Economics 323 Microeconomic Theory Fall 2016

Size: px
Start display at page:

Download "Economics 323 Microeconomic Theory Fall 2016"

Transcription

1 green=b SECOND EXAM Chapter Ten Economics 323 Microeconomic Theory Fall The markets for many come close to satisfying the conditions required for perfect competition. a. agricultural goods b. transportation products c. chemicals d. skill-intensive manufactures 2. In the short run, a firm that shuts down will earn economic profit of a. -FC b. zero c. ATC d. FC 3. A perfectly competitive firm will earn zero economic profit if produces a quantity where P = MC = a. AFC b. AVC c. ATC d. TC 4. For prices above, a perfectly competitive firm will supply the level of output for which P = MC on the rising portion of its MC curve. a. min AFC b. min AVC c. min ATC d. min VC -1-

2 5. Suppose n firms each have supply curve P = c + dq i. The industry supply curve will be a. P = c/n + (d/n)q b. P = c + (d/n)q c. P = cn + dq d. P = c + dnq 6. A firm in a competitive industry has a total cost function of TC = 0.5Q² + 10Q + 100, whose corresponding marginal cost curve is MC = Q If the firm faces a price of 20, what quantity should it sell? a. 5 b. 10 c. 20 d And what profit does the firm make at this price? a. 100 b. -10 c. -50 d And should the firm shut down? a. yes, shut down right away b. not in the short run but yes shut down in the long run c. yes shut down in the short run but not in the long run d. no, should never shut down 9. And if the firm instead faces a price of 30, what quantity should it sell? a. 5 b. 10 c. 20 d

3 10. And what profit does the firm make at the new higher price? a. 100 b. -10 c. -50 d Chapter Eleven 11. If a single-price monopolist faces demand curve P = a - bq, the marginal revenue curve will be a. MR = a - (b/2)q b. MR = 2a - bq c. MR = a - bq d. MR = a - 2bQ 12. The total revenue curve for a single price monopolist (drawn as a function of quantity) a. is a straight line with slope -P b. is a straight line with slope P c. increases at a decreasing rate d. increases until reaches a maximum at the quantity where the price elasticity of demand is unitary, then decreases 13. The quantity such that MR = 0 for a single price monopolist occurs where the price elesticity of demand is a. elastic b. unitary c. inelastic d. cannot tell based on the information provided -3-

4 14. A profit-maximizing single price monopolist will NEVER produce in the portion of the demand curve. a. elastic b. unitary c. inelastic d. cannot tell based on the information provided 15. All monopolists create deadweight loss by producing too little and charging too high of a price EXCEPT for a. first degree (perfectly) discriminating monopolist b. second degree (quantity discount) discriminating monopolist c. single price monopolist d. all of the above e. none the above 16. A monopolist has a demand curve given by P = Q and a total cost curve given by TC = 20Q. The associated marginal cost curve is MC = 20. What is the monopolist's marginal revenue curve? a. MR = Q b. MR = Q c. MR = Q d. MR = Q 17. And what is the monopolist's profit maximizing quantity? a. Q = 1 b. Q = 2 c. Q = 3 d. Q = And what price will the monopolist charge? a. P = 50 b. P = 60 c. P = 70 d. P = 80-4-

5 19. And how much economic profit will the monopolist earn? a. 120 b. 160 c. 200 d And what quantity would the monopolist pick if instead of charging a single price, it could perfectly discriminate? a. Q = 1 b. Q = 2 c. Q = 3 d. Q = 4 Chapter Twelve 21. A dominated strategy is one that yields no matter what the other player chooses. a. a higher payoff b. a lower payoff c. the largest possible minimum payoff d. the smallest possible maximum payoff 22. When the timing of players choices matter, typically set up the series of decisions as a game. a. intensive form b. extensive form or sequential c. normal form d. abnormal form -5-

