Chapter 13 Controlling Market Power: Antitrust and Regulation

Size: px
Start display at page:

Download "Chapter 13 Controlling Market Power: Antitrust and Regulation"

Transcription

1 Page 1 Chapter 13 Controlling Market Power: Antitrust and Regulation 1)Which of the following is an example of natural monopoly? A) a market for cable TV services B) a market for breakfast cereals C) a market for cold medicines D) a market for cigarettes 2) Figure 13.1 shows a demand and costs of an unregulated monopoly. At the profit maximization output, the firm earns a profit of: A) $80,000. B) $10,000. C) $50,000. D) $0. 3) Figure 13.1 shows a demand and costs of an unregulated monopoly. At the output level of 22,000 units, the firm's marginal revenue is smaller than its marginal cost. the firm is earning a zero economic profit. the firm is producing more than its profit maximizing level of output. All of the above is correct. Page 1

2 Page 2 4) The natural monopoly in figure 13.3 wants to produce: A) Q1. B) Q2. C) Q3 D) Q4. 5) Which of the following is n o t a form of antitrust policy? A) regulation of business practices B) blocking mergers C) breaking up monopolies D) a price control 6) A trust is: A) an agreement among firms to charge the perfectly competitive price. B) a compact between industry and government. C) a creation of the Sherman Act. D) an arrangement between firms whereby decision making is controlled by a board of trustees. Page 2

3 Page 3 7) Which of the following is an example of tie-in sales? A) In order to buy Microsoft Windows, you must also purchase Internet Explorer. B) Bus rides are cheaper for senior citizens than for other people. C) Two companies merge to form one company. D) Prices are set just low enough to prevent other firms from entering the market. 8) In which stage of producing electricity have recent technological innovations led to reduced economies of scale? A) generation in power plants B) transmission along high-voltage lines C) distribution to final users along low-voltage lines D) all of the above 9) Under traditional electricity regulation, public and private utilities were responsible for the: A) generation of electricity in their own power plants. B) transmission of electricity along their own system of high-voltage lines. C) distribution to final users along their own system of low-voltage lines. D) all of the above 10) When a firm has decreasing average costs over the entire range of market demand it is: A) a natural monopoly. B) an oligopoly. C) rent seeking. D) in a contestable market. Page 3

4 Page 4 Chapter 14 Imperfect Information: Adverse Selection and Moral Hazard 11) There exists asymmetric information in a market: A) if both sides of the market have the same information about the good. B) only if buyers have better information about the good than sellers. C) only if sellers have better information about the good than buyers. D) if either buyers or sellers have better information than the other group. 12) In some markets for used goods: A) the seller has more information than the buyer about the quality of the good. B) the buyer has more information than the seller about the quality of the good. C) low-quality used goods will be underpriced. D) the quality of used goods sold in the market will typically rise over time. 13) Which one of the following is an example of asymmetric information? A) A supermarket repackages packages of stale meat and sells them. B) A homeowner knowingly sells a house that has hidden electrical problems. C) A company hires an employee who has an addiction to sleeping pills. D) all of the above 14) Which of the following is the least likely example of asymmetric information? A) an insurance company and a client who just obtained a driver license B) a seller of used cars and a prospective customer C) a seller of produce and a buyer D) a retailer of Music CDs and a buyer Page 4

5 Page 5 15) A mixed market is one in which: A) consumers can be buyers and sellers and producers can be sellers and buyers. B) there are different qualities of a good being sold in the market and there is imperfect information about the quality of each good. C) a seller of a good requires that the purchase of one good be tied to the purchase of another. D) demand is positively sloped and supply is negatively sloped. 16) Suppose buyers in the used car market are willing to pay $4,000 for a plum (high -quality) used car and $2,000 for a lemon (low-quality) used car. If buyers believe that 50% of the used cars on the market are lemons (low quality), what would they be willing to pay for a used car? A) $2000 B) $3000 C) $3500 D) $4000 Markets Plums (high quality) Supplied Lemons (low quality) Supplied % Buyers Believe are Lemons (low quality) % 40% 50% Table ) In Table 14.1, market 1 would be in equilibrium if buyers believed lemons accounted for: A) 60% of the market. B) 55% of the market. C) 45% of the market. D) 40% of the market. Page 5

6 Page 6 18) Figure 14.1 represents the market for used bikes. Suppose buyers are willing to pay $200 for a plum (high-quality) used bike and $50 for a lemon (low-quality) used bike. If buyers believe that 50% of the used bikes are lemons (low quality), how much will they be willing to pay for a used bike? A) $50 B) $80 C) $125 D) $200 19) Figure 14.1 represents the market for used bikes. Suppose buyers are willing to pay $200 for a plum (high-quality) used bike and $50 for a lemon (low-quality) used bike. If buyers have pessimistic expectations about the used bikes in the market, what number of used bikes sold will actually be lemons (low quality)? A) 8 B) 12 C) 16 D) 22 Page 6

7 Page 7 Markets Plums (high quality) Supplied Lemons (low quality) Supplied % Buyers Believe are Lemons (low quality) % 80% 50% Table ) Table 14.4 represents 3 markets for used motorcycles. Which of the markets in Table 15.4 are in equilibrium? A) 1 only B) 2 only C) 3 only D) 1 and 3 21) In Table 14.4, market 1 would be in equilibrium if buyers believed lemons accounted for: A) about 90.91% of the market. B) about 74.5% of the market. C) about 63.25% of the market. D) about 57.65% of the market. 22) One result of adverse selection in the market for used cars is: A) more lemons (low quality) may be offered for sale than plums (high quality). B) more plums (high quality) may be offered for sale than lemons (low quality). C) few lemons (low quality) are sold. D) no used cars are sold. 23) Adverse selection in employment is more likely when: A) jobs require specific training. B) everyone is equally qualified for the job. C) people ' s abilities are easy to measure. D) people ' s abilities are difficult for potential employers to observe. Page 7

