Which of the following is NOT a barrier to entry that would allow a monopolist to keep potential competitors out of its market?

Which of the following is NOT a barrier to entry that would allow a monopolist to keep potential competitors out of its market?

A monopolist engages in price
discrimination

o

by charging the same price to all consumers.

o

by charging
a higher price to consumers whose demand is more inelastic.

o

by charging a lower price to consumers whose demand
is more inelastic.

o

by charging a lower price when marginal cost is
higher.

·
Economists generally define the short
run as being

o

that period of time in which all inputs are
variable.

o

any period of time less than one year.

o

that period
of time in which at least one of the firm’s inputs, usually plant size, is
fixed.

o

any period of time less than six months.

·
In the above figure, when this
monopolistically competitive firm produces its profit-maximizing output, it
sets a per-unit price of

·


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o

$13.

o

$10.

o

$11.

o

$8.

·
Refer to the above figure. Which
panel represents what happens in the U.S. job market in the short-run when U.S.
firms substitute labor outside of the U.S. for labor inside the U.S.?

·


.gcu.edu/learningPlatform/quiz/student.html?operation=startQuiz”>Enlarged View

o

Panel A

o

Panel B

o

Panel C

o

Panel D

·
The demand curve faced by a
monopolistically competitive firms is

o

unitary elastic.

o

horizontal.

o

downward
sloping.

o

vertical.

·
Refer to the above table. This firm
operates in a perfectly competitive market in which the market price is $10 per
unit. What is its profit-maximizing rate of production?

·


.gcu.edu/learningPlatform/quiz/student.html?operation=startQuiz”>Enlarged View

o

108 units

o

106 units

o

104 units

o

110 units

·
Julie always purchases the soda with
the lowest price. For Julie, the cross price elasticity of demand for brand X
and brand Y will be

o

impossible to determine without more information.

o

negative.

o

equal to 0.

o

positive.

·
In the above table, the average
physical product of the 3rd worker is

·


.gcu.edu/learningPlatform/quiz/student.html?operation=startQuiz”>Enlarged View

o

4.

o

5.

o

3.

o

12.

·
In a market for emission permits,
firms that emit below their allowed limits

o

are taxed by the government for the amount of
emissions.

o

will sell
their excess allowances through a trading system.

o

will buy even more allowances through a trading
system.

o

receive a subsidy for the amount of emissions.

·
Which of the following is a
characteristic of a monopoly market?

o

one firm

o

easy entry

o

firm is a price taker

o

many firms

·
Which of the following would NOT
affect a good’s price elasticity of demand?

o

The ease of substitution between goods

o

The cost of producing the good

o

The number
of substitute goods available

o

The proportion of one’s budget spent on an item

·
An inferior good has an income
elasticity of demand that is

o

positive.

o

positive but less than 1.

o

zero.

o

negative.

·
Which of the following is NOT a
characteristic of oligopoly firms?

o

Strategic dependence

o

Non-price
competition, such as advertising and promotions

o

Product differentiation

o

Perfectly elastic demand curves

·
Suppose at the current level of labor
used, MRP = $100 and MFC = $150. To maximize profits, the firm should

o

hire more labor.

o

expand production.

o

maintain the current level of labor.

o

reduce the
level of labor.

·
Other things held constant, after
some point hiring additional units of labor will cause the marginal physical
product of labor to decline because

o

the firm is a price taker.

o

the wage rate increases when additional workers are
hired.

o

the supply of labor is perfectly elastic.

o

of the law
of diminishing marginal product

·
n the above figure, the long-run cost
curve between points A and B illustrates

·


.gcu.edu/learningPlatform/quiz/student.html?operation=startQuiz”>Enlarged View

o

constant returns to scale.

o

diminishing marginal product.

o

economies of
scale.

o

diseconomies of scale.

·
The perfectly competitive firm cannot
influence the market price because

o

it is a price maker.

o

its costs are too high.

o

its
production is too small to affect the market.

o

it has market power.

·
If we add successive laborers to work
a given amount of land on a wheat farm, eventually

o

the increases in wheat harvested will get larger
and larger.

o

the increases in wheat harvested will rise at a
constant rate.

o

the
increases in wheat harvested will get smaller and smaller.

o

average total cost will fall to zero.

·
Which of the following statements
best defines private costs?

o

They represent explicit costs incurred by business
firms in the private sector.

o

They are
internal in the sense that the firm or household must explicitly take them into
account.

o

They are synonymous with social costs.

o

They are costs borne by people other than those who
commit the action.

·
Refer to the above figure. The profit
maximizing quantity for this firm is

·


.gcu.edu/learningPlatform/quiz/student.html?operation=startQuiz”>Enlarged View

o

Q3.

o

zero.

o

Q2.

o

Q1.

·
The additional revenue earned from
hiring one more worker is known as the

o

marginal
revenue product of labor.

o

marginal physical product of labor.

o

marginal factor cost of labor.

o

marginal utility of labor.

·
Which of the following is NOT a
barrier to entry that would allow a monopolist to keep potential competitors out
of its market?

o

The market
price of the product is too high.

o

Significant economies of scale exist.

o

The firm has a patent on the good or control over
some resource required for the production of the good.

o

The firm has government authorization to be a
monopoly.