6 23. A strategy can elicit cooperation in a repeated Prisoner s Dilemma game a. maximin b. dominant c. tat-for-tit d. tit-for-tat 24. In a Nash equilibrium, each player s choice is optimal a. no matter what the other player chooses b. given the other player s choice c. under the assumption of bounded rationality d. if the payer gets to pick first 25. The basic elements of a game in which people s choices affect one another are a. the players b. the set of possible strategies c. the payoff matrix d. all of the above Tariff Game Free Trade Mexico Free Trade 200 for the 800 for Mexico Tariff -400 for the 1000 for Mexico The United States Tariff 400 for the for Mexico -200 for the -800 for Mexico -6-

7 26. In the Tariff Game above, does the United States have a dominant strategy? a. yes, Tariff b. yes, Free Trade c. no, the United States does not have a dominant strategy in this game d. yes, to randomize between Free Trade and Tariff 27. And does Mexico have a dominant strategy? a. yes, Tariff b. yes, Free Trade c. no, Mexico does not have a dominant strategy in this game d. yes, to randomize between Free Trade and Tariff 28. And is there a Nash equilibrium fo this game? a. yes, both countries pick Tariffs b. yes, both countries pick Free Trade c. yes, both a. and b. are Nash equilibria d. there is no Nash equilibrium 29. And the maximin strategies for each country are a. each country picks Tariff b. each country picks Free Trade c. The United States picks Free Trade and Mexico picks Tariff d. The United States picks Tariff and Mexico picks Free Trade 30. If The United States picks first, then Mexico, the equilibrium will be a. each country picks Tariff b. each country picks Free Trade c. The United States picks Free Trade and Mexico picks Tariff d. The United States picks Tariff and Mexico picks Free Trade -7-

8 green=b SECOND EXAM SOLUTIONS Chapter Ten Economics 323 Microeconomic Theory Fall a The markets for many agricultural goods come close to satisfying the conditions required for perfect competition. 2a In the short run, a firm that shuts down will earn economic profit of - FC. 3c A perfectly competitive firm will earn zero economic profit if produces a quantity where P = MC = ATC. 4b For prices above min AVC, a perfectly competitive firm will supply the level of output for which P = MC on the rising portion of its MC curve. 5b Suppose n firms each have supply curve P = c + dq i. The industry supply curve will be P = c + (d/n)q. 6b A firm in a competitive industry has a total cost function of TC = 0.5Q² + 10Q + 100, whose corresponding marginal cost curve is MC = Q If the firm faces a price of 20, what quantity should it sell? 10. P = MC, 20 = Q + 10, Q = 10. 7c And what profit does the firm make at this price? -50. TR - TC = PQ - (0.5Q² + 10Q + 100) = 20(10) - ( ) = = b And should the firm shut down? Not in the short run but yes shut down in the long run. If shut down now, profits would be -100 (negative of fixed costs). Losing 50 is better than losing c And if the firm instead faces a price of 30, what quantity should it sell? 20. P = MC, 30 = Q + 10, Q = a And what profit does the firm make at the new higher price? 100. TR - TC = PQ - (0.5Q² + 10Q + 100) = 30(20) - ( ) = = 100. Chapter Eleven 11de If a single-price monopolist faces demand curve P = a - bq, the marginal revenue curve will be MR = a - 2bQ. 12d The total revenue curve for a single price monopolist (drawn as a function of quantity) increases until reaches a maximum at the quantity where the price elasticity of demand is unitary, then decreases. -1-

9 13b 14c 15a The quantity such that MR = 0 for a single price monopolist occurs where the price elesticity of demand is unitary. A profit-maximizing single price monopolist will NEVER produce in the inelastic portion of the demand curve. All monopolists create deadweight loss by producing too little and charging too high of a price EXCEPT for first degree (perfectly) discriminating monopolist. 16b A monopolist has a demand curve given by P = Q and a total cost curve given by TC = 20Q. The associated marginal cost curve is MC = 20. What is the monopolist's marginal revenue curve? MR = Q. 17d And what is the monopolist's profit maximizing quantity? Q = 4. MR = MC, Q = 20, 20Q = 80, Q = 4. 18b And what price will the monopolist charge? P = b And how much economic profit will the monopolist earn? 160. TR - TC = PQ - 20Q = 60(4) - 20(4) = 40(4) = e And what quantity would the monopolist pick if instead of charging a single price, it could perfectly discriminate? Q = 8 (none of the above). P = MC, Q = 20, 10Q = 80, Q = 8. Chapter Twelve 21b A dominated strategy is one that yields a lower payoff no matter what the other player chooses. 22b When the timing of players choices matter, typically set up the series of decisions as a extensive form or sequential game. 23d A tit-for-tat strategy can elicit cooperation in a repeated Prisoner s Dilemma game 24b In a Nash equilibrium, each player s choice is optimal given the other player s choice. 25d The basic elements of a game in which people s choices affect one another are the players, the set of possible strategies, and the payoff matrix (all of the above). -2-