8 Page 8 24) In a thin market: A) only high-quality goods are sold. B) some high-quality goods are sold but fewer than would be sold in a market with perfect information. C) some low-quality goods are sold but fewer than would be sold in a market with perfect information. D) no high-quality goods are sold. 25) Moral hazard occurs when a person's behavior changes in a way that: A) is immoral. B) is dangerous. C) increases the likelihood of a bad outcome for someone else. D) causes positive externalities. 26) Which of the following is not an example of moral hazard problems? A) Managers have an incentive to pursue their own interests rather than shareholders. B) A tenured faculty has a weaker incentive to do best in teaching or research. C) A high-cost individual has a greater incentive to purchase a health insurance. D) An insured individual tends to drive a car more recklessly. 27) Thin markets can be revived by: A) guaranteed price matching. B) increasing the number of sellers in the market. C) imposing price ceilings. D) warranties and repair guarantees. Page 8

9 Page 9 28) Lemon laws that allow consumers to return low-quality used cars are designed to help solve the problem of in used car markets. A) moral hazard B) thick markets C) experience ratings D) adverse selection 29) Health insurance companies face an asymmetric information problem because: A) companies have superior information concerning the risk of illness or injury of those insured. B) buyers have superior information concerning their risk of illness or injury. C) the insurance companies and buyers both have equal information concerning the risk of illness or injury of those insured. D) the probability of becoming ill or injured is unrelated to the insured person ' s occupation. 30) Insurance policies in which each firm pays a different price for medical insurance depending upon the past medical bills of the firm ' s employees are based upon a(n): A) experience rating. B) community rating. C) asymmetric information rating. D) adverse selection rating. Chapter 17 The Labor Market, Income and Poverty 31) The demand for labor is: A) derived from the demand for the products it is used to produce. B) determined by the demand for consumer products. C) determined by the price of consumer products. D) all of the above Page 9

10 Page 10 32) The marginal product of labor is the: A) change in labor necessary to produce an additional unit of output. B) cost of additional labor necessary to produce an additional unit of output. C) change in output resulting from adding an additional unit of labor. D) change in revenue resulting from adding an additional unit of labor. 33) Other things being equal, as the diminishing marginal returns begin to occur, the marginal revenue product of labor: A) decreases as more workers are used. B) increases as more workers are used. C) remains unchanged as more workers are used. D) none of the above 34) A curve that shows the relationship between the wage and the quantity of labor demanded in the short -run is: A) the marginal revenue product of labor curve. B) the marginal revenue curve. C) the marginal product of labor curve. D) none of the above Page 10

11 Page 11 Number of workers Units of output Table ) Refer to Table The marginal product of the third unit of labor is: A) 30. B) 50. C) 60. D) ) Refer to Table The marginal product of the fourth unit of labor is: A) 210. B) 40. C) 50. D) ) Refer to Table The marginal product of the fifth unit of labor is: A) 8. B) 40. C) 50. D) 250. Page 11

12 Page 12 38) Figure 17.1 depicts a firm's marginal revenue product curve. If the firm maximizes its profit and the hourly wage is $15, how many hours of labor will the firm demand? A) smaller than 30 hours B) between 30 hours and 40 hours C) between 40 hours and 50 hours D) greater than 50 hours 39) Figure 17.1 depicts a firm ' s marginal revenue product curve. The marginal revenue product curve is negatively sloped because decreases as the firm uses more labor. A) the hourly wage B) the marginal product of labor C) the product price D) none of the above Page 12

13 Page 13 40) The market demand curve for labor is the relationship between the wage and the quantity of labor that: A) all workers are willing to provide. B) any given worker is willing to provide. C) all firms are willing to employ. D) any given firm is willing to employ. 41) Which of the following is a long-run impact of an increase in the wage? A) The quantity demanded of labor increases because there is no diminishing returns. B) The quantity demanded of labor increases because the marginal revenue product curve shifts upward due to a higher product price. C) The quantity demanded of labor decreases because firms face a higher degree of diminishing returns. D) The quantity demanded of labor decreases because firms will have an incentive to use more of other inputs instead of labor. 42) The relationship between the wage and the quantity of labor that all workers are willing to provide is called: A) individual labor demand. B) market labor demand. C) individual labor supply. D) market labor supply. 43) According to the substitution effect of labor supply, when the wage rate goes up: A) it becomes more costly to consume leisure, so people will work more. B) it becomes less costly to consume leisure, so people will work more. C) the opportunity cost of enjoying leisure goes down. D) firms will hire more workers since people are more willing to work. Page 13

14 Page 14 44) If the wage paid to workers increases, the labor demand curve: A) will not shift. B) shifts to the left and fewer workers are hired. C) shifts to the right and more workers are hired. D) shifts to the right and fewer workers are hired. 45) Consider a labor market in equilibrium. If both demand curve and supply curve of labor shift to the right, then the wage rate in the market will. A) increase B) decrease C) remain unchanged D) either increase or decrease or remain unchanged 46) The supply of workers in a particular occupation could be relatively small if: A) training costs are high. B) job features are undesirable. C) there are few people with the required skills. D) All of the above are correct. 47) Given their skills and education, steelworkers earn higher incomes than they would in other occupations. This is partly because : A) steel workers face the higher risk of getting injured or killed. B) it is costly to acquire skills necessary for jobs at steel mills. C) few people have skills and knowledge required for jobs at steel mils. D) All of the above Page 14

