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

Size: px
Start display at page:

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

Transcription

1 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) plant. C) firm. D) multinational. 2. The characteristic of a corporation that most encourages investors to invest large amounts of money in it is: A) double taxation. B) limited liability. C) diffusion of ownership. D) access to international markets. 3. Jim Delaney sold his pizza firm to an investor who then sold stock to the public. Jim now earns a salary of $5,000 a month, and all the profits are distributed to the stockholders. This firm is an example of a: A) sole proprietorship. B) partnership because Jim Delaney partnered with an investor. C) corporation. D) nonprofit corporation. Use the following to answer question 4: Production in the Short Run Labor Total Product

2 4. (Table) According to the table, diminishing returns occur when hiring which worker? A) the first. B) the second. C) the third. D) the fourth. Use the following to answer question 5: Workers Output MP AP (Table) In the table, what is the MP of the third worker? A) 7 B) 8 C) 9 D) 10 2

3 Use the following to answer question 6: Figure: Determining Marginal Returns Workers Output MP AP (Figure: Determining Marginal Returns) Referring to both the table and the figure, adding a third worker leads to: A) increasing marginal returns. B) diminishing marginal returns. C) constant marginal returns. D) negative marginal returns. 3

4 Use the following to answer question 7: Production Data for Baseball Bat Company Number of Total Output Workers (number of bats) (Table) In the table, the marginal product of the eighth worker is bats. A) 10 B) 8 C) 23 D) 14 Use the following to answer question 8: Output Variable Cost 0 $25 1 $40 2 $55 3 $70 4 $85 8. (Table) Referring to the table, suppose the coffee plant experiences fixed costs of $35, then, at 2 units of production, the firm would have total costs of: A) $60. B) $20. C) $90. D) $55. 4

5 Use the following to answer question 9: Workers Output MP AP FC VC TC ATC AVC AFC MC , , ,800 2, ,250 2, ,700 3, ,150 3, ,600 4, ,050 4, ,500 5, (Table) Referring to the table, is the total cost when producing 21 units. A) $850 B) $1,850 C) 2,050 D) There is not enough information to answer this question. Use the following to answer question 10: Q FC VC , , , , , , , (Table) In the table, the total cost of producing 54 units of output is: A) 1,250. B) 500. C) 2,000. D) 1,750. 5

6 11. Market structure analysis allows economists to: A) predict the behavior of firms. B) create the conditions of competition. C) eliminate economic profits. D) remodel the economy. 12. Han and Micah have just started their own business: a food truck that sits on city streets and sells specialty Vietnamese food. The start-up costs were low, and there are lots of other Vietnamese food trucks in the city, but Han's cooking is very special. People come from all over the city to buy their food, so they can charge a slightly higher price than their competitors. What type of market structure do they face? A) perfect competition B) monopolistic competition C) oligopoly D) monopoly 13. Which market structures share the characteristic of many buyers and sellers? A) perfect competition and monopolistic competition B) perfect competition and oligopoly C) perfect competition and monopoly D) Perfect competition is the only market structure with many buyers and sellers 14. Marginal revenue equals: A) the change in price divided by change in total revenue. B) the change in total revenue divided by the change in quantity. C) total revenue divided by quantity. D) total revenue divided by price. 15. A perfectly competitive firm should continue to produce until: A) MC = TC. B) MC = P. C) ATC is at a minimum. D) MC is at a minimum. 6

7 Use the following to answer question 16: Output Marginal Total Cost Revenue 5 1,200 7, ,300 9, ,400 10, ,500 12, ,600 13, (Table) In the table, what is the shape of the demand curve that faces John's Tricycle Company? A) downward sloping B) horizontal C) vertical D) upward sloping 7

8 Use the following to answer question 17: Figure: Interpreting MC and Price Curves 17. (Figure: Interpreting MC and Price Curves) The profit-maximizing output is units. A) 12 B) 31 C) 54 D) 57 8

9 Use the following to answer question 18: Figure: Unicycle Production Costs 18. (Figure: Unicycle Production Costs) At a price of $20, how many unicycles will John produce? A) 40 B) 42 C) 44 D) (Figure: Unicycle Production Costs) If the price is $17, in the long run some unicycle producers: A) leave the industry. B) enter the industry. C) begin to advertise. D) become monopolies. 9