10 26a 27a 28a Tariff Game Free Trade Mexico Free Trade 200 for the 800 for Mexico Tariff -400 for the 1000 for Mexico The United States Tariff 400 for the for Mexico -200 for the -800 for Mexico In the Tariff Game above, does the United States have a dominant strategy? Yes, Tariff. And does Mexico have a dominant strategy? Yes, Tariff. And is there a Nash equilibrium fo this game? Yes, both countries pick Tariffs. 29a And the maximin strategies for each country are each country picks Tariff. 30a If The United States picks first, then Mexico, the equilibrium will be each country picks Tariff. -3-

Practice EXAM 3 Spring Professor Walker - E201

Practice EXAM 3 Spring Professor Walker - E201 Practice EXAM 3 Spring 2009 - Professor Walker - E201 1. The theory behind short run production costs can be narrowed to an assumption that MC is expected to initially fall, but rise at larger levels of

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

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

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

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

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

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

Review Chapters 1 & 2

Review Chapters 1 & 2 Review Chapters 1 & 2 ECON 1 Midterm 1 Review Session Scarcity or No Free Lunch Principle. Cost-Benefit Principle. Reservation Price. Economic Surplus = Benefit Cost. Opportunity Cost (DO NOT FORGET!!).

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

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

Do not open this exam until told to do so. Solution

Do not open this exam until told to do so. Solution Do not open this exam until told to do so. Department of Economics College of Social and Applied Human Sciences K. Annen, Fall 003 Final (Version): Intermediate Microeconomics (ECON30) Solution Final (Version

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

Test 3 Econ 3144 Fall 2010 Dr. Rupp 31 Multiple Choice Questions Signature I have neither given nor received aid on this exam

Test 3 Econ 3144 Fall 2010 Dr. Rupp 31 Multiple Choice Questions Signature I have neither given nor received aid on this exam Test 3 Econ 3144 Name Fall 2010 Dr. Rupp 31 Multiple Choice Questions Signature I have neither given nor received aid on this exam Use the following information to answer questions 1-4. A DVD making monopolist

More information

Principles of Microeconomics Assignment 8 (Chapter 10) Answer Sheet. Class Day/Time

Principles of Microeconomics Assignment 8 (Chapter 10) Answer Sheet. Class Day/Time 1 Principles of Microeconomics Assignment 8 (Chapter 10) Answer Sheet Name Class Day/Time Questions of this homework are in the next few pages. Please find the answer of the questions and fill in the blanks

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

ECON 230D2-002 Mid-term 1. Student Number MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

ECON 230D2-002 Mid-term 1. Student Number MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. ECON 230D2-002 Mid-term 1 Name Student Number MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. Scenario 12.3: Suppose a stream is discovered whose

More information

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

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

More information

AP Microeconomics Review Session #3 Key Terms & Concepts

AP Microeconomics Review Session #3 Key Terms & Concepts The Firm, Profit, and the Costs of Production 1. Explicit vs. implicit costs 2. Short-run vs. long-run decisions 3. Fixed inputs vs. variable inputs 4. Short-run production measures: be able to calculate/graph

More information

ECON111 Sample Questions. 1.) Please fill in the table below for a perfect competetive firm.

