Quiz 8

Question 1

Marginal revenue curve

Answer 1

a graphical representation showing how marginal revenue varies as output varies.

Question 2

Price-taking firm’s optimal output rule

Answer 2

the profit of a price-taking firm is maximized by producing the quantity of output at which the market price is equal to the marginal cost of the last unit produced.

Question 3

Break-even price

Answer 3

the market price at which a firm earns zero profits.

Question 4

Shut-down price

Answer 4

the price at which a firm ceases production in the short run because the price has fallen below the minimum average variable cost.

Question 5

Short-run individual supply curve

Answer 5

a graphical representation that shows how an individual producer’s profit-maximizing output quantity depends on the market price, taking fixed cost as given.

Question 6

Industry supply curve

Answer 6

a graphical representation that shows the relationship between the price of a good and the total output of the industry for that good.

Question 7

Short-run industry supply curve

Answer 7

a graphical representation that shows how quantity supplied by an industry depends on the market price, given a fixed number of producers.

Question 8

Short-run market equilibrium

Answer 8

an economic balance that results when the quantity supplied equals the quantity demanded, taking the number of producer as given.

Question 9

Long-run market equilibrium

Answer 9

an economic balance in which, given sufficient time for producers to enter or exit an industry, the quantity supplied equals the quantity demanded.

Question 10

Long-run industry supply curve

Answer 10

a graphical representation that shows how quantity supplied responds to pride once producers have had time to enter or exit the industry.

Question 11

Public ownership

Answer 11

when goods are supplied by the government or by a firm owned by the government to protect the interests of the consumer in response to natural monopoly.

Question 12

Price regulation

Answer 12

a limitation on the price that a monopolist is allowed to charge.

Question 13

Single-price monopolist

Answer 13

a monopolist that offers its product to all consumers at the same price.

Question 14

Price discrimination

Answer 14

charging different prices to different consumers for the same good.

Question 15

Perfect price discrimination

Answer 15

a situation in which a monopolist charges each consumer his or her willingness to pay–the maximum that the consumer is willing to pay.

Question 16

Interdependence

Answer 16

the outcome (profit) of each firm depends on the actions of the other firms in the market.

Question 17

Duopoly

Answer 17

an oligopoly consisting of only two firms.

Question 18

Duopolist

Answer 18

one the the two firms in a duopoly.

Question 19

Collusion

Answer 19

cooperation among producers to limit production and raise prices so as to raise one another’s profits.

Question 20

Cartel

Answer 20

an agreement among several producers to obey output restrictions in order to increase their joint profits.

Question 21

Noncooperative behavior

Answer 21

actions by firms that ignore the effects of those actions on the profits of other firms.

Question 22

Game theory

Answer 22

the study of behavior in situations of interdependence. Used to explain the behavior of an oligopoly.

Question 23

Payoff

Answer 23

in game theory, the reward received by a player in a game (for example, the profit earned by an oligopolist).

Question 24

Payoff matrix

Answer 24

in game theory, a diagram that shows how the payoffs to each of the participants in a two-player game depend on the actions of both; a tool in analyzing interdependence.