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2Micro 2
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Preguntas del test (86)
1When analyzing the welfare cost of a monopoly, economists use ________ as the measure of economic well-being.
- Aconsumer surplus
- Bproducer surplus
- Cprofit
- Dtotal revenue
- Etotal surplus
2Under conditions of monopoly, the socially efficient level of production occurs where the marginal cost curve intersects the ________ curve.
- Ademand
- Bmarginal revenue
- Csupply
- Daverage cost
3Because P > MC, monopoly pricing prevents some mutually beneficial trades from taking place. These unrealized mutually beneficial trades are ________ to society.
- Aa deadweight loss or excess burden
- Ba sunk cost
- Cof little concern
- Dnot considered a cost
4If a monopolist sells 100 units at $8 per unit and realizes an average cost of $6 per unit, what is the monopolist's profit?
- A$800
- B$200
- C$600
- DNone of the above
5What is the deadweight loss due to monopoly pricing under the following conditions:
The price charged for goods produced is $16.
The intersection of the marginal revenue and marginal cost curves occurs where output is 10 units and price is $8.
The socially efficient level of production is 12 units.- A$16
- B$8
- C$48
- D$24
- ENone of the above
6Antitrust laws may _________ the ability of firms to ______________.
- Arestrict, operate at the socially efficient level of production
- Benhance, capture profits from concentration of market power
- Crestrict, capture efficiencies in production through mergers and economies of scale (synergies)
- Denhance, reduce economic losses
7One problem with government regulation of natural monopolies is that
- Aa benevolent government is likely to be interested in generating profits for political gain.
- Bthe government typically has poor information about the socially optimal level of production.
- Cregulated industries typically have rising average costs or diseconomies of scale
- Da government regulated outcome may increase the profitability of the monopoly.
8If government regulators force a natural monopolist to price its product at a level equal to marginal cost
- Athe monopolist will still cause a deadweight loss.
- Bthe monopolist will likely increase its profit.
- Cthe monopolist will likely have economic losses that require a government subsidy to remain in operation.
- Dfewer consumers will have an ability to buy the monopoly product.
9If a regulated natural monopoly is unable to generate profits at the "marginal-cost pricing" regulated level of production
- Athe regulated monopolist should always exit the industry.
- Bthe regulated monopolist should try to minimize losses in the long run.
- Cit may be necessary for the government to subsidize the natural monopolist, which requires raising taxes or cutting public spending elsewhere.
- Dthe government should always purchase the monopoly and run it in the public sector.
10One problem with regulating a natural monopolist on the basis of its average cost is
- Aa monopolist is still able to generate excessive economic profits.
- Bregulators are unable to control prices and/or production output, possibly encouraging the monopolist to overstate costs or become less efficient.
- Ca monopolist's costs, by definition, are higher than costs of perfectly competitive firms.
- Dthat it does not provide an incentive for the monopolist to reduce its cost, possibly encouraging the monopolist to overstate costs or become less efficient.
11Which of the graphs shown below best describes the situation of a regulated natural monopolist with marginal-cost pricing regulation?
- APanel a
- BPanel b
- CPanel c
- DPanel d
12Passed by congress in 1890, ________ attempted to reduced the market power and the economies of scale of large and powerful "trusts".
- Athe Sherman Act
- Bthe Clayton Act
- Cthe 14th Amendment
- DNone of the above.
13Passed by congress in 1914, ________ strengthened ________ by authorizing private antitrust lawsuits against highly efficient large-scale firms, benefiting less efficient small-scale firms.
- Athe Sherman Act, the Clayton Act
- Bthe Antitrust Act, the Clayton Act
- Cthe Clayton Act, the Sherman Act
- DNone of the above.
14________ occur(s) when companies merge in order to lower long-run average costs and achieve large economies of scale.
- AMonopolies
- BSynergies
- COligopolies
- DCollusion
15Since natural monopolies have a declining average cost curve, regulating natural monopolies by setting price equal to marginal cost would
- Aresult in a less than optimal total surplus.
- Bmaximize producer surplus.
- Ccause the monopolist to operate at a loss.
- DAll of the above.
16When regulating a natural monopoly, one of the problems with setting price equal to average cost is that
- Aconsumer surplus is not maximized.
- Btotal social welfare is not optimized because P > MC.
- Cthere is no incentive for the monopolist to lower its costs.
- Dthere is an incentive for the monopolist to overstate its costs.
- EAll of the above.
17A perfectly price discriminating monopolist is able to
- Amaximize profit, but not produce a level of output consistent with optimal social well-being.
- Bproduce a level of output consistent with optimal social well-being, but not maximize profit.
- Cexercise illegal preferences over the gender of its employees.
- Dmaximize profit and produce a level of output consistent with optimal social well-being.
18When a monopolist is able to sell its product at different prices to different consumers, it is engaging in
- Aquality adjusted pricing.
- Bdistribution pricing.
- Cprice discrimination.
- Dprice differentiation.
19Price discrimination is a rational strategy for a profit-maximizing monopolist when
- Athere is no opportunity for arbitrage across market segmentations.
- Bthere is an opportunity for arbitrage across market segmentations.
- Cconsumers are unable to be segmented into identifiable markets.
- Dthey want to increase the deadweight loss that results from profit-maximizing behavior.