ECON111 Sample Questions. 1.) Please fill in the table below for a perfect competetive firm. ECON111 Sample Questions 1.) Please fill in the table below for a perfect competetive firm. Q P TC MC FC VC AFC AVC ATC TR MR 0-220 10 40 5 7 20 10 85 20 400 1000 20 100 24 a) Calculate profit at each

More information

AP Microeconomics: Test 5 Study Guide

AP Microeconomics: Test 5 Study Guide AP Microeconomics: Test 5 Study Guide Mr. Warkentin nwarkentin@wyomingseminary.org 203 Sprague Hall 2017-2018 Academic Year Directions: The purpose of this sheet is to quickly capture the topics and skills

More information

ECMC02H Intermediate Microeconomics - Topics in Price Theory

ECMC02H Intermediate Microeconomics - Topics in Price Theory 1 ECMC02H Intermediate Microeconomics - Topics in Price Theory Answers to the Term Test June 23, 2010 Version A of the test Your name (Print clearly and underline your last name) Your student number 1.

More information

Sample Multiple-Choice Questions

Sample Multiple-Choice Questions E03 3 Microeconomics Summative Exam SAMPLE QUESTIONS Sample Multiple-Choice Questions Circle the letter of each correct answer 1 True statements about the theory of the firm in the short run and long run

More information

2007 Thomson South-Western

2007 Thomson South-Western WHAT IS A COMPETITIVE MARKET? A competitive market has many buyers and sellers trading identical products so that each buyer and seller is a price taker. Buyers and sellers must accept the price determined

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

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

Contents. Concepts of Revenue I-13. About the authors I-5 Preface I-7 Syllabus I-9 Chapter-heads I-11

Contents. Concepts of Revenue I-13. About the authors I-5 Preface I-7 Syllabus I-9 Chapter-heads I-11 Contents About the authors I-5 Preface I-7 Syllabus I-9 Chapter-heads I-11 1 Concepts of Revenue 1.1 Introduction 1 1.2 Concepts of Revenue 2 1.3 Revenue curves under perfect competition 3 1.4 Revenue

More information

short run long run short run consumer surplus producer surplus marginal revenue

short run long run short run consumer surplus producer surplus marginal revenue Test 3 Econ 3144 Name Fall 2005 Dr. Rupp 20 Multiple Choice Questions (50 points) & 4 Discussion (50 points) Signature I have neither given nor received aid on this exam Use this table to answer questions

More information

Where are we? Second midterm on November 19. Review questions on th course web site. Today: chapter on perfect competition

Where are we? Second midterm on November 19. Review questions on th course web site. Today: chapter on perfect competition Where are we? Second midterm on November 19 Review questions on th course web site. Today: chapter on perfect competition Topic for the second paper: Pick a chapter in Ariely after Chapter 4 and compare

More information

Chapter 7 Consumer/Producers and Market Efficiency

Chapter 7 Consumer/Producers and Market Efficiency Midterm #2 Exam Study uestions: (A subset of these questions/concepts will be on the exam) Chapter 5 - Elasticity Define rice elasticity of demand. What does it mean to say demand is highly elastic? What

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

Boston College Problem Set 6, Fall 2012 EC Principles of Microeconomics Instructor: Inacio G L Bo

Boston College Problem Set 6, Fall 2012 EC Principles of Microeconomics Instructor: Inacio G L Bo Problem Set 6, Fall 01 EC 131 - Principles of Microeconomics Instructor: Inacio G L Bo Answer the questions in the spaces provided on the question sheets. If you run out of room for an answer, continue

More information

Economics 101 Midterm Exam #2. April 9, Instructions

Economics 101 Midterm Exam #2. April 9, Instructions Economics 101 Spring 2009 Professor Wallace Economics 101 Midterm Exam #2 April 9, 2009 Instructions Do not open the exam until you are instructed to begin. You will need a #2 lead pencil. If you do not

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

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

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

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

Eco201 Review Outline for Final Exam, Fall 2013, Prof. Bill Even

Eco201 Review Outline for Final Exam, Fall 2013, 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

Monopoly and How It Arises

Monopoly and How It Arises 13 MONOPOLY Monopoly and How It Arises A monopoly is a market: That produces a good or service for which no close substitute exists If a good has a close substitute, even if it is produced by only one