15 Page 15 48) Given their skills and education, American workers in hostile regions such as Iraq earn higher incomes than American workers in the homeland. This is partly because: A) American workers in Iraq face the higher risk of getting kidnapped and killed. B) jobs in Iraq in general require more education. C) the U.S. government restricts the number of American workers to work in Iraq. D) only few people have skills necessary for jobs in Iraq. 49) Which of the following is partially responsible for the male-female wage gap in the United States? A) Women have, on average, less education than their male counterparts. B) Women have, on average, less work experience than their male counterparts. C) Women have been denied access to many occupations, leading to increased supply in a few occupations. D) All of the above are correct. 50) Which of the following explains the differences in earnings by race? A) differences in productivity B) racial discrimination C) differences in education and work experience D) all of the above 51) One reason that college graduates earn higher wages than non -graduates is because college graduates: A) acquire additional skills to allow them to work in more industries than non-graduates. B) always work in more dangerous jobs than non-graduates. C) are always more intelligent than non-graduates. D) are less equipped to deal with technological change, as their skills are technology-specific. Page 15

16 Page 16 52) The poverty rate in the U.S. is highest for: A) married couples. B) childless households. C) female headed households D) single people. 53) The poverty rate in the U.S. is lowest for: A) whites. B) blacks. C) Hispanics. D) Asians. 54) A means tested government program is one that: A) is pilot tested to see if it works. B) provides assistance to those below a certain income level. C) is temporary and ends after a short period of time. D) all of the above. 55) Suppose that we compare shares of income earned by different U.S. groups by dividing all households into five groups. Which of the following statements about the income distribution in the U.S. is correct? A) Shares of income remain roughly constant as we move from the lowest quintile to the highest quintile. B) Shares of income decrease as we move from the lowest quintile to the highest quintile. C) Shares of income increase as we move from the lowest quintile to the highest quintile. D) none of the above Page 16

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. Test 2 Review Econ 201, V. Tremblay MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Barbara left a $25,000 job as an architect to run a catering

More information

CHAPTER 13 MARKETS FOR LABOR Microeconomics in Context (Goodwin, et al.), 2 nd Edition

CHAPTER 13 MARKETS FOR LABOR Microeconomics in Context (Goodwin, et al.), 2 nd Edition CHAPTER 13 MARKETS FOR LABOR Microeconomics in Context (Goodwin, et al.), 2 nd Edition Chapter Summary This chapter deals with supply and demand for labor. You will learn about why the supply curve for

More information

Chapter 18. Asymmetric Information. The buyer needs a hundred eyes, the seller not one. George Herbert (1651)

Chapter 18. Asymmetric Information. The buyer needs a hundred eyes, the seller not one. George Herbert (1651) Chapter 18 Asymmetric Information The buyer needs a hundred eyes, the seller not one. George Herbert (1651) Chapter 18 Outline 18.1 Problems Due to Asymmetric Information 18.2 Responses to Adverse Selection

More information

Variable Cost. Marginal Cost. Average Variable Cost 0 $50 $50 $0 -- -- -- -- 1 $150 A B C D E F 2 G H I $120 J K L 3 M N O P Q $120 R

Variable Cost. Marginal Cost. Average Variable Cost 0 $50 $50 $0 -- -- -- -- 1 $150 A B C D E F 2 G H I $120 J K L 3 M N O P Q $120 R Class: Date: ID: A Principles Fall 2013 Midterm 3 Multiple Choice Identify the choice that best completes the statement or answers the question. 1. Trevor s Tire Company produced and sold 500 tires. The

More information

Chapter 8 Production Technology and Costs 8.1 Economic Costs and Economic Profit

Chapter 8 Production Technology and Costs 8.1 Economic Costs and Economic Profit Chapter 8 Production Technology and Costs 8.1 Economic Costs and Economic Profit 1) Accountants include costs as part of a firm's costs, while economists include costs. A) explicit; no explicit B) implicit;

More information

Econ 101, section 3, F06 Schroeter Exam #4, Red. Choose the single best answer for each question.

Econ 101, section 3, F06 Schroeter Exam #4, Red. Choose the single best answer for each question. Econ 101, section 3, F06 Schroeter Exam #4, Red Choose the single best answer for each question. 1. Profit is defined as a. net revenue minus depreciation. *. total revenue minus total cost. c. average

More information

Perfect Competition. Chapter 12

Perfect Competition. Chapter 12 CHAPTER CHECKLIST Perfect Competition Chapter 12 1. Explain a perfectly competitive firm s profit maximizing choices and derive its supply curve. 2. Explain how output, price, and profit are determined

More information

Common in European countries government runs telephone, water, electric companies.

Common in European countries government runs telephone, water, electric companies. Public ownership Common in European countries government runs telephone, water, electric companies. US: Postal service. Because delivery of mail seems to be natural monopoly. Private ownership incentive

More information

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. Economics 103 Spring 2012: Multiple choice review questions for final exam. Exam will cover chapters on perfect competition, monopoly, monopolistic competition and oligopoly up to the Nash equilibrium

More information

Economics 103h Fall 2012: Part 1 of review questions for final exam

Economics 103h Fall 2012: Part 1 of review questions for final exam Economics 103h Fall 2012: Part 1 of review questions for final exam This is the first set of review questions. The short answer/graphing go through to the end of monopolistic competition. The multiple

More information

Practice Exam 1. 1. Economics is the study of choice under conditions of a. demand b. supply c. scarcity d. opportunity e.

Practice Exam 1. 1. Economics is the study of choice under conditions of a. demand b. supply c. scarcity d. opportunity e. Practice Exam 1 1. Economics is the study of choice under conditions of a. demand b. supply c. scarcity d. opportunity e. abundance 2. Suppose your friends take you out for dinner on your birthday and

More information

Perfect competition is a market structure in which a large number of firms all produce the same product.