10 20. Which sequence describes the long-run adjustment to short-run economic profits in a competitive market? A) new firms enter, industry supply increases, market price falls B) new firms enter, industry demand increases, market price rises C) new firms enter, industry supply decreases, market price falls D) new firms enter, industry supply increases, market price rises 21. Market power means the ability to: A) earn a normal profit. B) earn an economic profit. C) have some control over price. D) eliminate competition. 22. A price maker is a firm that: A) can influence market price by adjusting its level of output. B) can choose any price it wishes to sell at, whether or not it is on the demand curve. C) makes a profit by selling at the highest price possible. D) makes a loss if it charges a low price. 23. For both the monopolist and the perfectly competitive firm: A) the profit-maximizing output occurs where P = MC. B) the profit-maximizing output occurs where P = MR. C) the profit-maximizing output occurs where MR = MC. D) profits are not maximized. 10

11 Use the following to answer question 24: Figure: Effects of Monopolies on Markets 24. (Figure: Effects of Monopolies on Markets) In the graph, which area represents the inefficiencies caused by a monopoly? A) e B) f C) g D) h 25. An example of x-inefficiency is: A) an executive cutting wages of workers in an economic downtown. B) an executive paying a manager a bonus for increasing profits 20%. C) money spent on advertising. D) an executive, at corporate expense, hiring a limousine to travel one block. whenever it is raining. 11

12 26. A monopolist participates in price discrimination when they charge: A) a higher price to consumers whose demand is more elastic. B) a higher price when their marginal cost is lower. C) a lower price to consumers whose demand is more elastic. D) the same price to all of their consumers. 27. A monopolist has four distinct groups of customers. Group A has an elasticity of demand of 0.2, B has an elasticity of demand of 0.8, C has an elasticity of demand of 1.0, and D has an elasticity of demand of 2.0. The group paying the highest price for the product will be: A) A. B) B. C) C. D) D. 28. When Ford offers a car rental agency lower prices if it buys a fleet of new vehicles, it is practicing: A) first-degree price discrimination. B) second-degree price discrimination. C) third-degree price discrimination. D) perfect price discrimination. 29. The top eight firms in an industry control, respectively, 15%, 10%, 9%, 8%, 7%, 6%, 5%, and 4%. What is the four-firm concentration ratio? A) 15 B) 42 C) 64 D) Contestable markets are markets in which: A) entry costs are so high that the sheer threat of entry keeps prices high. B) entry is extremely difficult. C) potential competition doesn't exist. D) entry costs are so low that the sheer threat of entry keeps prices low. 31. Monopolistic competition is like perfect competition in that they both: A) have numerous competitors. B) put labels on their products. C) erect barriers to entry. D) make zero economic profit in the short run. 12

13 Use the following to answer question 32: Figure: Monopolistic Competition 32. (Figure: Monopolistic Competition) Under monopolistic competition, the price for this good or service in the graph will be: A) e. B) f. C) g. D) d. 33. Murphy's Gas Station constantly watches the price of unleaded gas at Johnson's Gas Station. If Johnson's lowers the price of gas, so will Murphy's. This is an example of: A) network effects. B) rent-seeking behavior. C) mutual interdependence. D) monopoly. 13

14 34. When oligopolies act jointly as a monopoly, they are acting as a: A) contestable market. B) competitive market. C) cartel. D) monopsony. 35. When firms collude, they are looking to operate as a monopoly by: A) raising price and output in the market. B) lowering price and output in the market. C) raising price and reducing output in the market. D) determining output where price equals marginal cost. 36. Game theory is: A) the study of strategy and strategic behavior. B) focused on competition between two distinct rivals. C) a methodology to accomplish winning results in games of chance. D) a strategy that requires cooperation when multiple parties are involved. 37. A Nash equilibrium occurs when: A) no optimal strategies are possible. B) each player takes the best possible action, given the actions of the other players. C) players select the worst strategy, given the actions of the other players. D) supply intersects demand. Use the following to answer question 38: 38. (Table) In this game table, the dominant strategies are: A) Jesse plays Up and Katy plays Left. B) Jesse plays Up and Katy plays Right. C) Jesse plays Down and Katy plays Left. D) Jesse plays Down and Katy plays Right. 14