More information

CHAPTER NINE MONOPOLY

CHAPTER NINE MONOPOLY CHAPTER NINE MONOPOLY This chapter examines how a market controlled by a single producer behaves. What price will a monopolist charge for his output? How much will he produce? The basic characteristics

More information

ECON 101: Principles of Microeconomics Discussion Section Week 12 TA: Kanit Kuevibulvanich

ECON 101: Principles of Microeconomics Discussion Section Week 12 TA: Kanit Kuevibulvanich Important Concepts: Monopoly ECON 101: Principles of Microeconomics Discussion Section Week 12 Comparison of Perfectly Competitive Market and Monopoly Market Perfect Competition Monopoly Number of Participants

More information

Firms in Competitive Markets

Firms in Competitive Markets 1 Basic Economics Chapter 14 Firms in Competitive Markets Competitive markets (1) Market with many buyers and sellers (e.g., ) (2) Trading identical products (e.g., ) (3) Each buyer and seller is a price

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

AP Microeconomics. Content Skills Learning Targets Assessment Resources & Technology

AP Microeconomics. Content Skills Learning Targets Assessment Resources & Technology St. Michael Albertville High School Teacher: Matthew Rooker AP Microeconomics October 2014 Content Skills Learning Targets Assessment Resources & Technology November 2014 Content Skills Learning Targets

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 One of the concepts mentioned in both Units I and II was and its components, total cost and total revenue. In this unit, costs and revenue

More information

Economics 384 B1. Intermediate Microeconomics II. Assignment 2. S Landon Winter 2007

Economics 384 B1. Intermediate Microeconomics II. Assignment 2. S Landon Winter 2007 Economics 384 B1 Intermediate Microeconomics II Assignment 2 S Landon Winter 2007 Due: By 4:00pm, 2 April 2007 This assignment will be marked out of 100. The maximum number of marks that can be earned

More information

Chapter 1 Basic Microeconomic Principles

Chapter 1 Basic Microeconomic Principles Chapter 1 Basic Microeconomic Principles Prof. Jepsen ECO 610 Lecture 1 December 3, 2012 copyright John Wiley and Sons Outline Course outline Economics review (Chapter 1) Costs Demand Profit maximization

More information

MIDTERM I. GROUP A Instructions: December 9, 2010

MIDTERM I. GROUP A Instructions: December 9, 2010 EC101 Sections 04 Fall 2010 NAME: ID #: SECTION: MIDTERM I December 9, 2010 GROUP A Instructions: You have 60 minutes to complete the exam. There will be no extensions. Students are not allowed to go out

More information

VIII 1 TOPIC VIII: MONOPOLY AND OTHER INDUSTRY STRUCTURES. I. Monopoly - Single Firm With No Threat of Close Competition. Other Industry Structures

VIII 1 TOPIC VIII: MONOPOLY AND OTHER INDUSTRY STRUCTURES. I. Monopoly - Single Firm With No Threat of Close Competition. Other Industry Structures TOPIC VIII: MONOPOLY AND OTHER INDUSTRY STRUCTURES I. Monopoly - Single Firm With No Threat of Close Competition II. Other Industry Structures CONCEPTS AND PRINCIPLES MONOPOLY We now consider the opposite

More information

Eco 685 Graphs, Tables, and Definitions

Eco 685 Graphs, Tables, and Definitions Eco 685 Graphs, Tables, and Definitions David L. Kelly 1 1 Department of Economics, University of Miami dkelly@miami.edu Fall, 2017 Introduction Introduction Managerial Economics Definition Definition

More information

Eco201 Review Outline for Final Exam, Fall 2018, Prof. Bill Even

Eco201 Review Outline for Final Exam, Fall 2018, 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

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

MIDTERM #2. The following defini;ons may be used throughout the exam:

MIDTERM #2. The following defini;ons may be used throughout the exam: Page 1 of 12 NAME: EC 131 - Principles of Microeconomics Fall 2012 MIDTERM #2 All ques@ons should be answered in the following pages. Nothing here requires a very long answer. Graphs many ;mes help, as

