2) All combinations of capital and labor along a given isoquant cost the same amount.

Size: px
Start display at page:

Download "2) All combinations of capital and labor along a given isoquant cost the same amount."

Transcription

1 Micro Problem Set III WCC Fall 2014 A=True / B=False 15 Points 1) If MC is greater than AVC, AVC must be rising. 2) All combinations of capital and labor along a given isoquant cost the same amount. 3) An increasing MPP leads to decreasing MC. 4) If the MPP L /P L > MPP K /P K, a cost minimizing firm should reduce its use of capital and increase its use of labor. 5) If price is less than ATC a perfectly competitive firm should immediately shut down. 6) Under both monopoly and perfect competition, there can be no exit or entry in the short-run. 7) Compared to a perfectly competitive industry, a monopolist who charges a single price produces a smaller output and charges a higher price. 8) The demand curve for a perfectly competitive industry is horizontal. 9) When regulatory agencies set price equal to average total cost, a subsidy is necessary to keep the regulated firm in business. 10) Often public utilities are permitted to operate as monopolies because they enjoy economies of scale. 11) A monopoly firm's market power enables it to shift the full cost of a tax on to consumers. 12) Under both perfect competition and monopoly, a firm s demand curve can also be described as its average revenue curve. 13) Monopolistically competitive firms typically produce an output at the least cost position on their average total cost curve. 14) If entry by new first lowers the cost of production, the long-run industry supply curve will have a negative slope under perfect competition. 15) Interlocking directorates were prohibited by the Sherman Antitrust Act.

2 Multiple Choice Pick the single best answer. 30 Points 16) Allie's Donuts produces about 600 dozen donuts per day. Due to bad weather, there is a shortage of wheat and the price of flour has risen 20 percent. Which of the cost curves for Allie's will shift up? a. marginal cost only b. marginal cost and average total cost only c. marginal cost, average variable cost, and average total cost only d. marginal cost, average variable cost, average total cost, and average fixed cost 17) If MC > MR a. output should be reduced. b. marginal profit is positive. c. there are losses. d. the total profit curve has yet to peak. e. none of the above. 18) The federal government imposes a 50 percent tax on the economic profit of all companies. We can expect that firms will a. raise prices. b. reduce output. c. raise prices and reduce output. d. do nothing. 19) In 1975, there was a great surplus of tankers on the world's oceans. As a result, Exxon was able to rent a tanker and the services of its crew from a Japanese ship owner for one year at a cost of $900,000. Salaries of the sailors are the responsibility of the ship owner, and wages for the crew of this tanker were $2 million per year. Japanese unions require crews be paid even if the ship does not sail. For the Japanese, this deal obviously a. was irrational. b. maximized profits. c. increased losses. d. was a mistake. 20) The ATC and AVC curves get closer to each other as output increase because a. AFC approaches zero as output increases. b. fixed costs are being spread over a larger and larger output. c. some costs do not change as output increases. d. all of the above are true.

3 21) Which of the following will shift the AC curve (everything else equal)? a. the price of the product rises b. technical change raises MPP of one input c. output is increased d. increasing returns to scale 22) A cost curve drawn with years on the horizontal axis and costs per unit on the vertical axis would be a(n) a. analytical cost curve. b. long run cost curve. c. historical cost curve. d. theoretical cost curve. 23) Which of the following is not a characteristic of long-run equilibrium? a. Total revenue equals total costs. b. Marginal costs are rising as output increases. c. Excess profits are zero. d. Firms are entering the industry. 24) Richard owns Gas Monkey Garage. He buys old cars and fixes them up for sale. Recently Richard bought a cheap 57 Chevy at auction for $14,000. While he could have simply relisted the car on his website and sold it for $20,000, he chose to lower the suspension at a cost of $2,000, give it a wicked cool paint job for $3,000, and have Sue install a two-tone leather interior for $4,000. He then sold this car for $38,000. What is Richard s economic profit on this restoration job? a. $38,000 b. $9,000 c. $15,000 d. -$5,000 25) Given the information in the table to the right, where does diminishing MPP set in? a. before the first unit of labor b. between the first and second units of labor c. between the third and fourth units of labor d. between the fourth and fifth units of labor e. between the fifth and sixth units of labor Labor TPP

4 26) Successful advertising by a monopolist may a. reduce the gap between the monopoly and competitive industry output. b. increase the gap between the monopoly and competitive industry output. c. cause the monopolist to overproduce. d. cause the monopolist to decrease output. 27) Entry of new firms into a perfectly competitive industry causes the short-run industry supply curve to a. shift out. b. shift back. c. shift up. d. shift down. 28) A perfectly competitive industry in long-run equilibrium is described as being allocatively efficient because a. firms produce a level of output such that marginal utility equals marginal cost for the last unit produced. b. firms produce where marginal revenue equals marginal cost. c. entry and exit are possible in the long-run. d. firms are not profitable. 29) Which of the following is not characteristic of perfect competition? a. Many buyers and sellers b. Brand name advertising by individual firms c. Homogeneous products d. Perfect information e. Freedom of entry and exit in the long-run 30) Suppose Thelma and Louise both sell fried green tomatoes in a perfectly competitive market. If Louise increases her output, a. Thelma must reduce output b. The price Thelma can charge falls c. The price Thelma can charge rises d. The price Thelma can charge is unaffected 31) The demand curve for an individual perfectly competitive firm is a. Perfectly inelastic b. Perfectly elastic c. Unit elastic d. Downward sloping e. Nonlinear

