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Microeconomics 201 > Econ Exam: Final May 13 ( tests 3 & 4) > Flashcards

Econ Exam: Final May 13 ( tests 3 & 4) Flashcards

1
Q

the law of demand:

A

tells us that demand curves slope down to the right

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2
Q

when the slope of a curve is negative, this means

A

a decrease in the independent variable will cause an increase in the dependent variable

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3
Q

when marginal cost is increasing:

A

total cost must be increasing

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4
Q

as output increases, average fixed costs

A

decrease

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5
Q

in the short run a perfectly competitive firm’s supply curve is that segment of the

A

marginal cost curve lying above the average variable cost curve

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6
Q

the reason the marginal cost curve eventually increases as output increases for the typical firm is because

A

the law of diminishing returns

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7
Q

which characteristic would best be associated with perfect competition?

A

price taker

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8
Q

which characteristic would best be associated with perfect competition?

A

many sellers

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9
Q

for a perfectly competitive business, price equals

A

average revenue, marginal revenue, total revenue divided by output

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10
Q

if the average variable cost of production for a firm is decreasing, then if follows that

A

marginal cost must be below average variable cost

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11
Q

a business firm should produce

A

the number of units of the product in which the marginal cost of producing is equal to the marginal revenue

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12
Q

a business firm is earning profits if at the profit maximizing quantity

A

price>average total cost

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13
Q

if a business is earning losses at the profit maximizing quantity, it should stay open if

A

price>average variable cost

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14
Q

for a perfectly competitive business, total revenue:

A

is price multiplied times quantity sold, increases by a constant absolute amount as output expands, graphs as a straight upsloping line from the origin

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15
Q

if production is occurring where marginal cost exceeds price, the perfectly competitive firm will

A

fail to maximize profit and resources will be over allocated to the product

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16
Q

if production is occurring where marginal cost is less that the price, the perfectly competitive firm will

A

fail to maximize profits and resources will be under allocated to the product

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17
Q

a consumer with a fixed income will maximize utility when each good is purchased in amounts such that the

A

marginal utility per dollar spent is the same for all goods

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18
Q

for a graph showing a perfectly competitive firm earning a loss but should stay open, at the profit maximizing quantity, the marginal cost will be:

A

greater than the average variable cost

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19
Q

for a graph showing a simple monopolist earning a loss but should stay open, at the profit maximizing quantity, the marginal cost:

A

may be greater than the average variable cost

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20
Q

for a graph showing a simple monopolist earning a loss and should shut down at the profit maximizing quantity, the marginal cost will be

A

none of the above

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21
Q

are perfectly competitive firms allocatively efficient?

A

yes, because price equals marginal cost

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22
Q

are simple monopolies allocatively efficient?

A

no, because price does not equal marginal cost

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23
Q

for a perfectly competitive firm the demand curve facing the firm will be

A

a horizontal line on the graph

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24
Q

for a simple monopolist the dff will be

A

the same as the industry’s demand curve

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25
Q

in the long run equilibrium for perfectly competitive firms, the price will settle at the lowest point of the average total cost curve

A

true

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26
Q

profits are determined by subtracting total costs from total revenue

A

true

27
Q

the solution to the consumer maximization problem given in class is to find the point in which the budget line is just tangent to one indifference curve

A

true

28
Q

if you were to graph typical cost curves, the margin cost curve would cross the average variable cost curve at the lowest point of the average variable cost curve

A

true

29
Q

if you were to graph typical cost curves, the marginal cost curve would cross the average fixed cost curve at the lowest loin of the AFC

A

false

30
Q

in economics it is assumed that the primary goal of the firm is to make a profit, however large or small that amount may be

A

false, want to maximize profits!

31
Q

for perfectly competitive firms the marginal revenue curve is the same as the average revenue curve

A

true

32
Q

for a simple monopolist the marginal revenue curve is the same as the average revenue curve

A

false

33
Q

if the four largest producers in an industry produce 60% of the entire industry output, this industry would be an example of which model?

A

oligopoly

34
Q

the reason marginal cost curve eventually increases as output increases for the typical firm is because

A

of the law of diminishing returns

35
Q

if firms exit monopolistic competition market, the demand curve facing the firm for these firms will

A

shift to the right

36
Q

if firms enter a monopolistic competition market, the demand curve facing the firm for these firms will

A

shift to the left

37
Q

if the four largest producers in an industry produce 20% of the entire industry output this industry would be an example of which model?

A

monopolistic competition

38
Q

the industry for women’s dresses would be an example of

A

monopolistic competition

39
Q

the auto industry would be an example of

A

oligopoly

40
Q

the beer industry would be an example of

A

oligopoly

41
Q

in the prisoners dilemma scenario the very best possible outcome for miley would be

A

for miley to confess and justin to stay quiet

42
Q

in a similar fashion to the prisoners dilemma, as traced out in class, the best outcome for both of two resort owners on an island with only two resorts would be

A

for both to charge high prices

43
Q

which characteristic would best be associated with monopolistic competition?

A

product differentiation

44
Q

which characteristics would NOT be associated with oligopoly?

A 
many sellers
(oligopoly = few sellers, control over price, product differentiation)
45
Q

a business firm is earning profits if, at the profit maximizing quantity

A

price > ATC

46
Q

if a business firm is earning losses at the profit maximizing quantity, it should stay open if

A

price > AVC

47
Q

the law of diminishing marginal utility means that as a typical consumer consumes units of a product

A

total utility increases and marginal utility decreases

48
Q

a business firm should produce

A

the number of units of the product in which the marginal cost of producing is equal to the marginal revenue

49
Q

for a simple monopolist the demand curve facing the firm will be

A

the same as the industry’s demand curve

50
Q

for a discriminating monopolist the demand curve facing the firm will be

A

the same as the industry’s demand curve

51
Q

for a firm in monopolistic competition the dff will be

A

more elastic than the industry’s demand curve

52
Q

for a firm in oligopoly industry the dff will be

A

a kinked line o the graph

53
Q

the law of diminishing returns is a short run concept because capital can be changed in the long run

A

true

54
Q

collusion is a very likely problem in oligopoly industries

A

true

55
Q

collusion is a very likely problem in monopolistic competition

A

false

56
Q

advertising tends to be a great necessity for firms in monopolistic competition

A

true

57
Q

for firms in monopolistic competiion the marginal revenue curve is the same as the dff

A

false

58
Q

for firms in oligopoly markets the marginal revenue curve is the same as the demand curve facing the firm

A

true

59
Q

in the monopolistic competition model are firms allocatively efficient

A

no

60
Q

in the oligopoly model are firms allocatively efficient

A

no

61
Q

in the discrimination monopoly model is the industry allocatively efficient

A

yes

62
Q

in the monopolistic competition model do consumers receive the lowest price?

A

no

63
Q

in the discriminating monopoly model do consumers receive the lowest price

A

no

64
Q

in the oligopoly model do consumers receive the lowest price

A

no

Microeconomics 201 (9 decks)

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