More information

Quiz #4 Week 04/05/2009 to 04/11/2009

Quiz #4 Week 04/05/2009 to 04/11/2009 Quiz #4 Week 04/05/2009 to 04/11/2009 You have 30 minutes to answer the following 15 multiple choice questions. Record your answers in the bubble sheet. Your grade in this quiz will count for 1% of your

More information

ECONS 101 PRINCIPLES OF MICROECONOMICS QUIZ #6 Week 04/19/09 to 04/25/09

ECONS 101 PRINCIPLES OF MICROECONOMICS QUIZ #6 Week 04/19/09 to 04/25/09 CHAPTER 14 Monopoly ECONS 101 PRINCIPLES OF MICROECONOMICS QUIZ #6 Week 04/19/09 to 04/25/09 1. Joe s price elasticity of demand for airplane travel is equal to 2, and Beth s price elasticity of demand

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

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

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

More information

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

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

PRACTICE QUESTIONS FOR THE FINAL EXAM (Part 1)

PRACTICE QUESTIONS FOR THE FINAL EXAM (Part 1) The following is the first sample problem set for your final examination. I will also post here more problem sets (with questions mostly needing calculations), as well as a previous final exam (all multiple

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

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

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

ECON 2100 Principles of Microeconomics (Summer 2016) Monopoly

ECON 2100 Principles of Microeconomics (Summer 2016) Monopoly ECON 21 Principles of Microeconomics (Summer 216) Monopoly Relevant readings from the textbook: Mankiw, Ch. 15 Monopoly Suggested problems from the textbook: Chapter 15 Questions for Review (Page 323):

More information

Eco201 Review questions for chapters Prof. Bill Even ====QUESTIONS FOR CHAPTER 13=============================

Eco201 Review questions for chapters Prof. Bill Even ====QUESTIONS FOR CHAPTER 13============================= Eco201 Review questions for chapters 13-15 Prof. Bill Even ====QUESTIONS FOR CHAPTER 13============================= 1) A monopoly has two key features, which are. A) barriers to entry and close substitutes

More information

14.01 Principles of Microeconomics, Fall 2007 Chia-Hui Chen November 7, Lecture 22

14.01 Principles of Microeconomics, Fall 2007 Chia-Hui Chen November 7, Lecture 22 Monopoly. Principles of Microeconomics, Fall Chia-Hui Chen November, Lecture Monopoly Outline. Chap : Monopoly. Chap : Shift in Demand and Effect of Tax Monopoly The monopolist is the single supply-side

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

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

PBAF 516 YA Prof. Mark Long Practice Midterm 2 Questions

PBAF 516 YA Prof. Mark Long Practice Midterm 2 Questions PBAF 516 YA Prof. Mark Long Practice Midterm 2 Questions Note: these 9 questions were drawn from questions that I have given in prior years (in a similar class). These questions should not be considered

More information

Perfect Competition and The Supply Curve

Perfect Competition and The Supply Curve chapter: 13 >> Perfect Competition and The Supply Curve The following materials are taken from Chap. 13, Economics, 2 nd ed., Krugman and Wells(2009), Worth Palgrave MaCmillan. 2009 Worth Publishers 1

More information

Chapter 7 Consumer/Producers and Market Efficiency

Chapter 7 Consumer/Producers and Market Efficiency Midterm #2 Exam Study uestions: (A subset of these questions/concepts will be on the exam) Chapter 5 - Elasticity Define rice elasticity of demand. What does it mean to say demand is highly elastic? What

More information

ADVANCED PLACEMENT MICROECONOMICS Maple Grove Senior High School Jeff Rush Social Studies Department

ADVANCED PLACEMENT MICROECONOMICS Maple Grove Senior High School Jeff Rush Social Studies Department ADVANCED PLACEMENT MICROECONOMICS Maple Grove Senior High School Jeff Rush rushj@district279.org Social Studies Department Required textbook Economics, McConnell and Brue, 17 th edition, 2008. Course description