5 32) Which of the following is NOT true with regard to economic profit? a. Economic profit equals total revenue minus total cost b. A firm earning an economic profit must be earning an accounting profit c. Firms attempt to maximize economic profit d. Economic profit attracts new firms to industries without barriers to entry 33) If a firm in perfect competition charges the market price of $14 per unit, a. Its marginal revenue will be $14, and its average revenue will be less than $14 b. It will sell no output c. Its average recenue will by $14, and its marginal revenue will be less than $14 per unit d. Its average revenue and its marginal revenue will both be $14 e. Its average revenue and marginal revenue will be $14 only for the first unit sold 34) The golden rule of profit maximization states that any firm maximizes profit by producing where a. Demand is unit elastic and total revenue is maximized b. Price equals average revenue c. Price equals marginal revenue d. Price equals marginal cost e. Marginal revenue equals marginal cost 35) Consider a perfectly competitive firm in the short-run. The firm is maximizing profit at Q = 3,000. Then its fixed costs increase. Assuming it still produces, the profitmaximizing output is now a. Greater than 3,000 and its profits decrease b. Less than 3,000 units and its profits decrease c. Equal to 3,000 and its profits decrease d. Equal to 3,000 and its profits remain the same 36) In the short run, if a firm shuts down, its loss will be a. Zero b. Equal to its variable costs c. Equal to its fixed costs d. Equal to its fixed costs minus its variable costs

6 37) When we say that perfectly competitive firms achieve allocative efficiency in the long-run, we mean that a. entry and exit occur until all firms earn an normal profit b. they produce at the low point on their ATC curve c. they charge a price equal to the lowest point on their ATC d. they produce a level of output at which the MC of producing the last unit is just equal to the MU gained from consuming the last unit e. there are no fixed costs under perfect competition in the long-run 38) Which of the following statements is true of a monopolist? a. The firm charges the highest possible price. b. The firm will always earn an economic profit. c. The firm might earn an economic profit in the long-run. d. The firm generates a larger consumer surplus than a perfectly competitive industry. e. The firm is more productively efficient than a perfectly competitive firm. 39) The fact that an individual competitive firm's demand curve is horizontal means a. consumers will pay any price for the output. b. an increase in industry output will not alter price. c. each firm has no control over output. d. none on the above. 40) In the figure below, which is the total revenue curve of the perfect competitor? a. A b. B c. C d. None of the above

7 41) A monopolist has power that a competitor does not. The monopoly may a. select any combination of price and quantity they desire for the product. b. select any price-quantity combination along the demand curve for the product. c. maximize profit by setting price equal to long run cost. d. all of the above. 42) In which of the following ways is a monopolist different from a perfect competitor? a. Average cost will continually drop as output expands. b. Price is above marginal revenue. c. Average total cost equals average fixed costs plus average variable costs. d. The demand curve for the industry has a negative slope. 43) The figure below shows a perfectly competitive industry's supply and demand curves in panel (1) and the cost curves of a firm in the industry in panel (2). In the case of S 2, the firm a. should shut down. b. is incurring losses. c. is earning zero economic profits. d. is earning economic profit greater than zero. 44) In economics, products are considered "heterogeneous" only if a. they are physically or chemically different b. sellers decide that they are different c. buyers perceive them as being different d. they are produced by different firms

8 45) Consider Figure 22.1 above. If the monopolist charges the same price to all of her customers, which of the following will not be true? a. The monopolist will select output level G. b. The monopolist will charge a price equal to B. c. The consumer surplus will be equal to area ACH. d. There will be a deadweight loss equal to area EFH.

9 Short Answer Directions: Please answer the following question on a single, separate, 8.5x11 sheet of paper with no fringes. Your work must meet my standards for neatness (not yours) or it will not be graded. Do not simply write down the first thing that comes to mind. Think carefully, organize your thoughts, and use your own words. While a one sentence answer won t suffice, you should be able to answer the following question in no more than a single, wellcrafted paragraph. (And I am not interested in reading more than that.) 1) A pure monopoly guarantees economic profits." Discuss the extent to which this is a valid statement.

Directions: This problem set is graded. Feel free to ask me questions. Turn your answers in on the provided scantron form.

Directions: This problem set is graded. Feel free to ask me questions. Turn your answers in on the provided scantron form. Micro Problem Set III WCC Fall 2015 Directions: This problem set is graded. Feel free to ask me questions. Turn your answers in on the provided scantron form. A=True / B=False 25 Points 1) All combinations

More information

Micro Problem Set 2 WCC Winter 2015

Micro Problem Set 2 WCC Winter 2015 Micro Problem Set 2 WCC Winter 2015 True=A/False=B 20 points 1) For any quota that exists, there is a tariff that will restrict trade by an equivalent amount. 2) Imposing a tariff usually increases producer

More information

ECON 102 Brown Final Exam (New Material) Practice Exam Solutions

ECON 102 Brown Final Exam (New Material) Practice Exam Solutions www.liontutors.com ECON 102 Brown Final Exam (New Material) Practice Exam Solutions 1. B A very large percent of their earnings comes from economic rent 2. B Any funds left, after everyone who has a claim

More information

Unit 6 Perfect Competition and Monopoly - Practice Problems

Unit 6 Perfect Competition and Monopoly - Practice Problems Unit 6 Perfect Competition and Monopoly - Practice Problems Multiple Choice Identify the choice that best completes the statement or answers the question. 1. One characteristic of a perfectly competitive

More information

Perfect competition: occurs when none of the individual market participants (ie buyers or sellers) can influence the price of the product.

