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

Save this PDF as:
 WORD  PNG  TXT  JPG

Size: px
Start display at page:

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

Transcription

1 , Fall 2007 Version A Special Codes 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 < MC < P. b. P > MR > MC. c. P = MR = MC. d. P > MR = MC. 2. A market structure with only a few sellers, offering similar or identical products, is known as a. monopoly. b. oligopoly. c. perfect competition. d. monopolistic competition. 3. The main argument for splitting up monopolies through antitrust action is based on the notion that a. small firms have lower costs. b. competition is more efficient than monopoly. c. greedy monopolies should be punished. d. consumers prefer dealing with small firms. Table 15-1 Quantity Price Total Revenue Average Revenue Marginal Revenue Refer to Table If the monopolist wants to maximize its revenue, how many units of its product should it sell? a. 4 b. 7 c. 6 d Refer to Table What is the marginal revenue for the monopolist for the third unit sold? a b. 87 c. 29 d If a competitive firm sees that its marginal cost exceeds its marginal revenue, then a. the firm is definitely earning a positive profit. b. it can increase its profit by increasing its output. c. the firm is definitely losing money. d. it can increase its profit by decreasing its output. 1

2 Econ201 Final Exam, Fall 2007, Version A Table 13-8: s of Gigaplot Production Quantity of gigaplots Fixed Variable Total 1 $13 $38 2 $28 3 $70 Average Fixed Average Variable Average Total Marginal 7. Refer to Table What is the marginal cost of the 3rd gigaplot? a. $70 b. $20 c. $17 d. $45 8. Refer to Table What is the average variable cost of producing 3 gigaplots? a. $15 b. $14 c. More information is needed. d. $16 9. Refer to Table What is the fixed cost of producing 3 gigaplots? a. $25 b. $12 c. $20 d. More information is needed. 10. When a firm in a competitive market decides to triple the amount of output it sells, as a result a. its profit must increase. b. the price in the market falls. c. its total revenue triples. d. the price in the market rises. 11. Which of the following events will definitely cause equilibrium quantity to fall? a. demand and supply both decrease b. demand decreases and supply increases c. demand and supply both increase d. demand increases and supply decreases 12. During the last few decades, sunscreen sales have increased while the price of sunscreen has risen and the variety of sunscreen products offered has increased. What s the most likely explanation? a. Sunscreen producers increased production out of concern for the public s health. b. Health-conscious consumers heeded health warnings and decided to buy more sunscreen. c. Cancer activists successfully lobbied to obtain government subsidies for sunscreen use. d. Government officials ordered sunscreen producers to produce more sunscreen. 13. When a country allows trade and becomes an exporter of a good, a. everyone in the country loses. b. the losses of the losers exceed the gains of the winners. c. the gains of the winners exceed the losses of the losers. d. everyone in the country benefits. 2

3 Econ201 Final Exam, Fall 2007, Version A 14. What will happen to the equilibrium price and quantity of legal music downloads if ipods become cheaper, it becomes more difficult to download or share music illegally, and payments to musicians by recording companies fall? a. Quantity will fall and the effect on price is ambiguous. b. Price will fall and the effect on quantity is ambiguous. c. Quantity will rise and the effect on price is ambiguous. d. Price will rise and the effect on quantity is ambiguous. 15. The lowest points of the average variable cost and average total cost curves occur where a. the average variable cost and average total cost curves intersect. b. the marginal cost curve intersects those curves. c. the marginal cost curve lies below both curves. d. average total cost is below average variable cost. 16. The defining characteristic of a natural monopoly is a. diseconomies of scale over the relevant range of output. b. constant marginal cost over the relevant range of output. c. constant returns to scale over the relevant range of output. d. economies of scale over the relevant range of output. Figure Refer to Figure To maximize its profit, a monopolist would choose a. 200 units of output and a price of $20 per unit b. 100 units of output and a price of $20 per unit c. 150 units of output and a price of $15 per unit d. 100 units of output and a price of $10 per unit 18. Refer to Figure To maximize total surplus, a benevolent social planner would choose a. 200 units of output and a price of $10 per unit b. 150 units of output and a price of $10 per unit c. 150 units of output and a price of $15 per unit d. 100 units of output and a price of $10 per unit 19. A competitive firm's short-run supply curve is part of which of the following curves? a. Average total cost b. Average variable cost c. Marginal revenue d. Marginal cost 3

4 Econ201 Final Exam, Fall 2007, Version A 20. When an oligopoly market reaches a Nash equilibrium, a. each firm will not have tried to maximize its profit. b. firms will not be concerned about the strategies of competing firms. c. each firm will have chosen its own best strategy, given what the other firms are doing. d. the market price will be different for each firm. 21. The Social Security tax is a tax on a. labor. b. earnings during retirement. c. capital. d. consumption expenditures. Figure Refer to Figure Profit will be maximized by charging a price equal to a. P 3. b. P 2. c. P 1. d. P Refer to Figure The marginal revenue curve for a monopoly firm is depicted by curve a. A. b. B. c. C. d. D. 24. Refer to Figure A profit-maximizing monopoly's profit is equal to a. (P 3 - P 0 ) Q 2. b. P 3 Q 2. c. (P 1 - P 0 ) Q 2. d. (P 3 - P 0 ) Q 4. 4

5 Econ201 Final Exam, Fall 2007, Version A 25. Tommy's Tires operates in a perfectly competitive market. If tires sell for $50 each and average total cost per tire is $40 at the profit-maximizing output level, then in the long run a. some firms will exit from the market, and the price will rise. b. more firms will enter the market, and the price will fall. c. more firms will enter the market, and the price will rise. d. more firms will exit from the market, and the price will fall. 26. The negative relationship between price and quantity demanded a. is represented by a downward-sloping demand curve. b. applies to most goods in the economy. c. is referred to as the law of demand. d. All of the above are correct. 27. In a competitive market the price is $7, and typical firms in the market has ATC = $7.50 and AVC = $7.15. a. In the long run the market will cease to exist. b. In the short run firms will shut down, and in the long run firms will leave the market. c. New firms will likely enter this market to capture any remaining economic profits. d. In the short run firms will produce, but in the long run firms will leave the market. 28. Because there is diminishing marginal product of labor, as the number of workers increases a. the additional output added by one additional worker rises. b. the additional cost of hiring an additional worker rises. c. the additional output added by one additional worker declines. d. the additional cost of an additional unit of output falls. 29. A monopolist can make large positive economic profits in the long run only if the monopolist a. produces the amount of output where average variable cost is at a minimum. b. is protected by barriers to entry. c. produces the amount of output where average total cost is at a minimum. d. operates as a price taker rather than a price maker. Figure Refer to Figure At levels of output below M the firm experiences a. economies of scale. b. economic profit. c. diseconomies of scale. d. accounting profit. 5

6 Econ201 Final Exam, Fall 2007, Version A 31. Refer to Figure In long run competitive market equilibrium, firms might operate on which of the average total cost curves? a. ATC C only. b. ATC B only. c. ATC A only. d. ATC D between M and N. 32. Travis can mow a lawn in two hours or he can trim a tree in one hour. Ricardo can mow a lawn in three hours or he can trim a tree in two hours. a. Travis has a comparative advantage over Ricardo in mowing lawns. b. Travis has an absolute advantage over Ricardo in mowing lawns. c. Ricardo has a comparative advantage over Travis in trimming trees. d. All of the above are correct. Figure 14-4: A typical firm in a COMPETITIVE market 33. Refer to Figure When market price is P 5, a profit-maximizing firm's profit is the area a. P 5 Q 3. b. (P 5 - P 3 ) Q 2. c. (P 5 - P 4 ) Q 3. d. When market price is P 5 there are no profits. 34. Refer to Figure Firms would want to enter this market anytime the price exceeds a. P 2. b. P 1. c. P 3. d. None of the above is correct. 35. When firms have agreements among themselves on the quantity to produce and the price at which to sell output, we refer to their form of organization as a a. monopolistically competitive oligopoly. b. cartel. c. Nash arrangement. d. perfectly competitive oligopoly. 36. The inner and outer loops in the circular-flow diagram represent a. (i) the flows of inputs and outputs and (ii) the flow of dollars. b. (i) the flow of dollars and (ii) other financial flows. c. (i) the flow of goods and (ii) the flow of services. d. (i) inputs into production processes and (ii) outputs from production processes. 6