More information

Lecture 22. Oligopoly & Monopolistic Competition

Lecture 22. Oligopoly & Monopolistic Competition Lecture 22. Oligopoly & Monopolistic Competition Course Evaluations on Thursday: Be sure to bring laptop, smartphone, or tablet with browser, so that you can complete your evaluation in class. Oligopoly

More information

2. What is Taylor s marginal utility per dollar spent on the 2 nd race? a. 2 b. 3 c. 4 d. 5

2. What is Taylor s marginal utility per dollar spent on the 2 nd race? a. 2 b. 3 c. 4 d. 5 ECON 251 Practice questions based on Spring 2013 Exam 2 Taylor has $100 to spend on playing golf and running in races. The price of a round of golf is $20 and the price of running a race is $10. The total

More information

Chapter Eleven. Monopoly

Chapter Eleven. Monopoly Chapter Eleven Monopoly Topics Monopoly Profit Maximization. Effects of a Shift of the Demand Curve. Market Power. Welfare Effects of Monopoly. Cost Advantages That Create Monopolies. Government Actions

More information

MIDTERM #2. The following definifons are used throughout the exam:

MIDTERM #2. The following definifons are used throughout the exam: Page 1 of 14 NAME: SECTION (mark yours): 05 06 EC 131 - Principles of Microeconomics Fall 2011 MIDTERM #2 All ques@ons should be answered in the following pages. Nothing here requires a very long answer.

More information

ECON 251 Final Exam Fall 2012

ECON 251 Final Exam Fall 2012 ECON 251 Final Exam Fall 2012 1. Emily is thinking of going shopping on Black Friday for a Nook Tablet. Emily values the Nook Tablet at $200. She sees in an advertisement that the Nook Tablet is on sale

More information

1. Why is utility subjective? 2. What are inferior options? 3. Suppose the price of A is 1, the price of B is 2 and the price of C is 1.

1. Why is utility subjective? 2. What are inferior options? 3. Suppose the price of A is 1, the price of B is 2 and the price of C is 1. Study Questions for Chapters 7-11 Chapter 7 1. Why is utility subjective? 2. What are inferior options? 3. Suppose the price of A is 1, the price of B is 2 and the price of C is 1.50 a. Complete the following

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

#1: Monopolistic Competition

#1: Monopolistic Competition #1: Monopolistic Competition MC-1. d. All of the terms describe economically breaking even MC-2. c. Economic profits will attract competition MC-3. d. Economically breaking even means you just cover the

More information

COMM 295 MIDTERM REVIEW SESSION BY WENDY ZHANG

COMM 295 MIDTERM REVIEW SESSION BY WENDY ZHANG COMM 295 MIDTERM REVIEW SESSION BY WENDY ZHANG TABLE OF CONTENT I. Introduction, Supply and Demand, Elasticity II. Estimation III. Profit Maximization IV. Competition, Consumer and Producer Surpluses V.

More information

#1: Monopolistic Competition

#1: Monopolistic Competition Answers: #1: Monopolistic Competition MC-1. d. All of the terms describe economically breaking even MC-2. c. Economic profits will attract competition MC-3. d. Economically breaking even means you just

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

Chapter Eleven. Topics. Marginal Revenue and Price. A firm s revenue is:

Chapter Eleven. Topics. Marginal Revenue and Price. A firm s revenue is: Chapter Eleven Monopoly Topics Monopoly Profit Maximization. Effects of a Shift of the Demand Curve. Market Power. Welfare Effects of Monopoly. Cost Advantages That Create Monopolies. Government Actions

More information

Chapter 33: Terms of Trade

Chapter 33: Terms of Trade Chapter 33: Terms of Trade 1 The Terms of Trade The division of the gains from trade depends on the terms of trade. The terms of trade are measured by the ratio of the price of exports to the price of

More information

ECO 162: MICROECONOMICS

ECO 162: MICROECONOMICS ECO 162: MICROECONOMICS PREPARED BY Dr. V.G.R. CHANDRAN Email: vgrchan@gmail.com Website: www.vgrchandran.com/default.html UNIVERSITI TEKNOLOGI MARA 0 P a g e TUTORIAL QUESTIONS ALL RIGHTS RESERVED 2010

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

ECON 2100 (Summer 2012 Sections 07 and 08) Exam #3C Answer Key

ECON 2100 (Summer 2012 Sections 07 and 08) Exam #3C Answer Key ECON 21 (Summer 212 Sections 7 and 8) Exam #3C Answer Key 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

More information

Assignment of Producer s Equilibrium and supply

Assignment of Producer s Equilibrium and supply Assignment of Producer s Equilibrium and supply Marks 16 2008-09(2) (3)set 1. Give one reason for a rightward shift in supply curve. (1) 2. Why is average total cost greater than average variable cost?