15 39. In the Prisoner's Dilemma, if the prisoners could collude: A) both prisoners would be better off confessing. B) the best outcome for both prisoners occurs if one confesses and the other does not. C) both prisoners would be better off not confessing. D) their prison sentences would be maximized. Use the following to answer question 40: JetBlue High Low Delta High 700, , 200 Low 550, , (Table) In this game table representing airfare pricing between Delta and JetBlue, what is the Nash equilibrium? A) Delta = high; JetBlue = high B) Delta = high; JetBlue = low C) Delta = low; JetBlue = high D) Delta = low; JetBlue = low 15

16 ANSWER KEY ECO 2023 Principles of Microeconomics Practice Test #3 1. C 2. B 3. C 4. C 5. C 6. A 7. D 8. C 9. B 10. D 11. A 12. B 13. A 14. B 15. B 16. B 17. C 18. C 19. A 20. A 21. C 22. A 23. C 24. D 25. D 26. C 27. A 28. B 29. B 30. D 31. A 32. B 33. C 34. C 35. C 36. A 37. B 38. C 39. C 40. B 16

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. 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

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

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

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

COST OF PRODUCTION & THEORY OF THE FIRM

COST OF PRODUCTION & THEORY OF THE FIRM MICROECONOMICS: UNIT III COST OF PRODUCTION & THEORY OF THE FIRM (C) positive and $0 positive. At zero output, variable costs are zero. 2. Based on the information in the table above, the total cost of

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

Microeconomics: CH 9-10 Take home quiz.

Microeconomics: CH 9-10 Take home quiz. Microeconomics: CH 9-10 Take home quiz. Mark your answers on a Scantron BEFORE class. Bring your Scantron to Class On Monday, November 26. Be sure to be on time, late Scantron forms will be penalized.

More information

Review Test Ch 9, 10, 11 2

Review Test Ch 9, 10, 11 2 Review Test Ch 9, 10, 11 2 Student: 1. A one-firm industry is known as: A. monopolistic competition. B. oligopoly. C. pure monopoly. D. pure competition. 2. Which of the following is not a basic characteristic

More information

Chapter 16 Oligopoly What Is Oligopoly?

Chapter 16 Oligopoly What Is Oligopoly? Chapter 16 Oligopoly 16.1 What Is Oligopoly? 1) Sammy's Inc. competes with a few other firms because there are natural barriers to entry. Sammy's operates in A) a perfectly competitive market. B) an oligopoly.

More information

Eco 200 Group Activity 4 Key Chap 13 & 14 & 15

Eco 200 Group Activity 4 Key Chap 13 & 14 & 15 Eco 200 Group Activity 4 Key Chap 13 & 14 & 15 Chapter 13: 1. 4 th Edition: p. 285, Problems and Applications, Q4 3 rd Edition: p. 286, Problems and Applications, Q4 a. The following table shows the marginal

More information

1.The profit maximizing output level for a perfectly competitive firm is where A) P = MC. B) P = AVC. C) MC = ATC. D) MC = AVC. E) MC = AFC.

1.The profit maximizing output level for a perfectly competitive firm is where A) P = MC. B) P = AVC. C) MC = ATC. D) MC = AVC. E) MC = AFC. Test 4 Econ 3144 Name Fall 2001 Dr. Rupp 21 Multiple Choice Questions (52.5 points) & 5 Discussion Questions (52 points) This formula may be useful: MR = P(1 1/ E p ). 1.The profit maximizing output level

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

How Wages Are Determined in Labor Markets

How Wages Are Determined in Labor Markets ACTIVITY 4-5 How Wages Are Determined in Labor Markets This activity examines how wages and employment are determined in two types of labor s. A perfectly competitive labor is one in which all buyers and

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

Economics 202 Study Questions Test #3 Professor Thornton

Economics 202 Study Questions Test #3 Professor Thornton Economics 202 Study Questions Test #3 Professor Thornton 1. Which of the following is a type of market structure? a. Monopoly b. Perfect competition c. Oligopoly 2. According to the structure/conduct/performance

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

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

2013 Pearson. Why did GM fail?

2013 Pearson. Why did GM fail? Why did GM fail? Perfect Competition 15 When you have completed your study of this chapter, you will be able to CHAPTER CHECKLIST 1 Explain a perfectly competitive firm s profit-maximizing choices and

More information

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

Structures. Name: Class: Date: Multiple Choice Identify the choice that best completes the statement or answers the question. Class: Date: Structures Multiple Choice Identify the choice that best completes the statement or answers the question. 1. A market with a large number of sellers a. can only be a perfectly competitive

More information

Answers to Text Questions and Problems Chapter 8

Answers to Text Questions and Problems Chapter 8 Answers to Text Questions and Problems Chapter 8 Answers to Review Questions 1. The pure monopolist, the oligopolist, and the monopolistically competitive firm all face downward-sloping demand curves.