Perfect competition is a market structure in which a large number of firms all produce the same product. The Four Conditions for Perfect Competition Perfect competition is a market structure in which a large number of firms all produce the same product. 1. Many Buyers and Sellers There are many participants

More information

Perfect Competition. Chapter 7 Section Main Menu

Perfect Competition. Chapter 7 Section Main Menu Perfect Competition What conditions must exist for perfect competition? What are barriers to entry and how do they affect the marketplace? What are prices and output like in a perfectly competitive market?

More information

1 The Market for Factors of Production Factors of Production are the inputs used to produce goods and services. The markets for these factors of production are similar to the markets for goods and services

More information

Learning Objectives. Chapter 6. Market Structures. Market Structures (cont.) The Two Extremes: Perfect Competition and Pure Monopoly

Learning Objectives. Chapter 6. Market Structures. Market Structures (cont.) The Two Extremes: Perfect Competition and Pure Monopoly Chapter 6 The Two Extremes: Perfect Competition and Pure Monopoly Learning Objectives List the four characteristics of a perfectly competitive market. Describe how a perfect competitor makes the decision

More information

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. MBA 640, Survey of Microeconomics Fall 2006, Final Exam Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The "law of demand" states that, other

More information

Chapter 7: Market Structures Section 1

Chapter 7: Market Structures Section 1 Chapter 7: Market Structures Section 1 Key Terms perfect competition: a market structure in which a large number of firms all produce the same product and no single seller controls supply or prices commodity:

More information

Market Failure. EC4004 Lecture 9

Market Failure. EC4004 Lecture 9 Market Failure EC4004 Lecture 9 Today. Online Exam. Quantity Demanded, Quantity Supplied at each price 10 9 8 7 6 5 4 3 2 1 Supply at each Price, S(p) t Demand at each Price, D(p) 1 2 3 4 5 6 7 8 9 10

More information

Economics Chapter 7 Review

Economics Chapter 7 Review Name: Class: Date: ID: A Economics Chapter 7 Review Matching a. perfect competition e. imperfect competition b. efficiency f. price and output c. start-up costs g. technological barrier d. commodity h.

More information

COMM 220: Ch 17 and 18 Multiple Choice Questions Figure 18.1

COMM 220: Ch 17 and 18 Multiple Choice Questions Figure 18.1 COMM 220: Ch 17 and 18 Multiple Choice Questions 1) When sellers have more information about products than buyers do, we would expect A) sellers to get higher prices for their goods than they could otherwise.

More information

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. MBA 640 Survey of Microeconomics Fall 2006, Quiz 6 Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) A monopoly is best defined as a firm that

More information

A. a change in demand. B. a change in quantity demanded. C. a change in quantity supplied. D. unit elasticity. E. a change in average variable cost.

A. a change in demand. B. a change in quantity demanded. C. a change in quantity supplied. D. unit elasticity. E. a change in average variable cost. 1. The supply of gasoline changes, causing the price of gasoline to change. The resulting movement from one point to another along the demand curve for gasoline is called A. a change in demand. B. a change

More information

CHAPTER 18 MARKETS WITH MARKET POWER Principles of Economics in Context (Goodwin et al.)

CHAPTER 18 MARKETS WITH MARKET POWER Principles of Economics in Context (Goodwin et al.) CHAPTER 18 MARKETS WITH MARKET POWER Principles of Economics in Context (Goodwin et al.) Chapter Summary Now that you understand the model of a perfectly competitive market, this chapter complicates the

More information

Practice Questions Week 8 Day 1

Practice Questions Week 8 Day 1 Practice Questions Week 8 Day 1 Multiple Choice Identify the choice that best completes the statement or answers the question. 1. The characteristics of a market that influence the behavior of market participants

More information

Econ 201 Final Exam. Douglas, Fall 2007 Version A Special Codes 00000. PLEDGE: I have neither given nor received unauthorized help on this exam.

Econ 201 Final Exam. Douglas, Fall 2007 Version A Special Codes 00000. PLEDGE: I have neither given nor received unauthorized help on this exam. , Fall 2007 Version A Special Codes 00000 PLEDGE: I have neither given nor received unauthorized help on this exam. SIGNED: PRINT NAME: Econ 201 Final Exam 1. For a profit-maximizing monopolist, a. MR

More information

Final Exam (Version 1) Answers

Final Exam (Version 1) Answers Final Exam Economics 101 Fall 2003 Wallace Final Exam (Version 1) Answers 1. The marginal revenue product equals A) total revenue divided by total product (output). B) marginal revenue divided by marginal

More information

Economics 100 Exam 2

Economics 100 Exam 2 Name: 1. During the long run: Economics 100 Exam 2 A. Output is limited because of the law of diminishing returns B. The scale of operations cannot be changed C. The firm must decide how to use the current

More information

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. Practice for Perfect Competition Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Which of the following is a defining characteristic of a

More information

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. Chap 13 Monopolistic Competition and Oligopoly These questions may include topics that were not covered in class and may not be on the exam. MULTIPLE CHOICE. Choose the one alternative that best completes

More information

AP Microeconomics Chapter 12 Outline

AP Microeconomics Chapter 12 Outline I. Learning Objectives In this chapter students will learn: A. The significance of resource pricing. B. How the marginal revenue productivity of a resource relates to a firm s demand for that resource.

More information

5. The supply curve of a monopolist is A) upward sloping. B) nonexistent. C) perfectly inelastic. D) horizontal.

5. The supply curve of a monopolist is A) upward sloping. B) nonexistent. C) perfectly inelastic. D) horizontal. Chapter 12 monopoly 1. A monopoly firm is different from a competitive firm in that A) there are many substitutes for a monopolist's product but there are no substitutes for a competitive firm's product.