Perfect competition: occurs when none of the individual market participants (ie buyers or sellers) can influence the price of the product. Perfect Competition In this section of work and the next one we derive the equilibrium positions of firms in order to determine whether or not it is profitable for a firm to produce and, if so, what quantities

More information

FINALTERM EXAMINATION FALL 2006

FINALTERM EXAMINATION FALL 2006 FINALTERM EXAMINATION FALL 2006 QUESTION NO: 1 (MARKS: 1) - PLEASE CHOOSE ONE Compared to the equilibrium price and quantity sold in a competitive market, a monopolist Will charge a price and sell a quantity.

More information

2010 Pearson Education Canada

2010 Pearson Education Canada What Is Perfect Competition? Perfect competition is an industry in which Many firms sell identical products to many buyers. There are no restrictions to entry into the industry. Established firms have

More information

CONTENTS. Introduction to the Series. 1 Introduction to Economics 5 2 Competitive Markets, Demand and Supply Elasticities 37

CONTENTS. Introduction to the Series. 1 Introduction to Economics 5 2 Competitive Markets, Demand and Supply Elasticities 37 CONTENTS Introduction to the Series iv 1 Introduction to Economics 5 2 Competitive Markets, Demand and Supply 17 3 Elasticities 37 4 Government Intervention in Markets 44 5 Market Failure 53 6 Costs of

More information

INTRODUCTION ECONOMIC PROFITS

INTRODUCTION ECONOMIC PROFITS INTRODUCTION This chapter addresses the following key questions: What are profits? What are the unique characteristics of competitive firms? How much output will a competitive firm produce? Chapter 7 THE

More information

ECON 102 Kagundu Final Exam (New Material) Practice Exam Solutions

ECON 102 Kagundu Final Exam (New Material) Practice Exam Solutions www.liontutors.com ECON 102 Kagundu Final Exam (New Material) Practice Exam Solutions 1. A A large number of firms will be able to operate in the industry because you only need to produce a small amount

More information

Answer all the following questions:-

Answer all the following questions:- Answer all the following questions:- QUESTION ONE / TRUE ( ) OR FALSE (X) / (10 MARKS) 1. Total revenue = price x sold quantity. 2. The purpose of a production function is to tell us just how much output

More information

Practice Exam 3: S201 Walker Fall with answers to MC

Practice Exam 3: S201 Walker Fall with answers to MC Practice Exam 3: S201 Walker Fall 2007 - with answers to MC Print Your Name: I. Multiple Choice (3 points each) 1. If marginal utility is falling then A. total utility must be falling. B. marginal utility

More information

MICROECONOMICS - CLUTCH CH PERFECT COMPETITION.

MICROECONOMICS - CLUTCH CH PERFECT COMPETITION. !! www.clutchprep.com CONCEPT: THE FOUR MARKET MODELS Market structure describes the environment in which a firm operates, determined by the Perfect Competition Monopolistic Competition Oligopoly Monopoly

More information

Unit 7. Firm behaviour and market structure: monopoly

Unit 7. Firm behaviour and market structure: monopoly Unit 7. Firm behaviour and market structure: monopoly Quiz 1. What of the following can be considered as the measure of a market power? A. ; B. ; C.. Answers A and B are both correct; E. All of the above

More information

2007 Thomson South-Western

2007 Thomson South-Western Monopolistic Competition Characteristics: Many sellers Product differentiation Free entry and exit In the long run, profits are driven to zero Firms have some control over price What does the costs graph

More information

a) I, II and III. b) I c) II and III only. d) I and III only. 2. Refer to the PPF diagram below. PPF

a) I, II and III. b) I c) II and III only. d) I and III only. 2. Refer to the PPF diagram below. PPF 1. Suppose that - at a given level of an economic activity - marginal social cost is greater than marginal social benefit. Which of the following statements is TRUE? I. Social surplus would be higher at

More information

Chapter 13. Microeconomics. Monopolistic Competition: The Competitive Model in a More Realistic Setting

Chapter 13. Microeconomics. Monopolistic Competition: The Competitive Model in a More Realistic Setting Microeconomics Modified by: Yun Wang Florida International University Spring, 2018 1 Chapter 13 Monopolistic Competition: The Competitive Model in a More Realistic Setting Chapter Outline 13.1 Demand and

More information

2) A production method that relies on large quantities of labor and smaller quantities of capital equipment is referred to as a: 2)

2) A production method that relies on large quantities of labor and smaller quantities of capital equipment is referred to as a: 2) Micro: TA Session 4, Problem set MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The main difference between a short-run production function and

More information

ECON 102 Brown Final Exam Practice Exam Solutions

ECON 102 Brown Final Exam Practice Exam Solutions www.liontutors.com ECON 102 Brown Final Exam Practice Exam Solutions 1. B 2. C 3. C All products are identical (homogenous) in perfect competition so there is no such thing as brand preference. 4. C Breakeven

More information

CH 13. Name: Class: Date: Multiple Choice Identify the choice that best completes the statement or answers the question.

CH 13. Name: Class: Date: Multiple Choice Identify the choice that best completes the statement or answers the question. Class: Date: CH 13 Multiple Choice Identify the choice that best completes the statement or answers the question. 1. One requirement for an industry to be perfectly competitive is that a. sellers and buyers

More information

Eco 202 Exam 2 Spring 2014

Eco 202 Exam 2 Spring 2014 Eco 202 Exam 2 Spring 2014 PLEASE ANSWER 50 OF THE FOLLOWING QUESTIONS. 1. Jon Brooks quit his job in a bicycle shop, where he earned $15,000 per year, to become a graduate student in economics. At the

More information

Practice Exam 3: S201 Walker Fall 2009

Practice Exam 3: S201 Walker Fall 2009 Practice Exam 3: S201 Walker Fall 2009 I. Multiple Choice (3 points each) 1. Which of the following statements about the short-run is false? A. The marginal product of labor may increase or decrease. B.

