Practice Exams Flashcards
A price war would be won by the company that can lower its prices the most. The ability to lower prices is based off of the _________ per unit.
variable costs
The monopolist’s revenue is maximized when marginal revenue is _____ to the marginal cost.
equal
Badmouthing is usually only effective against ____ major competitor.
one
An inelastic demand curve (where changes in price have no effect on the quantity demanded) shows a product that has ______________.
No substitutes
A _______ market can allow consumers with low WTP to resell the product to consumers with high WTP, undermining a price ceiling.
secondary
This illustrates a concept called ________________ —the idea that for many items, people value consecutive units of the good less and less.
“law of diminishing returns”
An optimal two-part tariff prices each unit at _________, and charges a lump sum fee on top.
marginal cost
Since the minimum wage is below the equilibrium price, it will have ________ on market outcomes.
no impact
When Netflix increased prices, revenue increased. This suggests that the company was previously operating at a part of the demand curve where demand was _______.
inelastic
A market’s equilibrium outcome maximizes when…
Total surplus is maximized at the market outcome.
The _____________ of $0.17 per cookie includes both marginal cost ($0.10 per cookie) and fixed cost per unit ($0.07 per cookie).
average total cost
Although the price of a good affects quantity demanded, the prices of inputs used to produce the good do not affect ____– and therefore _____ – directly.
WTP; demand
The company should be willing to produce tractors as long as the price they sell for covers the ___________ of production.
variable costs
f the Cross Price Elasticity of Demand is ___, two goods are neither complements nor substitutes.
zero
Consumer surplus is the region between ______ and price, and producer surplus is the region between ______ and price.
demand; supply
