Practice Test 4 Flashcards
Revenue, costs, and profit for avocado producers. The market for avocados is perfectly competitive. The market price of a bushel of avocados is $18. At the profit, maximizing quantity of output in the figure, the farmers total revenue is.——-his total cost is——-and his economic profit is———
$90,70,20
Erica is price taking owner of a cherry orchard. The price of cherries high enough that Aric is earning positive economic profits. In the long run, Erica should expect.——-cherry prices due to the——— firms
Lower, entry of new
Adams perfectly competitive surfboard factories, making positive economic profits. If the price of a surfboard is $900, Adams output is 300 surfboards per month and its monthly average total cost is $700, what is his monthly profit?
$60,000
If Jimmy cell 300 pounds in a perfectly competitive market for one dollar each than his marginal revenue is
One dollar
A——-actions have no effect on the market price of the good or service that they buy.
Price taking Consumers
Imperfect competition
Price and average revenue are the same
Reception of the model of perfect competition is
Many buyers and sellers
The marginal decision rule for Apple farmers. Given the market price of P one,B is the—— curve? (B is horizontal straight.)
Demand
Profit maximization for fabulous fins, flower firm in the short run. The ATC curve is represented by.
 Curve in the top switched shaped curve
And a long run equilibrium, economic profits in a perfectly competitive industry are
Zero
Jennifer Sunglass hut operates in a perfectly competitive industry and has standard cost curves. The variable cost at Jennifer Sunglass hut increases, so all the cost curves except fixed cost shift upward. The demand for Jennifer sunglasses does not change and what is the firm shut down. To maximize profit after the variable cost increases Jennifer Sunglass hut will.——its price and—— it’s levels of production
Not change, decrease
In the short run, if P= ATC, a perfectly competitive firm
Produces the optimal quantity of output and earns zero economic profit
The perfectly competitive organic produce farm. The figure shows a perfectly competitive firm that faces demand curve D and maximizes profit. The farms economic profit in the long run will be.
Zero dollars
Prices, cost curves, and profits for Brianne’s best Bree. Brianne owns briannes best brie, a perfectly competitive firm that produces artisanal cheeses. If the price of Bree is P1 and the firm is profit, maximizing, then the firm.
Shut shut down because marginal cost is lower than average total cost and AVC
Computing. Monopoly profits for Exxon Mobil gas. Producing a Point and would.
Not the profit maximizing, sense at this output. MR is less than zero and MC is greater than zero.
Market in which there is one buyer is
A monopsony
The profit maximizing output in price and the monopoly diamond market. Assume that there is no fixed cost and that AC equals MC equals $200 if this were a perfect competitive industry, total surplus would be.
$6,400
Monopoly with a linear demand curve. If this market, perfectly competitive, instead of a monopoly, the deadweight loss would be given by the area.
There would be no deadweight loss
The profit, maximizing output and price in the monopoly diamond market. Assume that there is no fixed cost and that AC equals MC equals $200. At the profit, maximizing output, and price for a perfectly competitive industry, economic profits, for firms in the industry is.
Zero dollars
Critics of college, athletic organizations, such as the national college, athletic association, argue that these organizations monopolize college athletes, and prevent student athletes from earning money while in college. If this is true, what type of entry barrier exist under such a scenario?
Control of a scarce resource or input
In general economists are critical of monopoly when there is/are
No natural monopoly
Monopoly is an industry structure characterized by
Barriers to entry and exit
Electricity is an industry with sizable fixed costs and substantial economies of scale. That’s in the electric industry.
Large companies are more profitable than small companies
A—— gives an inventor a temporary monopoly on the use or sale of an invention
Patent
A monopolist response to an increase in demand by——-price and——-output
Increasing, increasing
Monopoly model in the market for electricity. When the firm is in equilibrium, maximizing, economic profits, its profit is represented by
SPDB, the rectangular area below the demand curve, but up bum of the average total cost and marginal cost curves
Pay-per-view movies on Xfinity cable II. The figure shows the demand and marginal revenue curve for on-demand movie rentals on Xfinity cable. Assume that marginal cost an average cost are constant at $40. If the cable company practices, perfect price discrimination, deadweight loss will be.
Zero dollars
Goods that are subject to net at work externalities tend to
Become more valuable to individuals as more people use them
Assume that a monopoly firm is currently incurring economic losses. If a permanent change in fixed cost lowers average total cost below the demand curve:
The monopoly will earn economic profits.
Apple sets prices for its new line of iPad, and Microsoft, Dell and HP follow. This practice is known as.
