows a perfectly competitive firm that faces demand curve D and maximizes profit. The farms economic profit in the long run will be.

Answer 13

Zero dollars

Question 14

Prices, cost curves, and profits for Brianne’s best Bree. Brianne owns briannes best brie, a perfectly competitive firm that produces artisanal cheeses. If the price of Bree is P1 and the firm is profit, maximizing, then the firm.

Answer 14

Shut shut down because marginal cost is lower than average total cost and AVC

Question 15

Computing. Monopoly profits for Exxon Mobil gas. Producing a Point and would.

Answer 15

Not the profit maximizing, sense at this output. MR is less than zero and MC is greater than zero.

Question 16

Market in which there is one buyer is

Answer 16

A monopsony

Question 17

The profit maximizing output in price and the monopoly diamond market. Assume that there is no fixed cost and that AC equals MC equals $200 if this were a perfect competitive industry, total surplus would be.

Answer 17

$6,400

Question 18

Monopoly with a linear demand curve. If this market, perfectly competitive, instead of a monopoly, the deadweight loss would be given by the area.

Answer 18

There would be no deadweight loss

Question 19

The profit, maximizing output and price in the monopoly diamond market. Assume that there is no fixed cost and that AC equals MC equals $200. At the profit, maximizing output, and price for a perfectly competitive industry, economic profits, for firms in the industry is.

Answer 19

Zero dollars

Question 20

Critics of college, athletic organizations, such as the national college, athletic association, argue that these organizations monopolize college athletes, and prevent student athletes from earning money while in college. If this is true, what type of entry barrier exist under such a scenario?

Answer 20

Control of a scarce resource or input

Question 21

In general economists are critical of monopoly when there is/are

Answer 21

No natural monopoly

Question 22

Monopoly is an industry structure characterized by

Answer 22

Barriers to entry and exit

Question 23

Electricity is an industry with sizable fixed costs and substantial economies of scale. That’s in the electric industry.

Answer 23

Large companies are more profitable than small companies

Question 24

A—— gives an inventor a temporary monopoly on the use or sale of an invention

Answer 24

Patent

Question 25

A monopolist response to an increase in demand by——-price and——-output

Answer 25

Increasing, increasing

Question 26

Monopoly model in the market for electricity. When the firm is in equilibrium, maximizing, economic profits, its profit is represented by

Answer 26

SPDB, the rectangular area below the demand curve, but up bum of the average total cost and marginal cost curves

Question 27

Pay-per-view movies on Xfinity cable II. The figure shows the demand and marginal revenue curve for on-demand movie rentals on Xfinity cable. Assume that marginal cost an average cost are constant at $40. If the cable company practices, perfect price discrimination, deadweight loss will be.

Answer 27

Zero dollars

Question 28

Goods that are subject to net at work externalities tend to

Answer 28

Become more valuable to individuals as more people use them

Question 29

Assume that a monopoly firm is currently incurring economic losses. If a permanent change in fixed cost lowers average total cost below the demand curve:

Answer 29

The monopoly will earn economic profits.

Question 30

Apple sets prices for its new line of iPad, and Microsoft, Dell and HP follow. This practice is known as.

Answer 30

Price leader ship

Question 31

Payoff matrix for Antojito and Carolina reaper. The combined profit for Carolina reaper an antiojito is maximized on Carolina reaper produces.——— and antojito produces—-.

Answer 31

Lower quantity, lower quantity

Question 32

Oligopoly pricing strategy, and wireless TV market 2. The Nash equilibrium in the cable TV market occurs when.

Answer 32

Both firms set a low price and each earns $90,000

Question 33

Prisoners dilemma for Thelma and Louise. Thelma and Louise are arrested and jailed for bank robbery. Given the payoff matrix in the figure of the dominant strategy for Bonnie is.

Answer 33

To confess

Question 34

Industry consists of five firms. Three of the firms each account for 20% of market sales. One from accounts for 25% of market sales and the remaining from accounts for 15% of Marcus’s house. What is the HHI for this industry?

Answer 34

2050

Question 35

A dominant strategy equilibrium exists in the game when

Answer 35

Every player has a Claire best action that does not depend on the actions of the other players

Question 36

Affirm in an oligopoly knows that it’s—— affects its——-and the reactions of its rivals will affect it.