More information

23 Perfect Competition

23 Perfect Competition 23 Perfect Competition Learning Objectives After you have studied this chapter, you should be able to 1. define price taker, total revenues, marginal revenue, short-run shutdown price, short-run breakeven

More information

ECO 2023 Principles of Microeconomics Fall 2013 Practice Test #2. 1. Which of the following are factors of production?

ECO 2023 Principles of Microeconomics Fall 2013 Practice Test #2. 1. Which of the following are factors of production? ECO 2023 Principles of Microeconomics Fall 2013 Practice Test #2 1. Which of the following are factors of production? A. Output in a production function. B. Productivity. C. Land, labor, capital, and entrepreneurship.

More information

Lesson 3-2 Profit Maximization

Lesson 3-2 Profit Maximization Lesson 3-2 Profit Maximization Standard 3b: Students will explain the 5 dimensions of market structure and identify how perfect competition, monopoly, monopolistic competition, and oligopoly are characterized

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. Sample Test 3 Ch 10-13 Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) A cost incurred in the production of a good or service and for which

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. Micro - HW 4 MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) In central Florida during the spring, strawberry growers are price takers. The reason

More information

Quiz #5 Week 04/12/2009 to 04/18/2009

Quiz #5 Week 04/12/2009 to 04/18/2009 Quiz #5 Week 04/12/2009 to 04/18/2009 You have 30 minutes to answer the following 17 multiple choice questions. Record your answers in the bubble sheet. Your grade in this quiz will count for 1% of your

More information

Slides and Images, Worth Publishers Inc. 8-1

Slides and Images, Worth Publishers Inc. 8-1 Perfect Competition Michael J. Murray Slides and Images, Worth Publishers Inc. 8-1 Market Structure Analysis By observing a few industry characteristics, we can predict pricing and output behavior of the

More information

AP Microeconomics Review With Answers

AP Microeconomics Review With Answers AP Microeconomics Review With Answers 1. Firm in Perfect Competition (Long-Run Equilibrium) 2. Monopoly Industry with comparison of price & output of a Perfectly Competitive Industry (which means show

More information

Microeconomics: MIE1102

Microeconomics: MIE1102 TEXT CHAPTERS TOPICS 1, 2 ECONOMICS, ECONOMIC SYSTEMS, MARKET ECONOMY 3 DEMAND AND SUPPLY. MARKET EQUILIBRIUM 4 ELASTICITY OF DEMAND AND SUPPLY 5 DEMAND & CONSUMER BEHAVIOR 6 PRODUCTION FUNCTION 7 COSTS

More information

Short-Run Costs and Output Decisions

Short-Run Costs and Output Decisions Semester-I Course: 01 (Introductory Microeconomics) Unit IV - The Firm and Perfect Market Structure Lesson: Short-Run Costs and Output Decisions Lesson Developer: Jasmin Jawaharlal Nehru University Institute

More information

Micro Semester Review Name:

Micro Semester Review Name: Micro Semester Review Name: The following review is set up to emphasize certain concepts, graphs and terms. It is the responsibility of the individual teachers to emphasize and review the analysis aspects

More information

ECON 2100 (Summer 2016 Sections 10 & 11) Exam #3C

ECON 2100 (Summer 2016 Sections 10 & 11) Exam #3C ECON 21 (Summer 216 Sections 1 & 11) Exam #3C Multiple Choice Questions: (3 points each) 1. I am taking of the exam. C. Version C 2. is a market structure in which there is one single seller of a unique

More information

ECON 2100 (Summer 2016 Sections 10 & 11) Exam #3D

ECON 2100 (Summer 2016 Sections 10 & 11) Exam #3D ECON 21 (Summer 216 Sections 1 & 11) Exam #3D Multiple Choice Questions: (3 points each) 1. I am taking of the exam. D. Version D 2. is a market structure in which there is one single seller of a unique

More information

Practice Exam 3: S201 Walker Fall 2004

Practice Exam 3: S201 Walker Fall 2004 Practice Exam 3: S201 Walker Fall 2004 I. Multiple Choice (3 points each) 1. Which of the following statements about the short-run is false? A. The marginal product of labor may increase or decrease. B.

More information

Econ 2113: Principles of Microeconomics. Spring 2009 ECU

Econ 2113: Principles of Microeconomics. Spring 2009 ECU Econ 2113: Principles of Microeconomics Spring 2009 ECU Chapter 12 Monopoly Market Power Market power is the ability to influence the market, and in particular the market price, by influencing the total

More information

Microeconomics Exam Notes

Microeconomics Exam Notes Microeconomics Exam Notes Opportunity Cost What you give up to get it Production Possibility Frontier Maximum attainable combination of two products (Concept of Opportunity Cost). Main Decision Makers:

More information

ECON 101 KONG Midterm 2 CMP Review Session. Presented by Benji Huang

ECON 101 KONG Midterm 2 CMP Review Session. Presented by Benji Huang ECON 101 KONG Midterm 2 CMP Review Session Presented by Benji Huang Chapter 5 Efficiency and Equity Benefit, Cost, Surplus Consumers (1) A consumer benefits from the consumption of a product this benefit