More information

Q K L MPL APL FC VC TC AFC AVC ATC MC $ $ $40 $ $550 $10

Q K L MPL APL FC VC TC AFC AVC ATC MC $ $ $40 $ $550 $10 Economics 101 Spring 2018 Answers to Homework #5 Due Thursday, May 3, 2018 Directions: The homework will be collected in a box before the lecture. Please place your name, TA name, and section number on

More information

29/02/2016. Market structure II- Other types of imperfect competition. What Is Monopolistic Competition? OTHER TYPES OF IMPERFECT COMPETITION

29/02/2016. Market structure II- Other types of imperfect competition. What Is Monopolistic Competition? OTHER TYPES OF IMPERFECT COMPETITION Market structure II- Other types of imperfect competition OTHER TYPES OF IMPERFECT COMPETITION Characteristics of Monopolistic Competition Monopolistic competition is a market structure in which many firms

More information

Market Power at Work: Computer Market Revisited

Market Power at Work: Computer Market Revisited Monopolies Part II Competition is always a good thing. It forces us to do our best. A monopoly renders people complacent and satisfied with mediocrity. Nancy Pearcey Market Power at Work: Computer Market

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

Second Quiz: Review Managerial Economics: Eco 685 Quiz Date: Thursday, September 20, 2018

Second Quiz: Review Managerial Economics: Eco 685 Quiz Date: Thursday, September 20, 2018 Second Quiz: Review Managerial Economics: Eco 685 Quiz Date: Thursday, September 20, 2018 The quiz covers section III of short run costs, long run costs, and pricing. The pages in the notes are 35 to 64.

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. Review 10-14-15 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

More information

Microeconomics (Spring 2015) Final Exam Study Guide

Microeconomics (Spring 2015) Final Exam Study Guide Microeconomics (Spring 2015) Final Exam Study Guide 1 Note: Below is a list of study questions for the upcoming Part 1 of the final exam, June 10 (Ch. 13, 14, 15, and 17). Please answer them (all of them

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. AUBG, Fall 2015, Principles Micro with P. Stankov, Sample MT2 NOTE: The actual no. of questions on the actual MT will be 30, each for 0.67 grade points. MULTIPLE CHOICE. Choose the one alternative that

More information

Eastern Mediterranean University Faculty of Business and Economics Department of Economics Fall Semester

Eastern Mediterranean University Faculty of Business and Economics Department of Economics Fall Semester Eastern Mediterranean University Faculty of Business and Economics Department of Economics 2014 15 Fall Semester ECON101 Introduction to Economics I Final Exam Type A 26 January 2015 Duration: 100 minutes

More information

Market structures. Why Monopolies Arise. Why Monopolies Arise. Market power. Monopoly. Monopoly resources

Market structures. Why Monopolies Arise. Why Monopolies Arise. Market power. Monopoly. Monopoly resources Market structures Why Monopolies Arise Market power Alters the relationship between a firm s costs and the selling price Charges a price that exceeds marginal cost A high price reduces the quantity purchased

More information

CONTENT TOPIC 3: SUPPLY, PRODUCTION AND COST. The Supply Process. The Role of the Firm 10/10/2016

CONTENT TOPIC 3: SUPPLY, PRODUCTION AND COST. The Supply Process. The Role of the Firm 10/10/2016 CONTENT TOPIC 3: SUPPLY, PRODUCTION AND COST - The factors of production - Combining factors of production: The law of returns - Costs of production: Short & Long Run - Deciding whether to produce in the

More information