More information

Econ 201 Lecture 17. The marginal benefit of expanding output by one unit is the market price. Marginal cost of producing corn

Econ 201 Lecture 17. The marginal benefit of expanding output by one unit is the market price. Marginal cost of producing corn Econ 201 Lecture 17 The Perfectly Competitive Firm Is a Taker (Recap) The perfectly competitive firm has no influence over the market price. It can sell as many units as it wishes at that price. Typically,

More information

Business Ethics Concepts & Cases

Business Ethics Concepts & Cases Business Ethics Concepts & Cases Manuel G. Velasquez Chapter Four Ethics in the Marketplace Definition of Market A forum in which people come together to exchange ownership of goods; a place where goods

More information

Firms in Perfectly Competitive Markets

Firms in Perfectly Competitive Markets Chapter 11 Firms in Perfectly Competitive Markets Chapter Outline 11.1 LEARNING OBJECTIVE 11.1 Perfectly Competitive Markets Learning Objective 1 Define a perfectly competitive market, and explain why

More information

Exam No. 3 Date: 7 or 9 May Instructor: Brian B. Young

Exam No. 3 Date: 7 or 9 May Instructor: Brian B. Young Economics 212 Microeconomic Principles Exam No. 3 Date: 7 or 9 May 2012 Name The value of this exam is 100 points Instructor: Brian B. Young Please show your work where appropriate! Multiple Choice 2 points

More information

Market for cream: P 1 P 2 D 1 D 2 Q 2 Q 1. Individual firm: W Market for labor: W, S MRP w 1 w 2 D 1 D 1 D 2 D 2

Market for cream: P 1 P 2 D 1 D 2 Q 2 Q 1. Individual firm: W Market for labor: W, S MRP w 1 w 2 D 1 D 1 D 2 D 2 Factor Markets Problem 1 (APT 93, P2) Two goods, coffee and cream, are complements. Due to a natural disaster in Brazil that drastically reduces the supply of coffee in the world market the price of coffee

More information

11 PERFECT COMPETITION. Chapter. Competition

11 PERFECT COMPETITION. Chapter. Competition Chapter 11 PERFECT COMPETITION Competition Topic: Perfect Competition 1) Perfect competition is an industry with A) a few firms producing identical goods B) a few firms producing goods that differ somewhat

More information

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. Exam Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) If a producing firm does not have enough time to expand its plant capacity, it is: A)

More information

CH 7. Name: Class: Date: Multiple Choice Identify the choice that best completes the statement or answers the question.

CH 7. Name: Class: Date: Multiple Choice Identify the choice that best completes the statement or answers the question. Class: Date: CH 7 Multiple Choice Identify the choice that best completes the statement or answers the question. 1. A price ceiling a. is an illegal price. b. is the price that exists in a black market.

More information

MONOPOLIES HOW ARE MONOPOLIES ACHIEVED?

MONOPOLIES HOW ARE MONOPOLIES ACHIEVED? Monopoly 18 The public, policy-makers, and economists are concerned with the power that monopoly industries have. In this chapter I discuss how monopolies behave and the case against monopolies. The case

More information

Supply and Demand, and Market Failure. Economics looks at the world from a perspective of choices we make given our limited resources.

Supply and Demand, and Market Failure. Economics looks at the world from a perspective of choices we make given our limited resources. and Demand, and Market Failure Economics looks at the world from a perspective of choices we make given our limited resources. Economics - the study of how society manages its scarce resources Or the study

More information

MARKETS IN ACTION. Chapter. Housing Markets and Rent Ceilings

MARKETS IN ACTION. Chapter. Housing Markets and Rent Ceilings Chapter 6 MARKETS IN ACTION Housing Markets and Rent Ceilings Topic: Market Response to a Decrease in Supply 1) The short-run impact of the San Francisco earthquake on the housing market shifted the A)

More information

Monopoly, Oligopoly, and Monopolistic Competition. Chapter 8. Learning Objectives

Monopoly, Oligopoly, and Monopolistic Competition. Chapter 8. Learning Objectives Monopoly, Oligopoly, and Monopolistic Competition Chapter 8 McGraw-Hill/Irwin Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Learning Objectives 1. Distinguish among three types

More information

Econ 201, Microeconomics Principles, Final Exam Version 1

Econ 201, Microeconomics Principles, Final Exam Version 1 Econ 201, Microeconomics Principles, Final Exam Version 1 Instructions: Please complete your answer sheet by filling in your name, student ID number, and identifying the version of your test (1 or 2).

More information

UNIT 6 cont PRICING UNDER DIFFERENT MARKET STRUCTURES. Monopolistic Competition

UNIT 6 cont PRICING UNDER DIFFERENT MARKET STRUCTURES. Monopolistic Competition UNIT 6 cont PRICING UNDER DIFFERENT MARKET STRUCTURES Monopolistic Competition Market Structure Perfect Competition Pure Monopoly Monopolistic Competition Oligopoly Duopoly Monopoly The further right on

More information

Chapter 6 Competitive Markets

Chapter 6 Competitive Markets Chapter 6 Competitive Markets After reading Chapter 6, COMPETITIVE MARKETS, you should be able to: List and explain the characteristics of Perfect Competition and Monopolistic Competition Explain why a

More information

CHAPTER 11 MARKETS WITHOUT POWER Microeconomics in Context (Goodwin, et al.), 1 st Edition (Study Guide 2008)

CHAPTER 11 MARKETS WITHOUT POWER Microeconomics in Context (Goodwin, et al.), 1 st Edition (Study Guide 2008) CHAPTER 11 MARKETS WITHOUT POWER Microeconomics in Context (Goodwin, et al.), 1 st Edition (Study Guide 2008) Chapter Summary This chapter presents the traditional, idealized model of perfect competition.