More information

ECON 200. Introduction to Microeconomics

ECON 200. Introduction to Microeconomics ECON 200. Introduction to Microeconomics Homework 5 Part II Name: [Multiple Choice] 1. A firm is a natural monopoly if it exhibits the following as its output increases: (d) a. decreasing marginal revenue

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 Fatma Nur Karaman 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

Practice Test for Midterm 2 Econ Fall 2009 Instructor: Soojae Moon

Practice Test for Midterm 2 Econ Fall 2009 Instructor: Soojae Moon Practice Test for Midterm 2 Econ 2010-200 Fall 2009 Instructor: Soojae Moon Please read carefully and choose the choice that best completes the statement or answers the question. Table 7-2 This table refers

More information

4. Which of the following statements about marginal revenue for a perfectly competitive firm is incorrect? A) TR

4. Which of the following statements about marginal revenue for a perfectly competitive firm is incorrect? A) TR Name: Date: 1. Which of the following will not be true of a perfectly competitive market? A) Buyers and sellers will have an imperceptible effect on the market. B) Firms can freely enter and exit the market.

More information

Ch. 9 LECTURE NOTES 9-1

Ch. 9 LECTURE NOTES 9-1 Ch. 9 LECTURE NOTES I. Four market models will be addressed in Chapters 9-11; characteristics of the models are summarized in Table 9.1. A. Pure competition entails a large number of firms, standardized

More information

ECON 2100 (Summer 2014 Sections 08 & 09) Exam #3D

ECON 2100 (Summer 2014 Sections 08 & 09) Exam #3D ECON 21 (Summer 214 Sections 8 & 9) Exam #3D Multiple Choice Questions: (3 points each) 1. I am taking of the exam. D. Version D 2. If a firm is currently operating at a point where costs of production

More information

REDEEMER S UNIVERSITY

REDEEMER S UNIVERSITY REDEEMER S UNIVERSITY Km 46/48 Lagos Ibadan Expressway, Redemption City, Ogun State COLLEGE OF MANAGEMENT SCIENCE DEPARTMENT OF ECONOMICS AND BUSINESS STUDIES COURSE CODE /TITLE ECO 202/Microeconomics

More information

Section I (20 questions; 1 mark each)

Section I (20 questions; 1 mark each) Foundation Course in Managerial Economics- Solution Set- 1 Final Examination Marks- 100 Section I (20 questions; 1 mark each) 1. Which of the following statements is not true? a. Societies face an important

More information

a. Sells a product differentiated from that of its competitors d. produces at the minimum of average total cost in the long run

a. Sells a product differentiated from that of its competitors d. produces at the minimum of average total cost in the long run I. From Seminar Slides: 3, 4, 5, 6. 3. For each of the following characteristics, say whether it describes a perfectly competitive firm (PC), a monopolistically competitive firm (MC), both, or neither.

More information

CLEP Microeconomics Practice Test

CLEP Microeconomics Practice Test Practice Test Time 90 Minutes 80 Questions For each of the questions below, choose the best answer from the choices given. 1. In economics, the opportunity cost of an item or entity is (A) the out-of-pocket

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) Which of the following statements is correct? A) Consumers have the ability to buy everything

More information

MICROECONOMICS - CLUTCH CH MONOPOLISTIC COMPETITION.

MICROECONOMICS - CLUTCH CH MONOPOLISTIC COMPETITION. !! www.clutchprep.com CONCEPT: CHARACTERISTICS OF MONOPOLISTIC COMPETITION A market is in monopolistic competition when: Nature of Good: The goods for sale are, but not identical - Products are said to

More information

Chapter 10 Pure Monopoly

Chapter 10 Pure Monopoly Chapter 10 Pure Monopoly Multiple Choice Questions 1. Pure monopoly means: A. any market in which the demand curve to the firm is downsloping. B. a standardized product being produced by many firms. C.

More information

BUSINESS ECONOMICS (PAPER IV-PART I)

BUSINESS ECONOMICS (PAPER IV-PART I) BUSINESS ECONOMICS (PAPER IV-PART I) (60 MARKS) Q1: Macroeconomics is also called economics (a) applied (b) aggregate (c) experimental (d) none Q2: A Study of how increase in the corporate income tax rate

More information

Indicate whether the sentence or statement is True or False. Mark "A" if the statement is True or "B" if it is False.

Indicate whether the sentence or statement is True or False. Mark A if the statement is True or B if it is False. 2004 SLC Economics Page 1 Indicate whether the sentence or statement is True or False. Mark "A" if the statement is True or "B" if it is False. 1. The marginal social cost equals the marginal private cost

More information

Problem Set 4 Eco 112, Fall 2011 Chapters covered: Ch. 8 and Ch. 9 (up to slide 15 Price Discrimination) Due date: October 20, 2011

Problem Set 4 Eco 112, Fall 2011 Chapters covered: Ch. 8 and Ch. 9 (up to slide 15 Price Discrimination) Due date: October 20, 2011 Problem Set 4 Eco 112, Fall 2011 Chapters covered: Ch. 8 and Ch. 9 (up to slide 15 Price Discrimination) Due date: October 20, 2011 There are 30 multiple choice questions in this problem set. Answer these

More information

Ecn Intermediate Microeconomic Theory University of California - Davis June 11, 2009 Instructor: John Parman. Final Exam

Ecn Intermediate Microeconomic Theory University of California - Davis June 11, 2009 Instructor: John Parman. Final Exam Ecn 100 - Intermediate Microeconomic Theory University of California - Davis June 11, 2009 Instructor: John Parman Final Exam You have until 8pm to complete the exam, be certain to use your time wisely.