7 Econ201 Final Exam, Fall 2007, Version A 37. As a group, oligopolists would always earn the highest profit if they would a. produce the perfectly competitive quantity of output. b. charge the same price that a monopolist would charge if the market were a monopoly. c. produce more than the perfectly competitive quantity of output. d. operate according to their own individual self-interests. 38. When determining whether to shutdown in the short run, a competitive firm should a. ignore fixed costs. b. ignore variable costs. c. ignore sunk costs. d. Both a and c are correct 39. When a country allows trade and becomes an importer of a good, a. domestic producers become worse off, and domestic consumers become better off. b. both domestic producers and domestic consumers become worse off. c. both domestic producers and domestic consumers become better off. d. domestic producers become better off, and domestic consumers become worse off. 40. The firm will make the most profits if it produces the quantity of output at which a. marginal revenue equals total revenue. b. profit per unit is greatest. c. marginal cost equals average cost. d. marginal revenue equals marginal cost. 41. Suppose a nation is currently producing at a point inside its production possibilities frontier. We know that a. the nation is producing an efficient combination of goods. b. there will be a large opportunity cost if the nation tries to increase production. c. the nation is producing beyond its capacity, and inflation will occur. d. the nation is not using all available resources or is using inferior technology or both. Table 16-3 The information in the table below shows the total demand for cable TV subscriptions in Laramie, WY. Assume that the variable cost of providing the service is zero, so the firm will maximize profits by maximizing revenue. Quantity Price (per month) 0 $120 3,000 $100 6,000 $ 80 9,000 $ 60 12,000 $ 40 15,000 $ Refer to Table Assume that there are two profit-maximizing digital cable TV companies operating in Laramie, and they initially collude and agree to split the market equally. How many cable TV subscriptions will be sold altogether when this market reaches a Nash equilibrium? a. 9,000 b. 12,000 c. 3,000 d. 6,000 7

8 Econ201 Final Exam, Fall 2007, Version A 43. Refer to Table If there is only one cable TV company in Laramie, what price would it charge if it wants to maximize its profit? a. $40 b. $60 c. $80 d. $ If a surplus currently exists in a market we know that the current price is a. above equilibrium price and quantity supplied is greater than quantity demanded. b. below equilibrium price and quantity demanded is greater than quantity supplied. c. below equilibrium price and quantity supplied is greater than quantity demanded. d. above equilibrium price and quantity demanded is greater than quantity supplied. 45. Suppose a tax of $1 per unit is imposed on french fries. The more elastic the supply of french fries, a. the larger is the deadweight loss of the tax. b. the larger is the tax burden on french fry sellers relative to the tax burden on buyers. c. the smaller is the response of the quantity supplied of french fries to the tax. d. All of the above are correct. 46. Which of the following events would cause both the equilibrium price and equilibrium quantity of Dodge Neons (an inferior good) to increase? a. a decrease in consumer income b. an increase in consumer income c. gas mileage of SUVs and mid-size sedans increases. d. wages of auto workers fall. Figure Refer to Figure Which of the curves is most likely to represent average total cost? a. A b. B c. C d. D 48. The U.S. market for locomotives is divided between two producers: General Electric has 70 percent of the market and General Motors has 30 percent. This market is an example of a. an oligopoly, or duopoly. b. monopolistic competition. c. a collusive monopoly. d. a cartel. 8

9 Econ201 Final Exam, Fall 2007, Version A 49. If the price of oak lumber increases, what happens to consumer surplus in the market for oak cabinets? a. It will not change consumer surplus; only producer surplus changes. b. It may either increase or decrease. c. It increases. d. It decreases. 50. A good reason why the local gas distribution company is subject to price regulation rather than being broken up through antitrust, is because the gas company is a a. profit-maximizing monopoly. b. producer of externalities. c. revenue-maximizing monopoly. d. natural monopoly. Table 7-1 BUYER WILLINGNESS TO PAY MIKE $50.00 SANDY $30.00 JONATHAN $20.00 HALEY $ Refer to Table 7-1. If the table represents the willingness to pay of four buyers and the price of the product is $28, then their total consumer surplus is a. $24. b. $46. c. $26. d. $ Which of the following changes would not shift the demand curve for Monty Python videos? a. a change in consumer income b. a change in the price of Monty Python videos c. a change in expectations about the future price of Monty Python videos d. a change in the price of Mr. Bean videos, a substitute good 53. Wal-Mart has low costs in part because it is very large. Local retailers often go out of business because their prices are higher than Wal-Mart s. This demonstrates that a. the greed of large sellers like Wal-Mart hurts consumers, especially low-income consumers. b. consumers are angry at local retailers because of their high prices. c. there are economies of scale in retail sales. d. there are diseconomies of scale in retail sales. 54. Susan could work as a telemarketer, earning $25,000 per year. Instead, she has her own catering business. The $25,000 possible telemarketing income is part of her catering business s a. total revenue. b. explicit costs. c. marginal costs. d. implicit costs. 9

10 Econ201 Final Exam, Fall 2007, Version A 55. Kelly and David are both able to repair cars and cook meals. Which of the following is not possible? a. Kelly has an absolute advantage in both repairing cars and in cooking meals. b. Kelly has comparative advantage in car repair and David has comparative advantage in cooking. c. Kelly has absolute advantage in car repair and David has absolute advantage in cooking. d. Kelly has a comparative advantage in both repairing cars and in cooking meals. 10

11 ID: A Econ 201 Final Exam Answer Section MULTIPLE CHOICE 1. ANS: D MSC: Analytical 2. ANS: B MSC: Definitional 3. ANS: B MSC: Interpretive 4. ANS: C MSC: Applicative 5. ANS: D MSC: Applicative 6. ANS: D MSC: Analytical 7. ANS: C MSC: Applicative 8. ANS: A MSC: Applicative 9. ANS: A MSC: Applicative 10. ANS: C MSC: Analytical 11. ANS: A MSC: Applicative 12. ANS: B MSC: Applicative 13. ANS: C MSC: Interpretive 14. ANS: C MSC: Analytical 15. ANS: B MSC: Interpretive 16. ANS: D MSC: Definitional 17. ANS: B MSC: Analytical 18. ANS: C MSC: Analytical 19. ANS: D MSC: Definitional 20. ANS: C MSC: Interpretive 21. ANS: A MSC: Interpretive 22. ANS: A MSC: Analytical 23. ANS: B MSC: Interpretive 24. ANS: A MSC: Analytical 25. ANS: B MSC: Analytical 26. ANS: D MSC: Interpretive 27. ANS: B MSC: Applicative 28. ANS: C MSC: Interpretive 29. ANS: B MSC: Interpretive 30. ANS: A MSC: Analytical 31. ANS: D MSC: Analytical 32. ANS: B MSC: Applicative 33. ANS: C MSC: Analytical 34. ANS: C MSC: Analytical 35. ANS: B MSC: Definitional 36. ANS: A MSC: Interpretive 37. ANS: B MSC: Interpretive 38. ANS: D MSC: Analytical 39. ANS: A MSC: Interpretive 40. ANS: D MSC: Interpretive 41. ANS: D MSC: Interpretive 42. ANS: B MSC: Applicative 43. ANS: B MSC: Applicative 1

12 ID: A 44. ANS: A MSC: Applicative 45. ANS: A MSC: Applicative 46. ANS: A MSC: Applicative 47. ANS: B MSC: Analytical 48. ANS: A MSC: Interpretive 49. ANS: D MSC: Applicative 50. ANS: D MSC: Interpretive 51. ANS: A MSC: Applicative 52. ANS: B MSC: Interpretive 53. ANS: C MSC: Interpretive 54. ANS: D MSC: Interpretive 55. ANS: D MSC: Interpretive 2

13 , Fall 2007 Version B Special Codes PLEDGE: I have neither given nor received unauthorized help on this exam. SIGNED: PRINT NAME: Econ 201 Final Exam Figure Refer to Figure Profit will be maximized by charging a price equal to a. P 1. b. P 3. c. P 0. d. P Refer to Figure A profit-maximizing monopoly's profit is equal to a. (P 1 - P 0 ) Q 2. b. P 3 Q 2. c. (P 3 - P 0 ) Q 2. d. (P 3 - P 0 ) Q Refer to Figure The marginal revenue curve for a monopoly firm is depicted by curve a. A. b. B. c. C. d. D. 4. The firm will make the most profits if it produces the quantity of output at which a. marginal revenue equals total revenue. b. marginal cost equals average cost. c. marginal revenue equals marginal cost. d. profit per unit is greatest. 1