More information

JANUARY EXAMINATIONS 2006

JANUARY EXAMINATIONS 2006 No. of Pages: (A) 10 No. of Questions: 29 EC1000A ' JANUARY EXAMINATIONS 2006 Subject Title of Paper ECONOMICS EC1000 MICROECONOMICS Time Allowed Two Hours (2 Hours) Instructions to candidates This paper

More information

Microeconomics Instructor Miller Practice Problems Labor Market

Microeconomics Instructor Miller Practice Problems Labor Market Microeconomics Instructor Miller Practice Problems Labor Market 1. What is a factor market? A) It is a market where financial instruments are traded. B) It is a market where stocks and bonds are traded.

More information

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. Multiple choice review questions for Midterm 2 MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) A consumption point inside the budget line A) is

More information

1 st Exam. 7. Cindy's cross-price elasticity of magazine demand with respect to the price of books is

1 st Exam. 7. Cindy's cross-price elasticity of magazine demand with respect to the price of books is 1 st Exam 1. Marginal utility measures: A) the total utility of all your consumption B) the total utility divided by the price of the good C) the increase in utility from consuming one additional unit

More information

BPE_MIC1 Microeconomics 1 Fall Semester 2011

BPE_MIC1 Microeconomics 1 Fall Semester 2011 Masaryk University - Brno Department of Economics Faculty of Economics and Administration BPE_MIC1 Microeconomics 1 Fall Semester 2011 Final Exam - 05.12.2011, 9:00-10:30 a.m. Test A Guidelines and Rules:

More information

Exam 3 Student Name: Microeconomics Exam Dates: Week 15, late April-early May, 2007

Exam 3 Student Name: Microeconomics Exam Dates: Week 15, late April-early May, 2007 Exam 3 Student Name: Microeconomics Exam Dates: Week 15, late April-early May, 2007 Instructions: I) On your Scantron card you must print three things: 1) Print your full name clearly; 2) Print the day

More information

Chapter 6 Economic Growth

Chapter 6 Economic Growth Chapter 6 Economic Growth 1 The Basics of Economic Growth 1) The best definition for economic growth is A) a sustained expansion of production possibilities measured as the increase in real GDP over a

More information

ECON 443 Labor Market Analysis Final Exam (07/20/2005)

ECON 443 Labor Market Analysis Final Exam (07/20/2005) ECON 443 Labor Market Analysis Final Exam (07/20/2005) I. Multiple-Choice Questions (80%) 1. A compensating wage differential is A) an extra wage that will make all workers willing to accept undesirable

More information

Principle of Microeconomics Econ 202-506 chapter 13

Principle of Microeconomics Econ 202-506 chapter 13 Principle of Microeconomics Econ 202-506 chapter 13 MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The WaveHouse on Mission Beach in San Diego

More information

Imperfect information Up to now, consider only firms and consumers who are perfectly informed about market conditions: 1. prices, range of products

Imperfect information Up to now, consider only firms and consumers who are perfectly informed about market conditions: 1. prices, range of products Imperfect information Up to now, consider only firms and consumers who are perfectly informed about market conditions: 1. prices, range of products available 2. characteristics or relative qualities of

More information

Chapter 11: Price-Searcher Markets with High Entry Barriers

Chapter 11: Price-Searcher Markets with High Entry Barriers Chapter 11: Price-Searcher Markets with High Entry Barriers I. Why are entry barriers sometimes high? A. Economies of Scale in some markets average total costs fall over the full range of output. Therefore

More information

PART 1: MULTIPLE CHOICE

PART 1: MULTIPLE CHOICE ECN 201, Winter 1999 NAME: Prof. Bruce Blonigen SS#: MIDTERM 2 - Version A Tuesday, February 23 **************************************************************************** Directions: This test is comprised

More information

Chapter 05 Perfect Competition, Monopoly, and Economic

Chapter 05 Perfect Competition, Monopoly, and Economic Chapter 05 Perfect Competition, Monopoly, and Economic Multiple Choice Questions Use Figure 5.1 to answer questions 1-2: Figure 5.1 1. In Figure 5.1 above, what output would a perfect competitor produce?

More information

1. An economic institution that combines factors of production into outputs for consumers is a(n): A) industry. B) plant. C) firm. D) multinational.

1. An economic institution that combines factors of production into outputs for consumers is a(n): A) industry. B) plant. C) firm. D) multinational. Miami Dade College ECO 2023 Principles of Microeconomics Summer B 2014 Practice Test #3 1. An economic institution that combines factors of production into outputs for consumers is a(n): A) industry. B)

More information

Microeconomic FRQ s. Scoring guidelines and answers

Microeconomic FRQ s. Scoring guidelines and answers Microeconomic FRQ s 2005 1. Bestmilk, a typical profit-maximizing dairy firm, is operating in a constant-cost, perfectly competitive industry that is in long-run equilibrium. a. Draw correctly-labeled

More information

1 of 20 12/1/2013 1:02 PM

1 of 20 12/1/2013 1:02 PM 1 of 20 12/1/2013 1:02 PM The willingness to work a certain amount of time at a given wage rate is known as Labor supply. Labor Derived supply. Derived Labor supply is the willingness and ability to work

More information

Imperfect Competition. Oligopoly. Types of Imperfectly Competitive Markets. Imperfect Competition. Markets With Only a Few Sellers

Imperfect Competition. Oligopoly. Types of Imperfectly Competitive Markets. Imperfect Competition. Markets With Only a Few Sellers Imperfect Competition Oligopoly Chapter 16 Imperfect competition refers to those market structures that fall between perfect competition and pure monopoly. Copyright 2001 by Harcourt, Inc. All rights reserved.

More information

SUPPLY AND DEMAND : HOW MARKETS WORK

SUPPLY AND DEMAND : HOW MARKETS WORK SUPPLY AND DEMAND : HOW MARKETS WORK Chapter 4 : The Market Forces of and and demand are the two words that economists use most often. and demand are the forces that make market economies work. Modern

More information

Review 3. Table 14-2. The following table presents cost and revenue information for Soper s Port Vineyard.