More information

1 of 25 5/1/2014 4:28 PM

1 of 25 5/1/2014 4:28 PM 1 of 25 5/1/2014 4:28 PM Any point on the budget constraint Gives the consumer the highest level of utility. Represent a combination of two goods that are affordable. Represents combinations of two goods

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

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

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

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

Lecture 7 Markets with market power. (Please note that there is no Part II of Lecture 6)

Lecture 7 Markets with market power. (Please note that there is no Part II of Lecture 6) Lecture 7 Markets with market power (Please note that there is no Part II of Lecture 6) Four idealized types of market structure Perfect competition: many sellers; they are selling an identical product

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

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

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

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

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

Econ 170: Contemporary Economics Spring 2008 Exam 1 / Section F: SOLUTIONS. 1. Production possibilities and opportunity costs of missiles and houses

Econ 170: Contemporary Economics Spring 2008 Exam 1 / Section F: SOLUTIONS. 1. Production possibilities and opportunity costs of missiles and houses Econ 170: Contemporary Economics Spring 2008 Exam 1 / Section F: SOLUTIONS 1. Production possibilities and opportunity costs of missiles and houses The table below shows the tradeoff between different

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

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

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

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

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

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

Perfect Competition and Pure Monopoly

Perfect Competition and Pure Monopoly In the Name of God Sharif University of Technology Graduate School of Management and Economics Microeconomics (for MBA students) 44111 (1393-94 1 st term) - Group 2 Dr. S. Farshad Fatemi Perfect Competition

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

Miami Dade College ECO 2023 Principles of Microeconomics - Fall 2014 Practice Test #3

Miami Dade College ECO 2023 Principles of Microeconomics - Fall 2014 Practice Test #3 Miami Dade College ECO 2023 Principles of Microeconomics - Fall 2014 Practice Test #3 1. Papabear Corporation is a single seller of Wonderstuff. There are two substitutes for Wonderstuff. Given this situation,

More information

Describe the characteristics of different market structures: perfect competition, monopolistic competition, oligopoly, and pure monopoly

Describe the characteristics of different market structures: perfect competition, monopolistic competition, oligopoly, and pure monopoly www.edupristine.com Describe the characteristics of different market structures: perfect competition, monopolistic competition, oligopoly, and pure monopoly Prerequisite Characteristics of different market

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

Fall 2012 MICROECONOMICS Unit 3-Product Markets: Decision Making and Efficiency

Fall 2012 MICROECONOMICS Unit 3-Product Markets: Decision Making and Efficiency Fall 2012 MICROECONOMICS Unit 3-Product Markets: Decision Making and Efficiency Chapters 8 and 9 - Pure Competition in the Short Run and the Long Run Reading Assignments Chapters 8: ALL Chapter 9: 181-184,

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

Eco201 Review Outline for Final Exam, Spring 2016, Prof. Bill Even

Eco201 Review Outline for Final Exam, Spring 2016, Prof. Bill Even Note: The outline is intended to provide the student with a list of the major topics that will be on the final exam. The instructor is not limited to questions that fit into one of these precise categories,

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

8. In the table above, at what level of output is total revenue maximized? A) 3 B) 4 C) 5 D) 6 E) 7

8. In the table above, at what level of output is total revenue maximized? A) 3 B) 4 C) 5 D) 6 E) 7 Name: Date: 1. A monopoly A) consists of two to eight players, like the board game. B) must be inexpensive to create, as so many of them exist. C) is continually prone to the threat of entry from new rivals.

More information

AP Microeconomics Review

AP Microeconomics Review AP Microeconomics Review 1. Firm in Perfect Competition (Long-Run Equilibrium) 2. Monopoly Industry with comparison of price & output of a Perfectly Competitive Industry 3. Natural Monopoly with Fair-Return

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

Econ 170: Contemporary Economics Spring 2008 Exam 1 / Section E: SOLUTIONS. 1. Production possibilities and opportunity costs of missiles and houses

Econ 170: Contemporary Economics Spring 2008 Exam 1 / Section E: SOLUTIONS. 1. Production possibilities and opportunity costs of missiles and houses Econ 170: Contemporary Economics Spring 2008 Exam 1 / Section E: SOLUTIONS 1. Production possibilities and opportunity costs of missiles and houses The table below shows the tradeoff between different