14 Econ201 Final Exam, Fall 2007, Version B 5. A competitive firm's short-run supply curve is part of which of the following curves? a. Average variable cost b. Average total cost c. Marginal revenue d. Marginal cost 6. During the last few decades, sunscreen sales have increased while the price of sunscreen has risen and the variety of sunscreen products offered has increased. What s the most likely explanation? a. Government officials ordered sunscreen producers to produce more sunscreen. b. Cancer activists successfully lobbied to obtain government subsidies for sunscreen use. c. Health-conscious consumers heeded health warnings and decided to buy more sunscreen. d. Sunscreen producers increased production out of concern for the public s health. 7. What will happen to the equilibrium price and quantity of legal music downloads if ipods become cheaper, it becomes more difficult to download or share music illegally, and payments to musicians by recording companies fall? a. Quantity will rise and the effect on price is ambiguous. b. Price will rise and the effect on quantity is ambiguous. c. Quantity will fall and the effect on price is ambiguous. d. Price will fall and the effect on quantity is ambiguous. 8. As a group, oligopolists would always earn the highest profit if they would a. produce more than the perfectly competitive quantity of output. b. operate according to their own individual self-interests. c. charge the same price that a monopolist would charge if the market were a monopoly. d. produce the perfectly competitive quantity of output. 9. The negative relationship between price and quantity demanded a. applies to most goods in the economy. b. is represented by a downward-sloping demand curve. c. is referred to as the law of demand. d. All of the above are correct. 10. The inner and outer loops in the circular-flow diagram represent a. (i) the flow of dollars and (ii) other financial flows. b. (i) inputs into production processes and (ii) outputs from production processes. c. (i) the flow of goods and (ii) the flow of services. d. (i) the flows of inputs and outputs and (ii) the flow of dollars. Table 7-1 BUYER WILLINGNESS TO PAY MIKE $50.00 SANDY $30.00 JONATHAN $20.00 HALEY $ Refer to Table 7-1. If the table represents the willingness to pay of four buyers and the price of the product is $28, then their total consumer surplus is a. $56. b. $46. c. $26. d. $24. 2

15 Econ201 Final Exam, Fall 2007, Version B Table 16-3 The information in the table below shows the total demand for cable TV subscriptions in Laramie, WY. Assume that the variable cost of providing the service is zero, so the firm will maximize profits by maximizing revenue. Quantity Price (per month) 0 $120 3,000 $100 6,000 $ 80 9,000 $ 60 12,000 $ 40 15,000 $ Refer to Table Assume that there are two profit-maximizing digital cable TV companies operating in Laramie, and they initially collude and agree to split the market equally. How many cable TV subscriptions will be sold altogether when this market reaches a Nash equilibrium? a. 9,000 b. 6,000 c. 12,000 d. 3, Refer to Table If there is only one cable TV company in Laramie, what price would it charge if it wants to maximize its profit? a. $40 b. $100 c. $80 d. $ When a country allows trade and becomes an exporter of a good, a. the gains of the winners exceed the losses of the losers. b. everyone in the country benefits. c. the losses of the losers exceed the gains of the winners. d. everyone in the country loses. Table 13-8: s of Gigaplot Production Quantity of gigaplots Fixed Variable Total 1 $13 $38 2 $28 3 $70 Average Fixed Average Variable Average Total Marginal 15. Refer to Table What is the marginal cost of the 3rd gigaplot? a. $70 b. $17 c. $20 d. $45 3

16 Econ201 Final Exam, Fall 2007, Version B 16. Refer to Table What is the average variable cost of producing 3 gigaplots? a. $15 b. More information is needed. c. $14 d. $ Refer to Table What is the fixed cost of producing 3 gigaplots? a. $12 b. $25 c. $20 d. More information is needed. 18. When an oligopoly market reaches a Nash equilibrium, a. the market price will be different for each firm. b. firms will not be concerned about the strategies of competing firms. c. each firm will not have tried to maximize its profit. d. each firm will have chosen its own best strategy, given what the other firms are doing. Figure Refer to Figure In long run competitive market equilibrium, firms might operate on which of the average total cost curves? a. ATC A only. b. ATC B only. c. ATC C only. d. ATC D between M and N. 20. Refer to Figure At levels of output below M the firm experiences a. diseconomies of scale. b. economies of scale. c. economic profit. d. accounting profit. 4

17 Econ201 Final Exam, Fall 2007, Version B Table 15-1 Quantity Price Total Revenue Average Revenue Marginal Revenue Refer to Table What is the marginal revenue for the monopolist for the third unit sold? a b. 29 c. 23 d Refer to Table If the monopolist wants to maximize its revenue, how many units of its product should it sell? a. 6 b. 5 c. 4 d When firms have agreements among themselves on the quantity to produce and the price at which to sell output, we refer to their form of organization as a a. monopolistically competitive oligopoly. b. perfectly competitive oligopoly. c. cartel. d. Nash arrangement. Figure Refer to Figure To maximize total surplus, a benevolent social planner would choose a. 100 units of output and a price of $10 per unit b. 150 units of output and a price of $15 per unit c. 150 units of output and a price of $10 per unit d. 200 units of output and a price of $10 per unit 5

18 Econ201 Final Exam, Fall 2007, Version B 25. Refer to Figure To maximize its profit, a monopolist would choose a. 150 units of output and a price of $15 per unit b. 100 units of output and a price of $10 per unit c. 100 units of output and a price of $20 per unit d. 200 units of output and a price of $20 per unit 26. The U.S. market for locomotives is divided between two producers: General Electric has 70 percent of the market and General Motors has 30 percent. This market is an example of a. an oligopoly, or duopoly. b. monopolistic competition. c. a cartel. d. a collusive monopoly. 27. Suppose a tax of $1 per unit is imposed on french fries. The more elastic the supply of french fries, a. the larger is the tax burden on french fry sellers relative to the tax burden on buyers. b. the larger is the deadweight loss of the tax. c. the smaller is the response of the quantity supplied of french fries to the tax. d. All of the above are correct. 28. Tommy's Tires operates in a perfectly competitive market. If tires sell for $50 each and average total cost per tire is $40 at the profit-maximizing output level, then in the long run a. more firms will exit from the market, and the price will fall. b. more firms will enter the market, and the price will fall. c. some firms will exit from the market, and the price will rise. d. more firms will enter the market, and the price will rise. 29. Which of the following changes would not shift the demand curve for Monty Python videos? a. a change in the price of Monty Python videos b. a change in the price of Mr. Bean videos, a substitute good c. a change in expectations about the future price of Monty Python videos d. a change in consumer income 30. A good reason why the local gas distribution company is subject to price regulation rather than being broken up through antitrust, is because the gas company is a a. producer of externalities. b. natural monopoly. c. profit-maximizing monopoly. d. revenue-maximizing monopoly. 31. When a country allows trade and becomes an importer of a good, a. domestic producers become worse off, and domestic consumers become better off. b. both domestic producers and domestic consumers become worse off. c. domestic producers become better off, and domestic consumers become worse off. d. both domestic producers and domestic consumers become better off. 32. In a competitive market the price is $7, and typical firms in the market has ATC = $7.50 and AVC = $7.15. a. In the long run the market will cease to exist. b. New firms will likely enter this market to capture any remaining economic profits. c. In the short run firms will produce, but in the long run firms will leave the market. d. In the short run firms will shut down, and in the long run firms will leave the market. 33. For a profit-maximizing monopolist, a. P > MR > MC. b. P > MR = MC. c. MR < MC < P. d. P = MR = MC. 6

19 Econ201 Final Exam, Fall 2007, Version B 34. When a firm in a competitive market decides to triple the amount of output it sells, as a result a. its profit must increase. b. the price in the market falls. c. its total revenue triples. d. the price in the market rises. 35. Travis can mow a lawn in two hours or he can trim a tree in one hour. Ricardo can mow a lawn in three hours or he can trim a tree in two hours. a. Travis has a comparative advantage over Ricardo in mowing lawns. b. Travis has an absolute advantage over Ricardo in mowing lawns. c. Ricardo has a comparative advantage over Travis in trimming trees. d. All of the above are correct. 36. A market structure with only a few sellers, offering similar or identical products, is known as a. monopolistic competition. b. perfect competition. c. oligopoly. d. monopoly. Figure 14-4: A typical firm in a COMPETITIVE market 37. Refer to Figure Firms would want to enter this market anytime the price exceeds a. P 3. b. P 2. c. P 1. d. None of the above is correct. 38. Refer to Figure When market price is P 5, a profit-maximizing firm's profit is the area a. (P 5 - P 4 ) Q 3. b. When market price is P 5 there are no profits. c. (P 5 - P 3 ) Q 2. d. P 5 Q The Social Security tax is a tax on a. labor. b. capital. c. consumption expenditures. d. earnings during retirement. 7