Answer 36

Actions, rivals

Question 37

Monopoly, profits in duopoly markets for sugar. There are only two firms in the sugar industry. It’s from face is an identical demand curve, D1, and the market demand curve is D2. If the two firms collude to maximize their combined economic profits, they was at the market price at.——-and the combined economic profit of the firm would be——.

Answer 37

P2 given by the area of the rectangle, P1, P2, and BG.

Question 38

In an oligopoly

Answer 38

The actions of one firm depend on the actions of the other firms

Question 39

Payoff matrix for the United States and Canada. Suppose that the United States and Canada, both produce quinoa and each country can earn more profit affect output is limited and the price of king what is high. The dominant strategy for Canada is.

Answer 39

High output

Question 40

Are useful indicator in the market structure of an industry is the—— which is the sum of the squares market shares of each firm in an industry

Answer 40

Herfindahl Hirschmann index

Question 41

If a firms have an unspoken agreement where I buy firms limit—— they are engaging in——-

Answer 41

Competition among themselves, tacit collusion

Question 42

Oligopoly pricing strategy, and wireless TV market II. The noncooperative equilibrium in the cable TV market. Occurs when

Answer 42

Both firms set a low price and each are in $90,000

Question 43

Oligopoly pricing strategy, in wireless TV market II. The dominant strategy for next wireless.

Answer 43

Is to charge a low price

Question 44

A—— is an industry with only a small number of producers

Answer 44

Oligopoly

Question 45

Anthony operates the Halsted Street deli and bagel in downtown Chicago, serving delicious sandwiches and comfort food. The deli industry and monopolistically competitive. Anthony, along with every other deli in town is producing the quantity that maximizes average total cost. Assuming the delis are maximizing profits, the.

Answer 45

Number of delis will eventually increase

Question 46

The market for designer boots in monopolistic competition I. The profit maximizing quantity of output is determined by the intersection at point.

Answer 46

N

Question 47

Monopolistic competition in the market for specialty watches. I figure represents a monopolistically competitive firm in the long run. The firm will.

Answer 47

Exit this market until all remaining firms earn 0 economic profit

Question 48

A monopolistically, competitive firm maximize its profits by producing at a quantity where

Answer 48

MR equals MC

Question 49

Short run, and the long run profit in monopolistic competition. And penalty of the Figure The profit maximizing price is P2 and the ATC curve is tangent to the new demand curve. The portion of the ATC that lies to the right of the tangency and continues down to the intersection with MC and ATC indicates.

Answer 49

Excess capacity

Question 50

An industry characterized by many competitors, each producing an identical products, with free entry and exit is

Answer 50

Perfectly competitive

Question 51

Con sitter, a monopolistically competitive firm. As firms exit the industry, we can see this as.

Answer 51

A shift to the right of each individual firms demand curve

Question 52

Advertising is an economically productive activity, and not a waste of resources, because

Answer 52

It can convey information about a product(I said it can increase sales)

Question 53

Profit maximization for Domino’s Pizza in monopolistic competition. Suppose that Papa John’s produces a technical innovation that reduces individual franchise cost, so that ATC falls to ATC’ if the franchise produced the competitive up a fourth innovation, it’s optimal price would have been

Answer 53

I said $30 and I’m pretty sure it’s $30 but the correct answer is actually $23

Question 54

An industry with a Large The Birth relatively small firm, is producing differentiated products in a market with easy entry and exit affirms is

Answer 54

Monopolistically, competitive

Question 55

Profit maximization for Domino’s Pizza in monopolistic competition. Supposed to Papa John’s introduces a Technical innovation that reduces individual franchise cost of the ATC fast to ATC’. If the franchise produced the competitive output before the innovation, its optimal quantity would happen.

Answer 55

200 pizzas per day. Where marginal cost crosses demand.

Question 56

Monopolistic competition in the market for cell phones. The firm depicted in the Figure Produce is the output that maximizes profit, minimizes losses. In this case the firm is earning.

Answer 56

Economic losses

Question 57

Perfect competition and monopolistic competition in the long run. Which statement is true?

Answer 57

Both panels show markets that have many firms

Question 58

Fast food profit in monopolistic competitionII. The profit maximizing quantity of output is determined by the intersection point at

Answer 58

K

Question 59

Fast food, profits in monopolistic competition I. The profit maximizing quantity of output is determined by the intersection point at.

Answer 59

G