Review 3. Table 14-2. The following table presents cost and revenue information for Soper s Port Vineyard. Review 3 Chapters 10, 11, 12, 13, 14 are included in Midterm 3. There will be 40-45 questions. Most of the questions will be definitional, make sure you read the text carefully. Table 14-2 The following

More information

Chapter 23: Asymmetric Information

Chapter 23: Asymmetric Information Chapter 23: Asymmetric Information Asymmetric Information Adverse Selection Moral Hazard Lemons Market Second-Best Mechanism Designs Principal Agent Market Failure Signaling Screening Insurance Employer/

More information

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. Chapter 11 Perfect Competition - Sample Questions MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Perfect competition is an industry with A) a

More information

Chapter 13 Perfect Competition

Chapter 13 Perfect Competition Chapter 13 Perfect Competition 13.1 A Firm's Profit-Maximizing Choices 1) What is the difference between perfect competition and monopolistic competition? A) Perfect competition has a large number of small

More information

LECTURE #13: MICROECONOMICS CHAPTER 15

LECTURE #13: MICROECONOMICS CHAPTER 15 LECTURE #13: MICROECONOMICS CHAPTER 15 I. WHY MONOPOLIES ARISE A. Competitive firms are price takers; a Monopoly firm is a price maker B. Monopoly: a firm that is the sole seller of a product without close

More information

Chapter 15: Monopoly WHY MONOPOLIES ARISE HOW MONOPOLIES MAKE PRODUCTION AND PRICING DECISIONS

Chapter 15: Monopoly WHY MONOPOLIES ARISE HOW MONOPOLIES MAKE PRODUCTION AND PRICING DECISIONS Chapter 15: While a competitive firm is a taker, a monopoly firm is a maker. A firm is considered a monopoly if... it is the sole seller of its product. its product does not have close substitutes. The

More information

Chapter 6 MULTIPLE-CHOICE QUESTIONS

Chapter 6 MULTIPLE-CHOICE QUESTIONS Chapter 6 MULTIPLE-CHOICE QUETION 1. Which one of the following is generally considered a characteristic of a perfectly competitive labor market? a. A few workers of varying skills and capabilities b.

More information

Good Luck writing the Mock Exam!!

Good Luck writing the Mock Exam!! PASS MOCK EXAM FOR PRACTICE ONLY Course: ECON 1000 B Facilitator: Ben Dates and locations of mock exam take up: FRIDAY DECEMBER 11: 10 12 ME 3380 1 3 ME 3380 It is most beneficial to you to write this

More information

Practice Multiple Choice Questions Answers are bolded. Explanations to come soon!!

Practice Multiple Choice Questions Answers are bolded. Explanations to come soon!! Practice Multiple Choice Questions Answers are bolded. Explanations to come soon!! For more, please visit: http://courses.missouristate.edu/reedolsen/courses/eco165/qeq.htm Market Equilibrium and Applications

More information

Choose the single best answer for each question. Do all of your scratch-work in the side and bottom margins of pages.

Choose the single best answer for each question. Do all of your scratch-work in the side and bottom margins of pages. Econ 0, Sections 3 and 4, S, Schroeter Exam #4, Special code = 000 Choose the single best answer for each question. Do all of your scratch-work in the side and bottom margins of pages.. Gordon is the owner

More information

CHAPTER 12 MARKETS WITH MARKET POWER Microeconomics in Context (Goodwin, et al.), 2 nd Edition

CHAPTER 12 MARKETS WITH MARKET POWER Microeconomics in Context (Goodwin, et al.), 2 nd Edition CHAPTER 12 MARKETS WITH MARKET POWER Microeconomics in Context (Goodwin, et al.), 2 nd Edition Chapter Summary Now that you understand the model of a perfectly competitive market, this chapter complicates

More information

Figure: Computing Monopoly Profit

Figure: Computing Monopoly Profit Name: Date: 1. Most electric, gas, and water companies are examples of: A) unregulated monopolies. B) natural monopolies. C) restricted-input monopolies. D) sunk-cost monopolies. Use the following to answer

More information

Do not open this exam until told to do so.

Do not open this exam until told to do so. Do not open this exam until told to do so. Department of Economics College of Social and Applied Human Sciences K. Annen, Winter 004 Final (Version ): Intermediate Microeconomics (ECON30) Solutions Final

More information

Demand & Supply. Chapter 7 discusses the laws of supply and demand and the ways in which a voluntary market supports them.

Demand & Supply. Chapter 7 discusses the laws of supply and demand and the ways in which a voluntary market supports them. Demand & Supply Chapter 7 discusses the laws of supply and demand and the ways in which a voluntary market supports them. E.2.1 Define supply and demand and explain the causes of the Law of Supply and

More information

Chapter 14. Markets for Factor Inputs

Chapter 14. Markets for Factor Inputs Chapter 14 Markets for Factor Inputs Competitive Factor Markets Characteristics 1. Large number of sellers of the factor of production 2. Large number of buyers of the factor of production 3. The buyers

More information

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question on the accompanying scantron.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question on the accompanying scantron. Principles of Microeconomics Fall 2007, Quiz #6 Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question on the accompanying scantron. 1) A monopoly is

More information

E201 Department Final Exam Questions, Sample Set Two

E201 Department Final Exam Questions, Sample Set Two E201 Department Final Exam Questions, Sample Set Two Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. 1 Sue s opportunity cost to produce last

More information

Lecture 19: Imperfect Competition and Monopoly

Lecture 19: Imperfect Competition and Monopoly Lecture 19: Imperfect Competition and Monopoly EC101 DD & EE / Manove Rent-Seeking p 1 EC101 DD & EE / Manove Clicker Question p 2 Perfect and Imperfect Competition Perfect Competition a) One homogeneous

More information

ECON 202: Principles of Microeconomics. Chapter 11 Firms in Perfectly Competitive Markets