More information

ANSWERS TO END-OF-CHAPTER QUESTIONS

ANSWERS TO END-OF-CHAPTER QUESTIONS ANSWERS TO END-OF-CHAPTER QUESTIONS 24-1 No firm is completely sheltered from rivals; all firms compete for the consumer dollars. Pure monopoly, therefore, does not exist. Do you agree? Explain. How might

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

Monopolistic Competition 13A CHAPTER

Monopolistic Competition 13A CHAPTER Monopolistic Competition 13A CHAPTER After studying this chapter you will be able to Define and identify monopolistic competition Explain how output and price are determined in a monopolistically competitive

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. 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

Microeconomics LESSON 3 ACTIVITY 28

Microeconomics LESSON 3 ACTIVITY 28 Microeconomics LESSON 3 ACTIVITY 28 Costs and Competitive Market Supply (Perfect Competition) Part A 1. The Fiasco Company is a perfectly competitive firm whose daily costs of production (including a normal

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

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

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

Perfectly Competitive Supply. Chapter 6. McGraw-Hill/Irwin. Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

Perfectly Competitive Supply. Chapter 6. McGraw-Hill/Irwin. Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Perfectly Competitive Supply Chapter 6 McGraw-Hill/Irwin Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Learning Objectives 1.Explain how opportunity cost is related to the supply

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

Microeconomics Required Graphs and Terms

Microeconomics Required Graphs and Terms Microeconomics Required Graphs and Terms Understanding and explaining the economic concepts required by the AP and IB exams rests on a solid knowledge of fundamental economic graphs and terms. In order

More information

Chapter 16 Monopolistic Competition and Oligopoly

Chapter 16 Monopolistic Competition and Oligopoly Chapter 16 Monopolistic Competition and Oligopoly Market Structure Market structure refers to the physical characteristics of the market within which firms interact It is determined by the number of firms

More information

Mid-Term Econ 102 Fall03

Mid-Term Econ 102 Fall03 Mid-Term Econ 102 Fall03 Instruction 1. Use scantron 882-E 2. Any late work will be penalized. Each day late will cost 5 points. 3. This due back on December 8, 2003 4. Please use both of my lecture notes

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

SHORT-RUN PRODUCTION

SHORT-RUN PRODUCTION TRUE OR FALSE STATEMENTS SHORT-RUN PRODUCTION 1. According to the law of diminishing returns, additional units of the labour input increase the total output at a constantly slower rate. 2. In the short-run

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 13 Perfect Competition and the Supply Curve

Chapter 13 Perfect Competition and the Supply Curve Goldwasser AP Microeconomics Chapter 13 Perfect Competition and the Supply Curve BEFORE YOU READ THE CHAPTER Summary This chapter develops the model of perfect competition and then uses this model to discuss

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

Demand Equilibrium price Consumer sovereignty Elasticity Shortage Surplus

Demand Equilibrium price Consumer sovereignty Elasticity Shortage Surplus Social Studies AP Economics STANDARD SKILLS and CONCEPTS VOCABULARY Standard 1: Scarcity and Economic Reasoning Students will understand that productive resources are limited; therefore, people, institutions

More information

Solution to Selected Questions: CHAPTER 12 MONOPOLISTIC COMPETITION AND OLIGOPOLY

Solution to Selected Questions: CHAPTER 12 MONOPOLISTIC COMPETITION AND OLIGOPOLY Chulalongkorn University: BBA International Program, Faculty of Commerce and Accountancy 900 (Section ) Chairat Aemkulwat Economics I: Microeconomics Spring 05 Solution to Selected Questions: CHAPTER MONOPOLISTIC

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

Exercise Problems - Final Exam

Exercise Problems - Final Exam Exercise Problems - Final Exam *Take some time to go over these questions. Again, these questions are quite comparable to those in the real exam. Some of the questions may be quite straight forward, you

More information

C H A P T E R 8. Profit Maximization and Competitive Supply CHAPTER OUTLINE

C H A P T E R 8. Profit Maximization and Competitive Supply CHAPTER OUTLINE C H A P T E R 8 Profit Maximization and Competitive Supply CHAPTER OUTLINE 8.1 Perfectly Competitive Markets 8.2 Profit maximization 8.3 Marginal Revenue, Marginal Cost, and Profit Maximization 8.4 Choosing

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

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

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

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

In addition to the multiple choice and quantitative problems listed here, you should answer review questions 2, 4, 6, 7, 9; problems 1, 2, 3, 4.