Price leader ship
Payoff matrix for Antojito and Carolina reaper. The combined profit for Carolina reaper an antiojito is maximized on Carolina reaper produces.——— and antojito produces—-.
Lower quantity, lower quantity
Oligopoly pricing strategy, and wireless TV market 2. The Nash equilibrium in the cable TV market occurs when.
Both firms set a low price and each earns $90,000
Prisoners dilemma for Thelma and Louise. Thelma and Louise are arrested and jailed for bank robbery. Given the payoff matrix in the figure of the dominant strategy for Bonnie is.
To confess
Industry consists of five firms. Three of the firms each account for 20% of market sales. One from accounts for 25% of market sales and the remaining from accounts for 15% of Marcus’s house. What is the HHI for this industry?
2050
A dominant strategy equilibrium exists in the game when
Every player has a Claire best action that does not depend on the actions of the other players
Affirm in an oligopoly knows that it’s—— affects its——-and the reactions of its rivals will affect it.
Actions, rivals
Monopoly, profits in duopoly markets for sugar. There are only two firms in the sugar industry. It’s from face is an identical demand curve, D1, and the market demand curve is D2. If the two firms collude to maximize their combined economic profits, they was at the market price at.——-and the combined economic profit of the firm would be——.
P2 given by the area of the rectangle, P1, P2, and BG.
In an oligopoly
The actions of one firm depend on the actions of the other firms
Payoff matrix for the United States and Canada. Suppose that the United States and Canada, both produce quinoa and each country can earn more profit affect output is limited and the price of king what is high. The dominant strategy for Canada is.
High output
Are useful indicator in the market structure of an industry is the—— which is the sum of the squares market shares of each firm in an industry
Herfindahl Hirschmann index
If a firms have an unspoken agreement where I buy firms limit—— they are engaging in——-
Competition among themselves, tacit collusion
Oligopoly pricing strategy, and wireless TV market II. The noncooperative equilibrium in the cable TV market. Occurs when
Both firms set a low price and each are in $90,000
Oligopoly pricing strategy, in wireless TV market II. The dominant strategy for next wireless.
Is to charge a low price
A—— is an industry with only a small number of producers
Oligopoly
Anthony operates the Halsted Street deli and bagel in downtown Chicago, serving delicious sandwiches and comfort food. The deli industry and monopolistically competitive. Anthony, along with every other deli in town is producing the quantity that maximizes average total cost. Assuming the delis are maximizing profits, the.
Number of delis will eventually increase
The market for designer boots in monopolistic competition I. The profit maximizing quantity of output is determined by the intersection at point.
N
Monopolistic competition in the market for specialty watches. I figure represents a monopolistically competitive firm in the long run. The firm will.
Exit this market until all remaining firms earn 0 economic profit
A monopolistically, competitive firm maximize its profits by producing at a quantity where
MR equals MC
Short run, and the long run profit in monopolistic competition. And penalty of the Figure The profit maximizing price is P2 and the ATC curve is tangent to the new demand curve. The portion of the ATC that lies to the right of the tangency and continues down to the intersection with MC and ATC indicates.
Excess capacity
An industry characterized by many competitors, each producing an identical products, with free entry and exit is
Perfectly competitive
Con sitter, a monopolistically competitive firm. As firms exit the industry, we can see this as.
A shift to the right of each individual firms demand curve
Advertising is an economically productive activity, and not a waste of resources, because
It can convey information about a product(I said it can increase sales)
Profit maximization for Domino’s Pizza in monopolistic competition. Suppose that Papa John’s produces a technical innovation that reduces individual franchise cost, so that ATC falls to ATC’ if the franchise produced the competitive up a fourth innovation, it’s optimal price would have been
I said $30 and I’m pretty sure it’s $30 but the correct answer is actually $23
An industry with a Large The Birth relatively small firm, is producing differentiated products in a market with easy entry and exit affirms is
Monopolistically, competitive
Profit maximization for Domino’s Pizza in monopolistic competition. Supposed to Papa John’s introduces a Technical innovation that reduces individual franchise cost of the ATC fast to ATC’. If the franchise produced the competitive output before the innovation, its optimal quantity would happen.
200 pizzas per day. Where marginal cost crosses demand.
Monopolistic competition in the market for cell phones. The firm depicted in the Figure Produce is the output that maximizes profit, minimizes losses. In this case the firm is earning.
Economic losses
Perfect competition and monopolistic competition in the long run. Which statement is true?
Both panels show markets that have many firms
Fast food profit in monopolistic competitionII. The profit maximizing quantity of output is determined by the intersection point at
K
Fast food, profits in monopolistic competition I. The profit maximizing quantity of output is determined by the intersection point at.
G