More information

Chapter 5: Price Controls: Multiple Choice Questions Chapter 6: Elasticity Multiple Choice Questions

Chapter 5: Price Controls: Multiple Choice Questions Chapter 6: Elasticity Multiple Choice Questions Chapter 5: Price Controls: Multiple Choice Questions 1. ANSWER: d. ceiling. 2. ANSWER: a. a shortage, which cannot be eliminated through market adjustment. 3. ANSWER: b. the equilibrium price is below

More information

Economics. Monopolistic Perfect Competition. Monopolistic Competition. Monopolistic Competition 11/29/2013. The Big Picture. Perfect Competition

Economics. Monopolistic Perfect Competition. Monopolistic Competition. Monopolistic Competition 11/29/2013. The Big Picture. Perfect Competition 16 Modified by Joseph Tao-yi Wang Ron Cronovich The Big Picture Chapter 13: The cost of production Now, we will look at firm s revenue But revenue depends on market structure 1. Competitive market (chapter

More information

1 of 14 5/1/2014 4:56 PM

1 of 14 5/1/2014 4:56 PM 1 of 14 5/1/2014 4:56 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

Eco402 - Microeconomics Glossary By

Eco402 - Microeconomics Glossary By Eco402 - Microeconomics Glossary By Break-even point : the point at which price equals the minimum of average total cost. Externalities : the spillover effects of production or consumption for which no

More information

Syllabus item: 42 Weight: 3

Syllabus item: 42 Weight: 3 1.5 Theory of the firm and its market structures - Production and costs Syllabus item: 42 Weight: 3 Definition: Total product (TP): The total output that a firm produces, using its fixed and variable factors

More information

ECON 260 (2,3) Practice Exam #4 Spring 2007 Dan Mallela

ECON 260 (2,3) Practice Exam #4 Spring 2007 Dan Mallela ECON 260 (2,3) Practice Exam #4 Spring 2007 Dan Mallela Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. 1. Profit is defined as a. net revenue

More information

CH 14. Name: Class: Date: Multiple Choice Identify the choice that best completes the statement or answers the question.

CH 14. Name: Class: Date: Multiple Choice Identify the choice that best completes the statement or answers the question. Class: Date: CH 14 Multiple Choice Identify the choice that best completes the statement or answers the question. 1. We define a monopoly as a market with a. one supplier and no barriers to entry. b. one

More information

ECO201: PRINCIPLES OF MICROECONOMICS FIRST MIDTERM EXAMINATION

ECO201: PRINCIPLES OF MICROECONOMICS FIRST MIDTERM EXAMINATION YOUR NAME Row Number ECO201: PRINCIPLES OF MICROECONOMICS FIRST MIDTERM EXAMINATION Prof. Bill Even November 14, 2011 FORM 4 Directions 1. Fill in your scantron with your unique-id and the form number

More information

ECO201: PRINCIPLES OF MICROECONOMICS FIRST MIDTERM EXAMINATION

ECO201: PRINCIPLES OF MICROECONOMICS FIRST MIDTERM EXAMINATION YOUR NAME Row Number ECO201: PRINCIPLES OF MICROECONOMICS FIRST MIDTERM EXAMINATION Prof. Bill Even November 14, 2011 FORM 2 Directions 1. Fill in your scantron with your unique-id and the form number

More information

Textbook Media Press. CH 12 Taylor: Principles of Economics 3e 1

Textbook Media Press. CH 12 Taylor: Principles of Economics 3e 1 CH 12 Taylor: Principles of Economics 3e 1 Monopolistic Competition and Differentiated Products Monopolistic competition refers to a market where many firms sell differentiated products. Differentiated

More information

Lecture 11. Firms in competitive markets

Lecture 11. Firms in competitive markets Lecture 11 Firms in competitive markets By the end of this lecture, you should understand: what characteristics make a market competitive how competitive firms decide how much output to produce how competitive

More information

Economic Analysis for Business Decisions Multiple Choice Questions Unit-2: Demand Analysis

Economic Analysis for Business Decisions Multiple Choice Questions Unit-2: Demand Analysis Economic Analysis for Business Decisions Multiple Choice Questions Unit-2: Demand Analysis 1. The law of demand states that an increase in the price of a good: a. Increases the supply of that good. b.

More information

Chapter 13 Monopolistic Competition: The Competitive Model in a More Realistic Setting

Chapter 13 Monopolistic Competition: The Competitive Model in a More Realistic Setting Economics 6 th edition 1 Chapter 13 Monopolistic Competition: The Competitive Model in a More Realistic Setting Modified by Yulin Hou For Principles of Microeconomics Florida International University Fall

More information

ECO 162: MICROECONOMICS INTRODUCTION TO ECONOMICS Quiz 1. ECO 162: MICROECONOMICS DEMAND Quiz 2

ECO 162: MICROECONOMICS INTRODUCTION TO ECONOMICS Quiz 1. ECO 162: MICROECONOMICS DEMAND Quiz 2 INTRODUCTION TO ECONOMICS Quiz 1 Answer the entire question You are required to give brief explanation for each of the questions. 1. Explain the basic economic concepts with the help of Production Possibility

More information

Final Term Examination Spring 2006 Time Allowed: 150 Minutes. Question No. 1 Marks :1. Question No.