In addition to the multiple choice and quantitative problems listed here, you should answer review questions 2, 4, 6, 7, 9; problems 1, 2, 3, 4. CHAPTER 3 The Demand for Labor In addition to the multiple choice and quantitative problems listed here, you should answer review questions 2, 4, 6, 7, 9; problems 1, 2, 3, 4. Multiple-Choice Choose the

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

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

CHAPTER 6 MARKET STRUCTURE

CHAPTER 6 MARKET STRUCTURE CHAPTER 6 MARKET STRUCTURE CHAPTER SUMMARY This chapter presents an economic analysis of market structure. It starts with perfect competition as a benchmark. Potential barriers to entry, that might limit

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

Chapter 11 Perfect Competition

Chapter 11 Perfect Competition These notes provided by Laura Lamb are intended to complement class lectures. The notes are based on chapter 11 of Microeconomics and Behaviour 2 nd Canadian Edition by Frank and Parker (2004). Chapter

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 15 Monopolistic Competition

Chapter 15 Monopolistic Competition Chapter 15 Monopolistic Competition 15.1 What Is Monopolistic Competition? 1) An industry with a large number of firms, differentiated products, and free entry and exit is called A) perfect competition.

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

Monopolistic Competition

Monopolistic Competition CHAPTER 13A After studying this chapter you will be able to Monopolistic Define and identify monopolistic competition Explain how output and price are determined in a monopolistically competitive industry

More information

Economics 2106 Principles of Microeconomics Exam 2 Feb 28, 2002 Professor Robert Collins

Economics 2106 Principles of Microeconomics Exam 2 Feb 28, 2002 Professor Robert Collins Economics 2106 Principles of Microeconomics Exam 2 Feb 28, 2002 Professor Robert Collins 1) The price elasticity of demand measures A) the responsiveness of quantity demanded to a change in price. B) the

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

Econ 101 Kong CMP final review session - solution 2014 fall. Benji Huang

Econ 101 Kong CMP final review session - solution 2014 fall. Benji Huang Econ 101 Kong CMP final review session - solution 2014 fall Benji Huang practice monopoly 1 A monopoly make positive economic profit in the long run because. A) can; barriers to entry prevent other firms

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

Behind the Supply Curve: Profit, Production, and Costs. Unit 4

Behind the Supply Curve: Profit, Production, and Costs. Unit 4 Behind the Supply Curve: Profit, Production, and Costs Unit 4 Total Revenue (TR) Price of the output times the quantity sold. P x Q $0 $4 $6 $6 $4 $0 TR Profit Money/revenue remaining after paying all

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. Eco201 Review questions for chapters 14, 15 and 7. Prof. Bill Even MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) A characteristic of monopolistic

More information

Econ 101: Principles of Microeconomics

Econ 101: Principles of Microeconomics Econ 101: Principles of Microeconomics Chapter 16 - Monopolistic Competition and Product Differentiation Fall 2010 Herriges (ISU) Ch. 16 Monopolistic Competition Fall 2010 1 / 18 Outline 1 What is Monopolistic

More information

Miami Dade College ECO 2023 Principles of Microeconomics Spring 2015 Practice Test #2

Miami Dade College ECO 2023 Principles of Microeconomics Spring 2015 Practice Test #2 Miami Dade College ECO 2023 Principles of Microeconomics Spring 2015 Practice Test #2 1. If a product's price rises by 6%, and its quantity demanded falls by 8%, then we can say that demand for this product

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

Costs of Production. What decisions lie behind the supply curve, and why is the supply curve upward sloping?

Costs of Production. What decisions lie behind the supply curve, and why is the supply curve upward sloping? Costs of Production What decisions lie behind the supply curve, and why is the supply curve upward sloping? Obviously, costs are crucial. We will begin by discussing opportunity cost in more detail, and

More information

Paul Krugman and Robin Wells. Microeconomics. Third Edition. Chapter 12 Perfect Competition and the Supply Curve

Paul Krugman and Robin Wells. Microeconomics. Third Edition. Chapter 12 Perfect Competition and the Supply Curve Paul Krugman and Robin Wells Microeconomics Third Edition Chapter 12 Perfect Competition and the Supply Curve Part 2: Profits and profit maximization 3. Profit maximization for firms in competitive markets

More information