20 Econ201 Final Exam, Fall 2007, Version B 40. Wal-Mart has low costs in part because it is very large. Local retailers often go out of business because their prices are higher than Wal-Mart s. This demonstrates that a. there are diseconomies of scale in retail sales. b. consumers are angry at local retailers because of their high prices. c. there are economies of scale in retail sales. d. the greed of large sellers like Wal-Mart hurts consumers, especially low-income consumers. 41. If a surplus currently exists in a market we know that the current price is a. below equilibrium price and quantity supplied is greater than quantity demanded. b. above equilibrium price and quantity supplied is greater than quantity demanded. c. below equilibrium price and quantity demanded is greater than quantity supplied. d. above equilibrium price and quantity demanded is greater than quantity supplied. 42. Suppose a nation is currently producing at a point inside its production possibilities frontier. We know that a. the nation is producing an efficient combination of goods. b. the nation is not using all available resources or is using inferior technology or both. c. the nation is producing beyond its capacity, and inflation will occur. d. there will be a large opportunity cost if the nation tries to increase production. 43. If a competitive firm sees that its marginal cost exceeds its marginal revenue, then a. it can increase its profit by decreasing its output. b. the firm is definitely earning a positive profit. c. it can increase its profit by increasing its output. d. the firm is definitely losing money. 44. Susan could work as a telemarketer, earning $25,000 per year. Instead, she has her own catering business. The $25,000 possible telemarketing income is part of her catering business s a. marginal costs. b. total revenue. c. implicit costs. d. explicit costs. 45. Which of the following events would cause both the equilibrium price and equilibrium quantity of Dodge Neons (an inferior good) to increase? a. gas mileage of SUVs and mid-size sedans increases. b. wages of auto workers fall. c. a decrease in consumer income d. an increase in consumer income 46. If the price of oak lumber increases, what happens to consumer surplus in the market for oak cabinets? a. It increases. b. It may either increase or decrease. c. It will not change consumer surplus; only producer surplus changes. d. It decreases. 47. Because there is diminishing marginal product of labor, as the number of workers increases a. the additional cost of hiring an additional worker rises. b. the additional cost of an additional unit of output falls. c. the additional output added by one additional worker rises. d. the additional output added by one additional worker declines. 48. The lowest points of the average variable cost and average total cost curves occur where a. average total cost is below average variable cost. b. the average variable cost and average total cost curves intersect. c. the marginal cost curve lies below both curves. d. the marginal cost curve intersects those curves. 8

21 Econ201 Final Exam, Fall 2007, Version B 49. The defining characteristic of a natural monopoly is a. constant marginal cost over the relevant range of output. b. diseconomies of scale over the relevant range of output. c. economies of scale over the relevant range of output. d. constant returns to scale over the relevant range of output. 50. The main argument for splitting up monopolies through antitrust action is based on the notion that a. greedy monopolies should be punished. b. consumers prefer dealing with small firms. c. small firms have lower costs. d. competition is more efficient than monopoly. Figure Refer to Figure Which of the curves is most likely to represent average total cost? a. A b. B c. C d. D 52. When determining whether to shutdown in the short run, a competitive firm should a. ignore fixed costs. b. ignore variable costs. c. ignore sunk costs. d. Both a and c are correct 53. Kelly and David are both able to repair cars and cook meals. Which of the following is not possible? a. Kelly has comparative advantage in car repair and David has comparative advantage in cooking. b. Kelly has a comparative advantage in both repairing cars and in cooking meals. c. Kelly has an absolute advantage in both repairing cars and in cooking meals. d. Kelly has absolute advantage in car repair and David has absolute advantage in cooking. 54. A monopolist can make large positive economic profits in the long run only if the monopolist a. operates as a price taker rather than a price maker. b. produces the amount of output where average variable cost is at a minimum. c. is protected by barriers to entry. d. produces the amount of output where average total cost is at a minimum. 9

22 Econ201 Final Exam, Fall 2007, Version B 55. Which of the following events will definitely cause equilibrium quantity to fall? a. demand increases and supply decreases b. demand and supply both increase c. demand and supply both decrease d. demand decreases and supply increases 10

23 ID: B Econ 201 Final Exam Answer Section MULTIPLE CHOICE 1. ANS: B MSC: Analytical 2. ANS: C MSC: Analytical 3. ANS: B MSC: Interpretive 4. ANS: C MSC: Interpretive 5. ANS: D MSC: Definitional 6. ANS: C MSC: Applicative 7. ANS: A MSC: Analytical 8. ANS: C MSC: Interpretive 9. ANS: D MSC: Interpretive 10. ANS: D MSC: Interpretive 11. ANS: D MSC: Applicative 12. ANS: C MSC: Applicative 13. ANS: D MSC: Applicative 14. ANS: A MSC: Interpretive 15. ANS: B MSC: Applicative 16. ANS: A MSC: Applicative 17. ANS: B MSC: Applicative 18. ANS: D MSC: Interpretive 19. ANS: D MSC: Analytical 20. ANS: B MSC: Analytical 21. ANS: C MSC: Applicative 22. ANS: A MSC: Applicative 23. ANS: C MSC: Definitional 24. ANS: B MSC: Analytical 25. ANS: C MSC: Analytical 26. ANS: A MSC: Interpretive 27. ANS: B MSC: Applicative 28. ANS: B MSC: Analytical 29. ANS: A MSC: Interpretive 30. ANS: B MSC: Interpretive 31. ANS: A MSC: Interpretive 32. ANS: D MSC: Applicative 33. ANS: B MSC: Analytical 34. ANS: C MSC: Analytical 35. ANS: B MSC: Applicative 36. ANS: C MSC: Definitional 37. ANS: A MSC: Analytical 38. ANS: A MSC: Analytical 39. ANS: A MSC: Interpretive 40. ANS: C MSC: Interpretive 41. ANS: B MSC: Applicative 42. ANS: B MSC: Interpretive 43. ANS: A MSC: Analytical 1

24 ID: B 44. ANS: C MSC: Interpretive 45. ANS: C MSC: Applicative 46. ANS: D MSC: Applicative 47. ANS: D MSC: Interpretive 48. ANS: D MSC: Interpretive 49. ANS: C MSC: Definitional 50. ANS: D MSC: Interpretive 51. ANS: B MSC: Analytical 52. ANS: D MSC: Analytical 53. ANS: B MSC: Interpretive 54. ANS: C MSC: Interpretive 55. ANS: C MSC: Applicative 2

25 , Fall 2007 Version C Special Codes PLEDGE: I have neither given nor received unauthorized help on this exam. SIGNED: PRINT NAME: Econ 201 Final Exam 1. In a competitive market the price is $7, and typical firms in the market has ATC = $7.50 and AVC = $7.15. a. In the long run the market will cease to exist. b. In the short run firms will shut down, and in the long run firms will leave the market. c. In the short run firms will produce, but in the long run firms will leave the market. d. New firms will likely enter this market to capture any remaining economic profits. Figure Refer to Figure To maximize total surplus, a benevolent social planner would choose a. 150 units of output and a price of $10 per unit b. 150 units of output and a price of $15 per unit c. 100 units of output and a price of $10 per unit d. 200 units of output and a price of $10 per unit 3. Refer to Figure To maximize its profit, a monopolist would choose a. 100 units of output and a price of $20 per unit b. 200 units of output and a price of $20 per unit c. 100 units of output and a price of $10 per unit d. 150 units of output and a price of $15 per unit 4. The negative relationship between price and quantity demanded a. applies to most goods in the economy. b. is represented by a downward-sloping demand curve. c. is referred to as the law of demand. d. All of the above are correct. 1