Final Term Examination Spring 2006 Time Allowed: 150 Minutes. Question No. 1 Marks :1. Question No. www.vustuff.com WWW.VUTUBE.EDU.PK ECO402 Microeconomic s Final Term Examination Spring 2006 Time Allowed: 150 Minutes Question No. 1 Marks :1 Economies of scale and economies of scope are synonymous. Question

More information

Unit 13 AP Economics - Practice

Unit 13 AP Economics - Practice DO NOT WRITE ON THIS TEST! Unit 13 AP Economics - Practice Multiple Choice Identify the choice that best completes the statement or answers the question. 1. A natural monopoly exists whenever a single

More information

Monopolistic Competition. Chapter 17

Monopolistic Competition. Chapter 17 Monopolistic Competition Chapter 17 The Four Types of Market Structure Number of Firms? Many firms One firm Few firms Differentiated products Type of Products? Identical products Monopoly Oligopoly Monopolistic

More information

Econ 98 (CHIU) Midterm 1 Review: Part A Fall 2004

Econ 98 (CHIU) Midterm 1 Review: Part A Fall 2004 Disclaimer: The review may help you prepare for the exam. The review is not comprehensive and the selected topics may not be representative of the exam. In fact, we do not know what will be on the exam.

More information

Microeconomics. Use the graph below to answer question number 3

Microeconomics. Use the graph below to answer question number 3 More Tutorial at Microeconomics 1. Opportunity costs are the values of the: a. minimal budgets of families on welfare b. hidden charges passed on to consumers c. monetary costs of goods and services *

More information

Microeconomics. Use the graph below to answer question number 3

Microeconomics. Use the graph below to answer question number 3 More Tutorial at Microeconomics 1. Opportunity costs are the values of the: a. minimal budgets of families on welfare b. hidden charges passed on to consumers c. monetary costs of goods and services *

More information

Monopoly and How It Arises

Monopoly and How It Arises Monopoly and How It Arises A monopoly is a market: That produces a good or service for which no close substitute exists In which there is one supplier that is protected from competition by a barrier preventing

More information

Chief Reader Report on Student Responses:

Chief Reader Report on Student Responses: Chief Reader Report on Student Responses: 2018 AP Microeconomics Free-Response Questions Number of Students Scored 90,032 Number of Readers 91 Score Distribution Exam Score N %At 5 18,827 20.9 4 25,070

More information

CH 14: Perfect Competition

CH 14: Perfect Competition CH 14: Perfect Competition Characteristics of Perfect Competition 1. Both buyers and sellers are price takers A price taker is a firm (or individual) who takes the price determined by market supply and

More information

ECON 4550 (Fall 2011) Exam 1

ECON 4550 (Fall 2011) Exam 1 ECON 455 (Fall 211) Exam 1 Name Multiple Choice Questions: (4 points each) 1. Jimmy is risk neutral. He is faced with a random payoff with expected value of $2,. Further, for this payoff the highest possible

More information

Economics. Monopolistic Competition. Firms in Competitive Markets. Monopolistic Competition 11/22/2012. The Big Picture. Perfect Competition

Economics. Monopolistic Competition. Firms in Competitive Markets. Monopolistic Competition 11/22/2012. The Big Picture. Perfect Competition 16 Modified by Joseph Tao-yi Wang Ron Cronovich The Big Picture Chapter 13: The cost of production Now, we will look at firm s revenue But revenue depends on market structure 1. Competitive market (chapter

More information

SCHOOL OF ACCOUNTING AND BUSINESS BSc. (APPLIED ACCOUNTING) GENERAL / SPECIAL DEGREE PROGRAMME END SEMESTER EXAMINATION JULY 2016

SCHOOL OF ACCOUNTING AND BUSINESS BSc. (APPLIED ACCOUNTING) GENERAL / SPECIAL DEGREE PROGRAMME END SEMESTER EXAMINATION JULY 2016 All Rights Reserved No. of Pages - 08 No of Questions - 08 SCHOOL OF ACCOUNTING AND BUSINESS BSc. (APPLIED ACCOUNTING) GENERAL / SPECIAL DEGREE PROGRAMME END SEMESTER EAMINATION JULY 2016 BEC 30325 Managerial

More information

Principles of Microeconomics Module 5.1. Understanding Profit

Principles of Microeconomics Module 5.1. Understanding Profit Principles of Microeconomics Module 5.1 Understanding Profit 180 Production Choices of Firms All firms have one goal in mind: MAX PROFITS PROFITS = TOTAL REVENUE TOTAL COST Two ways to reach this goal:

More information

To produce more beach balls, you must give up ever increasing quantities of ice cream cones.

To produce more beach balls, you must give up ever increasing quantities of ice cream cones. Unit 01: Basic Concepts (Macro/Micro) Scarcity The Economic Problem: Unlimited wants, limited economic resources Factors of Production: -Land -Labor -Capital -Entrepreneurship Big 3 Questions: -What to

More information

NAME: INTERMEDIATE MICROECONOMIC THEORY FALL 2006 ECONOMICS 300/012 Final Exam December 8, 2006

NAME: INTERMEDIATE MICROECONOMIC THEORY FALL 2006 ECONOMICS 300/012 Final Exam December 8, 2006 NAME: INTERMEDIATE MICROECONOMIC THEORY FALL 2006 ECONOMICS 300/012 Section I: Multiple Choice (4 points each) Identify the choice that best completes the statement or answers the question. 1. The slope

More information

Monopoly. 3 Microeconomics LESSON 5. Introduction and Description. Time Required. Materials

Monopoly. 3 Microeconomics LESSON 5. Introduction and Description. Time Required. Materials LESSON 5 Monopoly Introduction and Description Lesson 5 extends the theory of the firm to the model of a Students will see that the profit-maximization rules for the monopoly are the same as they were