ECON 202: Principles of Microeconomics. Chapter 11 Firms in Perfectly Competitive Markets ECON 202: Principles of Microeconomics Chapter 11 Firms in Perfectly Competitive Markets Firms in Perfectly Competitive Markets 1. Market Structures. 2. Perfectly Competitive Markets. 3. Maximizing Profit

More information

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) It is efficient to produce an additional shirt if A) the marginal benefit of producing the shirt

More information

Figure 4-1 Price Quantity Quantity Per Pair Demanded Supplied $ 2 18 3 $ 4 14 4 $ 6 10 5 $ 8 6 6 $10 2 8

Figure 4-1 Price Quantity Quantity Per Pair Demanded Supplied $ 2 18 3 $ 4 14 4 $ 6 10 5 $ 8 6 6 $10 2 8 Econ 101 Summer 2005 In-class Assignment 2 & HW3 MULTIPLE CHOICE 1. A government-imposed price ceiling set below the market's equilibrium price for a good will produce an excess supply of the good. a.

More information

LECTURE #15: MICROECONOMICS CHAPTER 17

LECTURE #15: MICROECONOMICS CHAPTER 17 LECTURE #15: MICROECONOMICS CHAPTER 17 I. IMPORTANT DEFINITIONS A. Oligopoly: a market structure with a few sellers offering similar or identical products. B. Game Theory: the study of how people behave

More information

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. Chapter 10 - Output and Costs - Sample Questions MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The short run is a period of time in which A)

More information

monopsony Chapter 8 CHAPTER SUMMARY

monopsony Chapter 8 CHAPTER SUMMARY Chapter 8 Monopoly CHAPTER SUMMARY Market power arises from unique resources, intellectual property, scale and scope economies, regulation, or product differentiation. A seller with market power restrains

More information

1 of 18 10/19/ :51 PM

1 of 18 10/19/ :51 PM 1 of 18 10/19/2013 12:51 PM Which of the following is true about a competitive market supply curve? It is horizontal. It is downward-sloping to the right. It is the sum of the marginal cost curves of all

More information

Integrating the Input Market and the Output Market when Teaching Introductory Economics

Integrating the Input Market and the Output Market when Teaching Introductory Economics 1 Integrating the Input Market and the Output Market when Teaching Introductory Economics May 2015 Clark G. Ross Frontis Johnston Professor of Economics Davidson College Box 7022 Davidson, NC 28035-7022

More information

Economics 100 Quiz 1 Fall The fundamental economic problem faced by all societies is: a. unemployment c. poverty b. inequality d.

Economics 100 Quiz 1 Fall The fundamental economic problem faced by all societies is: a. unemployment c. poverty b. inequality d. Economics 100 Quiz 1 Fall 2000 1. The fundamental economic problem faced by all societies is: a. unemployment c. poverty b. inequality d. scarcity 2. "Capitalism" refers to: a. the use of markets c. private

More information

Monopoly and Perfect Competition Compared

Monopoly and Perfect Competition Compared Monopoly and Perfect Competition Compared I. Definitions of Efficiency A. Technological efficiency occurs when: Given the output produced, the costs of production (recourses used) are minimized. or Given

More information

Lab #11. Chapter 11 Perfect Competition

Lab #11. Chapter 11 Perfect Competition University of Lethbridge Department of Economics ECON 1010 Introduction to Microeconomics Instructor: Michael G. Lanyi Lab #11 Chapter 11 Perfect Competition 1) Perfect competition occurs in a market where

More information

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. Chapter 12 Monopoly - Sample Questions MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Unregulated monopolies A) cannot change the market quantity.

More information

國 立 高 雄 第 一 科 技 大 學 管 理 學 院 暨 財 金 學 院 1 0 3 學 年 度 第 1 學 期 經 濟 學 期 末 會 考 題 目 卷 ( A ) I. Production and Cost

國 立 高 雄 第 一 科 技 大 學 管 理 學 院 暨 財 金 學 院 1 0 3 學 年 度 第 1 學 期 經 濟 學 期 末 會 考 題 目 卷 ( A ) I. Production and Cost 國 立 高 雄 第 一 科 技 大 學 管 理 學 院 暨 財 金 學 院 1 0 3 學 年 度 第 1 學 期 經 濟 學 期 末 會 考 題 目 卷 ( A ) I. Production and Cost 1. The short run is the time frame A. during which the quantities of all resources are fixed.

More information

Online Review Copy. AP Micro Chapter 8 Test. Multiple Choice Identify the choice that best completes the statement or answers the question.

Online Review Copy. AP Micro Chapter 8 Test. Multiple Choice Identify the choice that best completes the statement or answers the question. AP Micro Chapter 8 Test Multiple Choice Identify the choice that best completes the statement or answers the question. 1. There would be some control over price within rather narrow limits in which market

More information

Name Eco200: Practice Test 3A Covering Chapters 16, 18-21

Name Eco200: Practice Test 3A Covering Chapters 16, 18-21 Name Eco200: Practice Test 3A Covering Chapters 16, 18-21 1. The following information describes the demand schedule for a unique type of apple. This type of apple can only be produced by two firms because

More information

CHAPTER 17 MARKETS WITH ASYMMETRIC INFORMATION

CHAPTER 17 MARKETS WITH ASYMMETRIC INFORMATION CHAPTER 17 MARKETS WITH ASYMMETRIC INFORMATION QUESTIONS FOR REVIEW 1. Why can asymmetric information between buyers and sellers lead to a market failure when a market is otherwise perfectly competitive?

More information

Monopolistic Competition

Monopolistic Competition Monopolistic Chapter 17 Copyright 2001 by Harcourt, Inc. All rights reserved. Requests for permission to make copies of any part of the work should be mailed to: Permissions Department, Harcourt College

More information