26 Econ201 Final Exam, Fall 2007, Version C Figure 14-4: A typical firm in a COMPETITIVE market 5. Refer to Figure When market price is P 5, a profit-maximizing firm's profit is the area a. (P 5 - P 4 ) Q 3. b. P 5 Q 3. c. When market price is P 5 there are no profits. d. (P 5 - P 3 ) Q Refer to Figure Firms would want to enter this market anytime the price exceeds a. P 2. b. P 3. c. P 1. d. None of the above is correct. 7. During the last few decades, sunscreen sales have increased while the price of sunscreen has risen and the variety of sunscreen products offered has increased. What s the most likely explanation? a. Sunscreen producers increased production out of concern for the public s health. b. Government officials ordered sunscreen producers to produce more sunscreen. c. Cancer activists successfully lobbied to obtain government subsidies for sunscreen use. d. Health-conscious consumers heeded health warnings and decided to buy more sunscreen. 8. A good reason why the local gas distribution company is subject to price regulation rather than being broken up through antitrust, is because the gas company is a a. revenue-maximizing monopoly. b. natural monopoly. c. producer of externalities. d. profit-maximizing monopoly. 2

27 Econ201 Final Exam, Fall 2007, Version C Figure Refer to Figure Which of the curves is most likely to represent average total cost? a. A b. B c. C d. D Table 15-1 Quantity Price Total Revenue Average Revenue Marginal Revenue Refer to Table What is the marginal revenue for the monopolist for the third unit sold? a. 23 b. 87 c. 29 d Refer to Table If the monopolist wants to maximize its revenue, how many units of its product should it sell? a. 6 b. 5 c. 7 d Which of the following events would cause both the equilibrium price and equilibrium quantity of Dodge Neons (an inferior good) to increase? a. gas mileage of SUVs and mid-size sedans increases. b. wages of auto workers fall. c. an increase in consumer income d. a decrease in consumer income 3

28 Econ201 Final Exam, Fall 2007, Version C Table 16-3 The information in the table below shows the total demand for cable TV subscriptions in Laramie, WY. Assume that the variable cost of providing the service is zero, so the firm will maximize profits by maximizing revenue. Quantity Price (per month) 0 $120 3,000 $100 6,000 $ 80 9,000 $ 60 12,000 $ 40 15,000 $ Refer to Table If there is only one cable TV company in Laramie, what price would it charge if it wants to maximize its profit? a. $80 b. $60 c. $40 d. $ Refer to Table Assume that there are two profit-maximizing digital cable TV companies operating in Laramie, and they initially collude and agree to split the market equally. How many cable TV subscriptions will be sold altogether when this market reaches a Nash equilibrium? a. 9,000 b. 12,000 c. 3,000 d. 6, The Social Security tax is a tax on a. labor. b. earnings during retirement. c. capital. d. consumption expenditures. 16. When a firm in a competitive market decides to triple the amount of output it sells, as a result a. the price in the market falls. b. the price in the market rises. c. its total revenue triples. d. its profit must increase. 17. When firms have agreements among themselves on the quantity to produce and the price at which to sell output, we refer to their form of organization as a a. perfectly competitive oligopoly. b. cartel. c. monopolistically competitive oligopoly. d. Nash arrangement. 18. If a surplus currently exists in a market we know that the current price is a. above equilibrium price and quantity demanded is greater than quantity supplied. b. above equilibrium price and quantity supplied is greater than quantity demanded. c. below equilibrium price and quantity demanded is greater than quantity supplied. d. below equilibrium price and quantity supplied is greater than quantity demanded. 4

29 Econ201 Final Exam, Fall 2007, Version C 19. As a group, oligopolists would always earn the highest profit if they would a. produce more than the perfectly competitive quantity of output. b. operate according to their own individual self-interests. c. produce the perfectly competitive quantity of output. d. charge the same price that a monopolist would charge if the market were a monopoly. 20. A competitive firm's short-run supply curve is part of which of the following curves? a. Marginal cost b. Marginal revenue c. Average variable cost d. Average total cost Table 7-1 BUYER WILLINGNESS TO PAY MIKE $50.00 SANDY $30.00 JONATHAN $20.00 HALEY $ Refer to Table 7-1. If the table represents the willingness to pay of four buyers and the price of the product is $28, then their total consumer surplus is a. $46. b. $24. c. $26. d. $ When determining whether to shutdown in the short run, a competitive firm should a. ignore fixed costs. b. ignore variable costs. c. ignore sunk costs. d. Both a and c are correct 23. Travis can mow a lawn in two hours or he can trim a tree in one hour. Ricardo can mow a lawn in three hours or he can trim a tree in two hours. a. Travis has an absolute advantage over Ricardo in mowing lawns. b. Ricardo has a comparative advantage over Travis in trimming trees. c. Travis has a comparative advantage over Ricardo in mowing lawns. d. All of the above are correct. 24. The lowest points of the average variable cost and average total cost curves occur where a. the marginal cost curve intersects those curves. b. the marginal cost curve lies below both curves. c. the average variable cost and average total cost curves intersect. d. average total cost is below average variable cost. 25. When a country allows trade and becomes an exporter of a good, a. everyone in the country benefits. b. the gains of the winners exceed the losses of the losers. c. everyone in the country loses. d. the losses of the losers exceed the gains of the winners. 5

30 Econ201 Final Exam, Fall 2007, Version C Table 13-8: s of Gigaplot Production Quantity of gigaplots Fixed Variable Total 1 $13 $38 2 $28 3 $70 Average Fixed Average Variable Average Total Marginal 26. Refer to Table What is the fixed cost of producing 3 gigaplots? a. $20 b. $12 c. $25 d. More information is needed. 27. Refer to Table What is the average variable cost of producing 3 gigaplots? a. More information is needed. b. $16 c. $14 d. $ Refer to Table What is the marginal cost of the 3rd gigaplot? a. $20 b. $70 c. $45 d. $17 Figure Refer to Figure Profit will be maximized by charging a price equal to a. P 0. b. P 3. c. P 1. d. P 2. 6

31 Econ201 Final Exam, Fall 2007, Version C 30. Refer to Figure The marginal revenue curve for a monopoly firm is depicted by curve a. A. b. B. c. C. d. D. 31. Refer to Figure A profit-maximizing monopoly's profit is equal to a. (P 3 - P 0 ) Q 4. b. P 3 Q 2. c. (P 1 - P 0 ) Q 2. d. (P 3 - P 0 ) Q A monopolist can make large positive economic profits in the long run only if the monopolist a. produces the amount of output where average variable cost is at a minimum. b. is protected by barriers to entry. c. operates as a price taker rather than a price maker. d. produces the amount of output where average total cost is at a minimum. 33. The defining characteristic of a natural monopoly is a. constant returns to scale over the relevant range of output. b. constant marginal cost over the relevant range of output. c. diseconomies of scale over the relevant range of output. d. economies of scale over the relevant range of output. 34. For a profit-maximizing monopolist, a. P > MR = MC. b. MR < MC < P. c. P = MR = MC. d. P > MR > MC. 35. Which of the following events will definitely cause equilibrium quantity to fall? a. demand decreases and supply increases b. demand and supply both decrease c. demand and supply both increase d. demand increases and supply decreases 36. When a country allows trade and becomes an importer of a good, a. domestic producers become better off, and domestic consumers become worse off. b. both domestic producers and domestic consumers become better off. c. both domestic producers and domestic consumers become worse off. d. domestic producers become worse off, and domestic consumers become better off. 7

32 Econ201 Final Exam, Fall 2007, Version C Figure Refer to Figure At levels of output below M the firm experiences a. accounting profit. b. diseconomies of scale. c. economies of scale. d. economic profit. 38. Refer to Figure In long run competitive market equilibrium, firms might operate on which of the average total cost curves? a. ATC C only. b. ATC A only. c. ATC B only. d. ATC D between M and N. 39. Tommy's Tires operates in a perfectly competitive market. If tires sell for $50 each and average total cost per tire is $40 at the profit-maximizing output level, then in the long run a. some firms will exit from the market, and the price will rise. b. more firms will exit from the market, and the price will fall. c. more firms will enter the market, and the price will rise. d. more firms will enter the market, and the price will fall. 40. If the price of oak lumber increases, what happens to consumer surplus in the market for oak cabinets? a. It decreases. b. It will not change consumer surplus; only producer surplus changes. c. It may either increase or decrease. d. It increases. 41. A market structure with only a few sellers, offering similar or identical products, is known as a. perfect competition. b. monopoly. c. oligopoly. d. monopolistic competition. 42. If a competitive firm sees that its marginal cost exceeds its marginal revenue, then a. the firm is definitely losing money. b. it can increase its profit by decreasing its output. c. the firm is definitely earning a positive profit. d. it can increase its profit by increasing its output. 8