·
For years, your neighbor insisted she
had no desire to own a computer. Recently, however, she purchased one and says
she did so because all her relatives have computers and she wants to exchange
e-mail with them. Your neighbor’s behavior is an example of

o

a switching cost.

o

the impact of negative market feedback.

o

limited-pricing behavior.

o

a network
effect.

·
Refer to the above figure. Ajax and
Greenco are oligopolists. Above you are given the payoff matrix for the two
firms giving the payoff associated with different pricing strategies. What is
the best strategy for Greenco if Ajax decides on charging a high price?

·


.gcu.edu/learningPlatform/quiz/student.html?operation=startQuiz”>Enlarged View

o

There is no best strategy.

o

High price

o

Low price

o

Not enough information is given to determine the
best strategy

·
If the absolute value of the price
elasticity of demand for good Y is 0.75, when there is a 30 percent increase in
price, we can conclude that quantity demanded

A.

has fallen by 35.0 percent.

B.

has fallen by 10.4 percent.

C.

has fallen by 22.5 percent.

D.

has fallen
by 40.0 percent.

·
The profit-maximizing output for the
perfectly competitive firm occurs at the point at which

o

TR – MR is at a maximum.

o

TR – ATC is at a maximum.

o

MR = MC.

o

TR – TC is at a minimum.

·
In the above figure, the
profit-maximizing output and price for this monopolistically competitive firm
are

·


.gcu.edu/learningPlatform/quiz/student.html?operation=startQuiz”>Enlarged View

o

13,000 units at a price of $7 per unit.

o

12,000 units at a price of $8 per unit.

o

10,000 units
at a price of $10 per unit.

o

10,000 units at a price of $5 per unit.

·
In the above figure, the
monopolistically competitive firm’s profit-maximizing output is

·


.gcu.edu/learningPlatform/quiz/student.html?operation=startQuiz”>Enlarged View

o

700 units.

o

1,000 units.

o

300 units.

o

900 units.

·
All of the following are
characteristics of monopolistic competition EXCEPT

o

many firms
in the industry.

o

advertising.

o

product differentiation.

o

a few firms dominate the industry.

·
When the costs of an action are not
fully borne by the two parties engaged in a transaction, this is called a(n)

o

externality.

o

equilibrium.

o

internal cost.

o

property right.

·
Suppose that the demand for pizza is
inelastic. If a pizzeria decided to lower the price of pizza, total
revenue would

o

increase.

o

stay the same.

o

decrease.

o

be maximized.

·
Industry X has four firms. The
largest firm in Industry X has more than 90 percent of the market share.
Industry Y also has four firms, but each of those four firms in Industry Y has
25 percent of the market share. The Herfindahl-Hirschman index will be

o

the same for both industries, but the four-firm
concentration will be larger for Industry Y than Industry X.

o

the same for both industries, but the four-firm
concentration will be larger for Industry X than Industry Y.

o

larger for Industry Y than Industry X, but the
four-firm concentration will be the same.

o

larger for
Industry X than Industry Y, but the four-firm concentration will be the same.

·
In the above table, the marginal
physical product of the 3rd worker is

·


.gcu.edu/learningPlatform/quiz/student.html?operation=startQuiz”>Enlarged View

o

12.

o

5.

o

4.

o

3.

·
In the above figure, what is the
profit-maximizing output and price?

·


.gcu.edu/learningPlatform/quiz/student.html?operation=startQuiz”>Enlarged View

o

10, $10

o

12, $10

o

10, $8

o

8, $7

·
If the social costs of refining oil
are greater than the private costs of oil refining, then

o

the amount of oil refining needs to increase in
order to bring social costs and private costs in line with each other.

o

users of products that use refined oil are paying
too much for the products.

o

there is too
much oil refining.

o

the external costs of oil refining are greater than
the social costs of oil refining.

·
Which of the following will cause a
shift in the demand curve of labor?

o

An increase or decrease in the productivity of
labor.

o

An increase or decrease in the demand for the
product labor produces.

o

A decline in the price of a complementary input .

o

all of the
above

·
Suppose a monopolist’s costs and
revenues are as follows: ATC = $45.00; MC = $35.00; MR = $35.00; P = $45.00.
The firm should

o

shut down.

o

increase output and decrease price.

o

decrease output and increase price.

o

not change
output or price.

·
The perfectly competitive firm faces

o

constant marginal costs.

o

a downward sloping demand curve.

o

a horizontal supply function.

o

perfectly
elastic demand.

·
If five firms of similar sizes join
to form a cartel, then it is most likely that

o

all five firms as a group will have falling
profits, but increased output.

o

they will charge a common, lower market price.

o

all five firms will earn the same profits as
before.

o

they will
collectively produce less than before.

·
Which of the following methods could
be used to correct for external costs?

o

Impose a tax or an effluent fee on the offenders.

o

Have the offender clean up the pollution it caused.

o

Require firms in the industry to install pollution
control devices.

o

All of the
above would be appropriate.


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