More information

Perfect Competition. What is a market structure? What is a Perfectly Competitive Market/Perfect Competition? David Kelly

Perfect Competition. What is a market structure? What is a Perfectly Competitive Market/Perfect Competition? David Kelly What is a market structure? Perfect Competition A market structure refers to the conditions under which a good or service is bought and sold. The notes that follow examine two extremes - perfect competition

More information

AGENDA Mon 10/12. Economics in Action Review QOD #21: Competitive Farming HW Review Pure Competition MR = MC HW: Read pp Q #7

AGENDA Mon 10/12. Economics in Action Review QOD #21: Competitive Farming HW Review Pure Competition MR = MC HW: Read pp Q #7 AGENDA Mon 10/12 Economics in Action Review QOD #21: Competitive Farming HW Review Pure Competition MR = MC HW: Read pp 173-176 Q #7 QOD #21: Competitive Farming A purely competitive wheat farmer can sell

More information

JANUARY EXAMINATIONS 2008

JANUARY EXAMINATIONS 2008 No. of Pages: (A) 9 No. of Questions: 38 EC1000A micro 2008 JANUARY EXAMINATIONS 2008 Subject Title of Paper ECONOMICS EC1000 MICROECONOMICS Time Allowed Two Hours (2 Hours) Instructions to candidates

More information

Professor Christina Romer SUGGESTED ANSWERS TO PROBLEM SET 2

Professor Christina Romer SUGGESTED ANSWERS TO PROBLEM SET 2 Economics 2 Spring 2018 rofessor Christina Romer rofessor David Romer SUGGESTED ANSWERS TO ROBLEM SET 2 1.a. In this problem we are dividing everything the household buys into two categories child care

More information

INTI COLLEGE MALAYSIA FOUNDATION IN BUSINESS INFORMATION TECHNOLOGY (CFP) ECO105: ECONOMICS 1 FINAL EXAMINATION: JANUARY 2006 SESSION

INTI COLLEGE MALAYSIA FOUNDATION IN BUSINESS INFORMATION TECHNOLOGY (CFP) ECO105: ECONOMICS 1 FINAL EXAMINATION: JANUARY 2006 SESSION ECO105 (F) / Page 1 of 12 Section A INTI COLLEGE MALAYSIA FOUNDATION IN BUSINESS INFORMATION TECHNOLOGY (CFP) ECO105: ECONOMICS 1 FINAL EXAMINATION: JANUARY 2006 SESSION Instructions: This section consists

More information

- pure monopoly: only one seller of a good/service with no close substitutes

- pure monopoly: only one seller of a good/service with no close substitutes Micro 101, Chapter 10 1 Chapter 10: Monopoly Main objectives: 1. Define what constitutes a monopoly - pure monopoly: only one seller of a good/service with no close substitutes 2. Describe types of barriers

More information

Chapter Summary and Learning Objectives

Chapter Summary and Learning Objectives CHAPTER 11 Firms in Perfectly Competitive Markets Chapter Summary and Learning Objectives 11.1 Perfectly Competitive Markets (pages 369 371) Explain what a perfectly competitive market is and why a perfect

More information

Monopoly. Firm s equilibrium. Muhammad Rafi Khan

Monopoly. Firm s equilibrium. Muhammad Rafi Khan 1 Monopoly It is a type of market structure where there is only one producer and many buyers. The monopolist produces an industry s entire output. In contrast to perfectly competitive firms, which are

More information

ECON 251 Exam 2 Pink. Fall 2012

ECON 251 Exam 2 Pink. Fall 2012 ECON 251 Exam 2 Pink Use the table below to answer the following four questions The table below shows Harry s total utility from consuming beer and wine. The price of beer is $2 per bottle. The price of

More information

Sample Exam Questions/Chapter 12. Use the following to answer question 1: Figure: Short-Run Costs

Sample Exam Questions/Chapter 12. Use the following to answer question 1: Figure: Short-Run Costs Sample Exam Questions/Chapter 12 Use the following to answer question 1: Figure: Short-Run Costs 1. (Figure: Short-Run Costs) Look at the figure Short-Run Costs. At the given price, the most profitable

More information

MARKETS. Part Review. Reading Between the Lines SONY CORP. HAS CUT THE U.S. PRICE OF ITS PLAYSTATION 2

MARKETS. Part Review. Reading Between the Lines SONY CORP. HAS CUT THE U.S. PRICE OF ITS PLAYSTATION 2 Part Review 4 FIRMS AND MARKETS Reading Between the Lines SONY CORP. HAS CUT THE U.S. PRICE OF ITS PLAYSTATION 2 On May 14, 2002 Sony announced it was cutting the cost of its PlayStation 2 by 33 percent,

More information

Version #1. Midterm exam 2 November 18th, Student Name: ID# Discussion #

Version #1. Midterm exam 2 November 18th, Student Name: ID# Discussion # Econ 101-Fall 2008, Lecture 2 Professor Kelly Midterm exam 2 November 18th, 2008 Version #1 Student Name: ID# Discussion # You have 75 minutes to answer the exam. The exam contains 12 binary choice questions

More information

Market structures Perfect competition

Market structures Perfect competition Market structures Perfect competition Market Structures Market structure refers to the number and size of buyers and sellers in the market for a good or service. A market can be defined as a group of firms

More information

Chapter 6. Competition

Chapter 6. Competition Chapter 6 Competition Copyright 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 1-1 Chapter 6 The goal of this

More information