33 Econ201 Final Exam, Fall 2007, Version C 43. Which of the following changes would not shift the demand curve for Monty Python videos? a. a change in expectations about the future price of Monty Python videos b. a change in the price of Mr. Bean videos, a substitute good c. a change in the price of Monty Python videos d. a change in consumer income 44. The firm will make the most profits if it produces the quantity of output at which a. profit per unit is greatest. b. marginal cost equals average cost. c. marginal revenue equals marginal cost. d. marginal revenue equals total revenue. 45. When an oligopoly market reaches a Nash equilibrium, a. each firm will not have tried to maximize its profit. b. each firm will have chosen its own best strategy, given what the other firms are doing. c. the market price will be different for each firm. d. firms will not be concerned about the strategies of competing firms. 46. The inner and outer loops in the circular-flow diagram represent a. (i) the flow of goods and (ii) the flow of services. b. (i) inputs into production processes and (ii) outputs from production processes. c. (i) the flow of dollars and (ii) other financial flows. d. (i) the flows of inputs and outputs and (ii) the flow of dollars. 47. The U.S. market for locomotives is divided between two producers: General Electric has 70 percent of the market and General Motors has 30 percent. This market is an example of a. a cartel. b. an oligopoly, or duopoly. c. monopolistic competition. d. a collusive monopoly. 48. The main argument for splitting up monopolies through antitrust action is based on the notion that a. small firms have lower costs. b. consumers prefer dealing with small firms. c. competition is more efficient than monopoly. d. greedy monopolies should be punished. 49. Suppose a nation is currently producing at a point inside its production possibilities frontier. We know that a. the nation is producing an efficient combination of goods. b. the nation is producing beyond its capacity, and inflation will occur. c. there will be a large opportunity cost if the nation tries to increase production. d. the nation is not using all available resources or is using inferior technology or both. 50. Because there is diminishing marginal product of labor, as the number of workers increases a. the additional cost of an additional unit of output falls. b. the additional cost of hiring an additional worker rises. c. the additional output added by one additional worker declines. d. the additional output added by one additional worker rises. 51. Kelly and David are both able to repair cars and cook meals. Which of the following is not possible? a. Kelly has an absolute advantage in both repairing cars and in cooking meals. b. Kelly has comparative advantage in car repair and David has comparative advantage in cooking. c. Kelly has absolute advantage in car repair and David has absolute advantage in cooking. d. Kelly has a comparative advantage in both repairing cars and in cooking meals. 9

34 Econ201 Final Exam, Fall 2007, Version C 52. Susan could work as a telemarketer, earning $25,000 per year. Instead, she has her own catering business. The $25,000 possible telemarketing income is part of her catering business s a. explicit costs. b. total revenue. c. implicit costs. d. marginal costs. 53. What will happen to the equilibrium price and quantity of legal music downloads if ipods become cheaper, it becomes more difficult to download or share music illegally, and payments to musicians by recording companies fall? a. Quantity will fall and the effect on price is ambiguous. b. Price will fall and the effect on quantity is ambiguous. c. Price will rise and the effect on quantity is ambiguous. d. Quantity will rise and the effect on price is ambiguous. 54. Suppose a tax of $1 per unit is imposed on french fries. The more elastic the supply of french fries, a. the smaller is the response of the quantity supplied of french fries to the tax. b. the larger is the deadweight loss of the tax. c. the larger is the tax burden on french fry sellers relative to the tax burden on buyers. d. All of the above are correct. 55. Wal-Mart has low costs in part because it is very large. Local retailers often go out of business because their prices are higher than Wal-Mart s. This demonstrates that a. there are economies of scale in retail sales. b. consumers are angry at local retailers because of their high prices. c. the greed of large sellers like Wal-Mart hurts consumers, especially low-income consumers. d. there are diseconomies of scale in retail sales. 10

Econ 202 Final Exam. Douglas, Fall 2007 Version A Special Codes 00000. PLEDGE: I have neither given nor received unauthorized help on this exam.

Econ 202 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 202 Final Exam 1. On average over the past 50 years, the U.S.

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

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

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

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 Monopoly practice Davidson spring2007 MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) A monopoly industry is characterized by 1) A)

More information

Problems on Perfect Competition & Monopoly

Problems on Perfect Competition & Monopoly Problems on Perfect Competition & Monopoly 1. True and False questions. Indicate whether each of the following statements is true or false and why. (a) In long-run equilibrium, every firm in a perfectly

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

Managerial Economics & Business Strategy Chapter 8. Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

Managerial Economics & Business Strategy Chapter 8. Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets Managerial Economics & Business Strategy Chapter 8 Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets I. Perfect Competition Overview Characteristics and profit outlook. Effect

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. 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

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

Chapter 7 Monopoly, Oligopoly and Strategy

Chapter 7 Monopoly, Oligopoly and Strategy Chapter 7 Monopoly, Oligopoly and Strategy After reading Chapter 7, MONOPOLY, OLIGOPOLY AND STRATEGY, you should be able to: Define the characteristics of Monopoly and Oligopoly, and explain why the are

More information

Firms in Perfectly Competitive Markets

Firms in Perfectly Competitive Markets Chapter 11 Firms in Perfectly Competitive Markets Chapter Summary Economists group industries into one of four market structures: Perfect competition, monopolistic competition, oligopoly, and monopoly.

More information

Econ 111 (04) 2nd Midterm A

Econ 111 (04) 2nd Midterm A Econ 111 (04) 2nd Midterm A MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Which one of the following does not occur in perfect competition? A)

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

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

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

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 7 Monopoly and Oligopoly

Chapter 7 Monopoly and Oligopoly Chapter 7 Monopoly and Oligopoly Multiple Choice Questions Choose the one alternative that best completes the statement or answers the question. 1. Assume that in order to sell 10 more units of output

More information

Chapter. Perfect Competition CHAPTER IN PERSPECTIVE

Chapter. Perfect Competition CHAPTER IN PERSPECTIVE Perfect Competition Chapter 10 CHAPTER IN PERSPECTIVE In Chapter 10 we study perfect competition, the market that arises when the demand for a product is large relative to the output of a single producer.

More information

ANSWERS TO END-OF-CHAPTER QUESTIONS

ANSWERS TO END-OF-CHAPTER QUESTIONS ANSWERS TO END-OF-CHAPTER QUESTIONS 23-1 Briefly indicate the basic characteristics of pure competition, pure monopoly, monopolistic competition, and oligopoly. Under which of these market classifications

More information

Chapter 14 Monopoly. 14.1 Monopoly and How It Arises

Chapter 14 Monopoly. 14.1 Monopoly and How It Arises Chapter 14 Monopoly 14.1 Monopoly and How It Arises 1) One of the requirements for a monopoly is that A) products are high priced. B) there are several close substitutes for the product. C) there is a

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

Unit 5.3: Perfect Competition

Unit 5.3: Perfect Competition Unit 5.3: Perfect Competition Michael Malcolm June 18, 2011 1 Market Structures Economists usually talk about four market structures. From most competitive to least competitive, they are: perfect competition,

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

Monopolistic Competition

Monopolistic Competition In this chapter, look for the answers to these questions: How is similar to perfect? How is it similar to monopoly? How do ally competitive firms choose price and? Do they earn economic profit? In what

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

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

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

Econ 202 Exam 3 Practice Problems

Econ 202 Exam 3 Practice Problems Econ 202 Exam 3 Practice Problems Principles of Microeconomics Dr. Phillip Miller Multiple Choice Identify the choice that best completes the statement or answers the question. Chapter 13 Production and

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

Econ 2113 Test 3 Pledge: I have neither given nor received aid on this exam.

Econ 2113 Test 3 Pledge: I have neither given nor received aid on this exam. Econ 2113 Test 3 Dr. Rupp Spring 2011 Name: Pledge: I have neither given nor received aid on this exam. Signature: Multiple Choice Identify the choice that best completes the statement or answers the question.

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

N. Gregory Mankiw Principles of Economics. Chapter 15. MONOPOLY

N. Gregory Mankiw Principles of Economics. Chapter 15. MONOPOLY N. Gregory Mankiw Principles of Economics Chapter 15. MONOPOLY Solutions to Problems and Applications 1. The following table shows revenue, costs, and profits, where quantities are in thousands, and total

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

Summary Chapter 12 Monopoly

Summary Chapter 12 Monopoly Summary Chapter 12 Monopoly Defining Monopoly - A monopoly is a market structure in which a single seller of a product with no close substitutes serves the entire market - One practical measure for deciding

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

Market Structure: Perfect Competition and Monopoly

Market Structure: Perfect Competition and Monopoly WSG8 7/7/03 4:34 PM Page 113 8 Market Structure: Perfect Competition and Monopoly OVERVIEW One of the most important decisions made by a manager is how to price the firm s product. If the firm is a profit

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

AP Microeconomics Unit 5 Problem Set

AP Microeconomics Unit 5 Problem Set Goldwasser AP Microeconomics Unit 5 Problem Set NAME 1. For each of the following, is the industry perfectly competitive? Referring to market share, standardization of the product, and/or free entry and

More information

BUSINESS ECONOMICS CEC & 761

BUSINESS ECONOMICS CEC & 761 BUSINESS ECONOMICS CEC2 532-751 & 761 PRACTICE MICROECONOMICS MULTIPLE CHOICE QUESTIONS Warning: These questions have been posted to give you an opportunity to practice with the multiple choice format

More information

Chapter 8 Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

Chapter 8 Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets Managerial Economics & Business Strategy Chapter 8 Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets McGraw-Hill/Irwin Copyright 2010 by the McGraw-Hill Companies, Inc. All

More information

MPP 801 Monopoly Kevin Wainwright Study Questions

MPP 801 Monopoly Kevin Wainwright Study Questions MPP 801 Monopoly Kevin Wainwright Study Questions MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The marginal revenue facing a monopolist A) is

More information

Principles of Economics: Micro: Exam #2: Chapters 1-10 Page 1 of 9

Principles of Economics: Micro: Exam #2: Chapters 1-10 Page 1 of 9 Principles of Economics: Micro: Exam #2: Chapters 1-10 Page 1 of 9 print name on the line above as your signature INSTRUCTIONS: 1. This Exam #2 must be completed within the allocated time (i.e., between

More information

The Revenue of a Competitive In perfect competition, average revenue equals the price of the good. Total revenue Average Revenue = = The Revenue of a

The Revenue of a Competitive In perfect competition, average revenue equals the price of the good. Total revenue Average Revenue = = The Revenue of a In this chapter, look for the answers to these questions: What is a perfectly competitive market? What is marginal revenue? How is it related to total and average revenue? How does a competitive firm determine

More information

Microeconomics Instructor Miller Practice Problems Monopolistic Competition

Microeconomics Instructor Miller Practice Problems Monopolistic Competition Microeconomics Instructor Miller Practice Problems Monopolistic Competition 1. A monopolistically competitive market is described as one in which there are A) a few firms producing an identical product.

More information

5. Suppose demand is perfectly elastic, and the supply of the good in question

5. Suppose demand is perfectly elastic, and the supply of the good in question ECON 1620 Basic Economics Principles 2010 2011 2 nd Semester Mid term test (1) : 40 multiple choice questions Time allowed : 60 minutes 1. When demand is inelastic the price elasticity of demand is (A)

More information

Pre-Test Chapter 21 ed17

Pre-Test Chapter 21 ed17 Pre-Test Chapter 21 ed17 Multiple Choice Questions 1. Which of the following is not a basic characteristic of pure competition? A. considerable nonprice competition B. no barriers to the entry or exodus

More information

Monopoly WHY MONOPOLIES ARISE

Monopoly WHY MONOPOLIES ARISE In this chapter, look for the answers to these questions: Why do monopolies arise? Why is MR < P for a monopolist? How do monopolies choose their P and Q? How do monopolies affect society s well-being?

More information

Rutgers University Economics 102: Introductory Microeconomics Professor Altshuler Fall 2003

Rutgers University Economics 102: Introductory Microeconomics Professor Altshuler Fall 2003 Rutgers University Economics 102: Introductory Microeconomics Professor Altshuler Fall 2003 Answers to Problem Set 11 Chapter 16 2. a. If there were many suppliers of diamonds, price would equal marginal

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

Oligopoly. What Is Oligopoly? What is Oligopoly?

Oligopoly. What Is Oligopoly? What is Oligopoly? CHAPTER 13B After studying this chapter you will be able to Oligopoly Define and identify oligopoly Explain two traditional oligopoly models Use game theory to explain how price and output are determined

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

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

Pricing and Output Decisions: i Perfect. Managerial Economics: Economic Tools for Today s Decision Makers, 4/e By Paul Keat and Philip Young

Pricing and Output Decisions: i Perfect. Managerial Economics: Economic Tools for Today s Decision Makers, 4/e By Paul Keat and Philip Young Chapter 9 Pricing and Output Decisions: i Perfect Competition and Monopoly M i l E i E i Managerial Economics: Economic Tools for Today s Decision Makers, 4/e By Paul Keat and Philip Young Pricing and

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, Quiz #5 Fall 2007 Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question on the accompanying scantron. 1) Perfect competition

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

Unit 3 Practice Exam Answer the questions on a separate sheet of paperplease do not write on this practice test.

Unit 3 Practice Exam Answer the questions on a separate sheet of paperplease do not write on this practice test. Unit 3 Practice Exam Answer the questions on a separate sheet of paperplease do not write on this practice test. 1. Which of the following items is most likely to be an implicit cost of production? a.

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

ECON 600 Lecture 3: Profit Maximization Π = TR TC

ECON 600 Lecture 3: Profit Maximization Π = TR TC ECON 600 Lecture 3: Profit Maximization I. The Concept of Profit Maximization Profit is defined as total revenue minus total cost. Π = TR TC (We use Π to stand for profit because we use P for something

More information

I. Output Decisions by Firms

I. Output Decisions by Firms University of Pacific-Economics 53 Lecture Notes #8B I. Output Decisions by Firms Now that we have examined firm costs in great detail, we can now turn to the question of how firms decide how much output

More information

CHAPTER 11 PRICE AND OUTPUT IN MONOPOLY, MONOPOLISTIC COMPETITION, AND PERFECT COMPETITION

CHAPTER 11 PRICE AND OUTPUT IN MONOPOLY, MONOPOLISTIC COMPETITION, AND PERFECT COMPETITION CHAPTER 11 PRICE AND OUTPUT IN MONOPOLY, MONOPOLISTIC COMPETITION, AND PERFECT COMPETITION Chapter in a Nutshell Now that we understand the characteristics of different market structures, we ask the question

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) The four-firm concentration ratio equals the percentage of the value of accounted for by the four

More information

CHAPTER 10: PURE MONOPOLY

CHAPTER 10: PURE MONOPOLY CHAPTER 10: PURE MONOPOLY Introduction While the perfectly competitive firm has no power over prices in the marketplace, the monopoly has the power necessary to determine both the price and output of the

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

Consumer and Producer Surplus. Consumer and Producer Surplus. Consumer Surplus. Consumer Surplus. Consumer Surplus Individual consumer surplus

Consumer and Producer Surplus. Consumer and Producer Surplus. Consumer Surplus. Consumer Surplus. Consumer Surplus Individual consumer surplus Consumer and Consumer and February 6, 2007 Reading: Chapter 6 Introduction Consumer surplus Producer surplus Efficiency and the gains from trade s 2 Introduction Connections to: Opportunity costs to consumers

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

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 Four - Sample Questions Chapters 12-14 MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) What is the difference between perfect competition

More information

Microeconomics Instructor Miller Perfect Competition Practice Problems

Microeconomics Instructor Miller Perfect Competition Practice Problems Microeconomics Instructor Miller Perfect Competition Practice Problems 1. Perfect competition is characterized by all of the following except A) heavy advertising by individual sellers. B) homogeneous

More information

Defn. Market power the abiliby of a single economic actor (or small group of actors) to have a substantial influence on market prices.

Defn. Market power the abiliby of a single economic actor (or small group of actors) to have a substantial influence on market prices. Notes for Chapter 15 Monopoly Firms in perfect competition face the most competition. (They have no market power.) Monopolies face the least competition. (They have the most market power.) Defn. Market

More information

Quick Review. Chapter 15: Figure 1 The Four Types of Market Structure

Quick Review. Chapter 15: Figure 1 The Four Types of Market Structure Chapter 16: Oligopoly Imperfect competition refers to those market structures that fall between perfect competition and pure monopoly and do not face so much competition that they are price takers. Types

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

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

We will study the extreme case of perfect competition, where firms are price takers.

We will study the extreme case of perfect competition, where firms are price takers. Perfectly Competitive Markets A firm s decision about how much to produce or what price to charge depends on how competitive the market structure is. If the Cincinnati Bengals raise their ticket prices

More information

Econ 202 Section 2 Midterm 1

Econ 202 Section 2 Midterm 1 Douglas, Fall 2009 September 29, 2009 A: Special Code 0000 21 PLEDGE: I have neither given nor received unauthorized help on this exam. SIGNED: PRINT NAME: Econ 202 Section 2 Midterm 1 1. What will happen

More information

Chapter 9: Perfect Competition

Chapter 9: Perfect Competition Chapter 9: Perfect Competition Perfect Competition Law of One Price Short-Run Equilibrium Long-Run Equilibrium Maximize Profit Market Equilibrium Constant- Cost Industry Increasing- Cost Industry Decreasing-

More information

Econ 101: Principles of Microeconomics

Econ 101: Principles of Microeconomics Econ 101: Principles of Microeconomics Chapter 14 - Monopoly Fall 2010 Herriges (ISU) Ch. 14 Monopoly Fall 2010 1 / 35 Outline 1 Monopolies What Monopolies Do 2 Profit Maximization for the Monopolist 3

More information

Pre-Test Chapter 23 ed17

Pre-Test Chapter 23 ed17 Pre-Test Chapter 23 ed17 Multiple Choice Questions 1. The kinked-demand curve model of oligopoly: A. assumes a firm's rivals will ignore a price cut but match a price increase. B. embodies the possibility

More information

Market Structure: Monopolistic Competition

Market Structure: Monopolistic Competition WSG9 7/7/03 4:34 PM Page 131 9 Market Structure: Monopolistic Competition OVERVIEW Although the conditions necessary for the existence of perfect competitive and monopoly are unlikely to be found in the

More information

Oligopoly: How do firms behave when there are only a few competitors? These firms produce all or most of their industry s output.

Oligopoly: How do firms behave when there are only a few competitors? These firms produce all or most of their industry s output. Topic 8 Chapter 13 Oligopoly and Monopolistic Competition Econ 203 Topic 8 page 1 Oligopoly: How do firms behave when there are only a few competitors? These firms produce all or most of their industry

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 10 MARKET POWER: MONOPOLY AND MONOPSONY

CHAPTER 10 MARKET POWER: MONOPOLY AND MONOPSONY CHAPTER 10 MARKET POWER: MONOPOLY AND MONOPSONY EXERCISES 3. A monopolist firm faces a demand with constant elasticity of -.0. It has a constant marginal cost of $0 per unit and sets a price to maximize

More information

ECON 103, 2008-2 ANSWERS TO HOME WORK ASSIGNMENTS

ECON 103, 2008-2 ANSWERS TO HOME WORK ASSIGNMENTS ECON 103, 2008-2 ANSWERS TO HOME WORK ASSIGNMENTS Due the Week of June 23 Chapter 8 WRITE [4] Use the demand schedule that follows to calculate total revenue and marginal revenue at each quantity. Plot

More information

Thus MR(Q) = P (Q) Q P (Q 1) (Q 1) < P (Q) Q P (Q) (Q 1) = P (Q), since P (Q 1) > P (Q).

Thus MR(Q) = P (Q) Q P (Q 1) (Q 1) < P (Q) Q P (Q) (Q 1) = P (Q), since P (Q 1) > P (Q). A monopolist s marginal revenue is always less than or equal to the price of the good. Marginal revenue is the amount of revenue the firm receives for each additional unit of output. It is the difference

More information

ECO 100Y INTRODUCTION TO ECONOMICS Term Test # 3

ECO 100Y INTRODUCTION TO ECONOMICS Term Test # 3 Department of Economics Prof. Gustavo Indart University of Toronto February 15, 2013 ECO 100Y INTRODUCTION TO ECONOMICS Term Test # 3 LAST NAME FIRST NAME STUDENT NUMBER INSTRUCTIONS: 1. The total time

More information

Understanding Economics 2nd edition by Mark Lovewell and Khoa Nguyen

Understanding Economics 2nd edition by Mark Lovewell and Khoa Nguyen Understanding Economics 2nd edition by Mark Lovewell and Khoa Nguyen Chapter 5 Perfect Competition Chapter Objectives! In this chapter you will: " Consider the four market structures, and the main differences

More information

AP Microeconomics. Practice Exam. Advanced Placement Program

AP Microeconomics. Practice Exam. Advanced Placement Program Advanced Placement Program AP Microeconomics Practice Exam The questions contained in this AP Microeconomics Practice Exam are written to the content specifications of AP Exams for this subject. Taking

More information

ECON101 STUDY GUIDE 7 CHAPTER 14

ECON101 STUDY GUIDE 7 CHAPTER 14 ECON101 STUDY GUIDE 7 CHAPTER 14 MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) An oligopoly firm is similar to a monopolistically competitive

More information

Chapter 14. Oligopoly and Monopolistic Competition. Anyone can win unless there happens to be a second entry. George Ade

Chapter 14. Oligopoly and Monopolistic Competition. Anyone can win unless there happens to be a second entry. George Ade Chapter 14 Oligopoly and Monopolistic Competition Anyone can win unless there happens to be a second entry. George Ade Chapter 14 Outline 14.1 Market Structures 14.2 Cartels 14.3 Noncooperative Oligopoly

More information

Pre-Test Chapter 22 ed17

Pre-Test Chapter 22 ed17 Pre-Test Chapter 22 ed17 Multiple Choice Questions 1. Refer to the above diagram. At the profit-maximizing level of output, total revenue will be: A. NM times 0M. B. 0AJE. C. 0EGC. D. 0EHB. 2. For a pure

More information

PART A: For each worker, determine that worker's marginal product of labor.

PART A: For each worker, determine that worker's marginal product of labor. ECON 3310 Homework #4 - Solutions 1: Suppose the following indicates how many units of output y you can produce per hour with different levels of labor input (given your current factory capacity): PART

More information

Chapter 14: Firms in Competitive Markets. Total revenue = price per unit sold number of units sold = p q

Chapter 14: Firms in Competitive Markets. Total revenue = price per unit sold number of units sold = p q Chapter 14: Firms in Competitive Markets Profit and Revenue The firm's goal is to maximize profit. Profit = total revenue - total cost (opportunity cost) Total revenue = price per unit sold number of units

More information

International Trade Restrictions

International Trade Restrictions International Trade Restrictions Governments restrict international trade to protect domestic producers from competition. Governments use four sets of tools: Tariffs Import quotas Other import barriers

More information

Chapter 22 The Cost of Production Extra Multiple Choice Questions for Review

Chapter 22 The Cost of Production Extra Multiple Choice Questions for Review Chapter 22 The Cost of Production Extra Multiple Choice Questions for Review 1. Implicit costs are: A) equal to total fixed costs. B) comprised entirely of variable costs. C) "payments" for self-employed

More information

4. Market Structures. Learning Objectives 4-63. Market Structures

4. Market Structures. Learning Objectives 4-63. Market Structures 1. Supply and Demand: Introduction 3 2. Supply and Demand: Consumer Demand 33 3. Supply and Demand: Company Analysis 43 4. Market Structures 63 5. Key Formulas 81 2014 Allen Resources, Inc. All rights

More information

Essential Graphs for Microeconomics

Essential Graphs for Microeconomics Essential Graphs for Microeconomics Basic Economic Concepts roduction ossibilities Curve Good X A F B C W Concepts: oints on the curve-efficient oints inside the curve-inefficient oints outside the curve-unattainable

More information

University of Lethbridge Department of Economics ECON 1012 Introduction to Macroeconomics Instructor: Michael G. Lanyi CH 31

University of Lethbridge Department of Economics ECON 1012 Introduction to Macroeconomics Instructor: Michael G. Lanyi CH 31 University of Lethbridge Department of Economics ECON 1012 Introduction to Macroeconomics Instructor: Michael G. Lanyi CH 31 1) Goods and services that we buy from other countries are our A) balance of

More information

CHAPTER 9: PURE COMPETITION

CHAPTER 9: PURE COMPETITION CHAPTER 9: PURE COMPETITION Introduction In Chapters 9-11, we reach the heart of microeconomics, the concepts which comprise more than a quarter of the AP microeconomics exam. With a fuller understanding

More information

C H A P T E R 12. Monopolistic Competition and Oligopoly CHAPTER OUTLINE

C H A P T E R 12. Monopolistic Competition and Oligopoly CHAPTER OUTLINE C H A P T E R 12 Monopolistic Competition and Oligopoly CHAPTER OUTLINE 12.1 Monopolistic Competition 12.2 Oligopoly 12.3 Price Competition 12.4 Competition versus Collusion: The Prisoners Dilemma 12.5

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