20If a monopolist is able to price discriminate
- Aconsumer surplus is increased at a point closer to the socially efficient level of output.
- Bdeadweight loss is increased at a point closer to the socially efficient level of output.
- Cthe price effect dominates the output effect on monopoly revenue at a point farther from the socially efficient level of output.
- Dconsumer surplus and deadweight losses are transformed into producer surplus and monopoly profits at a point closer to the socially efficient level of output.
21A monopolist who is able to engage in perfect price discrimination will have profit equal to
- AA + C
- BB + D+ E
- CC + D+ F
- DA + B + C+ D+ E
22In theory, price discrimination
- Aincreases the monopolist's profits.
- Bdecreases consumer surplus.
- Cdecreases deadweight loss.
- DAll of the above.
23Price discrimination requires the firm to
- Adifferentiate between different units of their product.
- Bengage in arbitrage among buyers of their product.
- Cseparate customers according to their willingness to pay.
- Dprevent arbitrage among buyers of their product.
- Eboth c and d.
24The process of buying a good in one market at a low price and selling it in another market at a higher price, such as in ticket-scalping, is called ________.
- Amarginal cost pricing
- Bprofit discrimination
- Carbitrage
- Dproduct discrimination
25Markets which are characterized by only a few sellers with large market shares that sell similar or nearly identical (homogenous) products are typically referred to as
- Aaggressive markets.
- Boligopoly markets.
- Cmonopoly markets.
- Dcompetitive markets.
26In general, market structures that fall somewhere in between Monopoly and Perfect Competition are called
- Aoligopoly markets.
- Bmonopolistically competitive markets.
- Cincomplete markets.
- Dimperfectly competitive markets.
27Monopolistically competitive firms are typically characterized by
- Afew firms selling similar or identical products.
- Bmany firms selling identical products.
- Cmany firms selling similar, but not identical products.
- Dfew firms selling highly different products.
28Monopolistic competition is characterized by which of the following attributes
(i) Many sellers
(ii) Product Differentiation
(iii) Barriers to entry
(iv) Natural monopolies- A(i) and (iii) only
- B(i) and (ii) only
- C(ii) and (iv) only
- Dall of the above.
29In a monopolistically competitive market structure, because each good sold in the market is _________________ each firm is considered a _________________.
- Aslightly different, price setter or price maker
- Bslightly different, price taker
- Cthe same, price setter or price maker
- Dthe same, price taker
30In a monopolistically competitive industry, price is likely to be ____________________ marginal cost since each firm is a ___________________.
- Aabove, price setter or price maker
- Bequal to, price taker
- Cbelow, price setter or price maker
- Dalways a fraction of, price setter or price maker
31When many sellers are involved in selling their products in a market, the market structure is which of the following:
(i) perfect competition
(ii) monopolistic competition
(iii) monopoly
(iv) oligopoly- A(i) only
- Bboth (i) and (ii)
- C(ii) only
- D(i), (ii) and (iv) only
- Eall of the above
32When freedom of entry is one of the attributes of a market structure, economic profits are
- Aeventually driven to zero.
- Bnegative for all firms.
- Csacrificed to excess capacity.
- Dalways positive.
33Monopolistic competition differs from Oligopoly because in monopolistically competitive markets
- Aeach of the sellers offers a somewhat different product.
- Bthere are barriers to entry.
- Call firms can eventually earn economic profits in perpetuity.
- Dstrategic interactions between firms is vitally important.
34A monopolistically competitive firm differs from a perfectly competitive firm because a monopolistically competitive firm
- Afaces a horizontal demand curve at the market clearing price due to product homogeneity.
- Bfaces a downward sloping demand curve for its product due to product differentiation.
- Cis characterized by profit maximization.
- Dhas no barriers to entry.
35If firms in a monopolistically competitive industry are making economic profits
- Afirms will likely be subject to regulation.
- Bbarriers to entry will be strengthened.
- Cnew firms will eventually enter the market.
- Dsome firms must eventually exit the market.
36In the short run, a firm in a monopolistically competitive market
- Aearns economic profits.
- Bearns economic losses.
- Cwill never shut down.
- Dall of the above
- Eonly a or b are possible
37Which of the following graphs would represent a profit maximizing monopolistically competitive firm?
- APanel a
- BPanel b
- CPanel c
- DPanel d
38Which of the graphs shown would be consistent with a monopolistically competitive firm that is making economic profits?
- APanel a
- BPanel b
- CPanel c
- DPanel d
39Which of the graphs shown would be consistent with a monopolistically competitive firm that is making economic losses?
- APanel a
- BPanel b
- CPanel c
- DPanel d
40If firms in a monopolistically competitive market are earning economic profits, which of the graphs shown would reflect the change in demand for incumbent firms as the market adjusts to its new equilibrium?
- APanel a
- BPanel b
- CPanel c
- DPanel d
41If firms in a monopolistically competitive market are incurring economic losses, which of the graphs shown would reflect the change in demand for incumbent firms (who are able to stay in the market) as the market adjusts to its new equilibrium?
- APanel a
- BPanel b
- CPanel c
- DPanel d
42In monopolistically competitive markets, economic profits ____________, and __________________ shifts the demand curve of incumbent firms to the ___________________.
- Asignal some incumbent firms to exit, exit, right
- Bsignal some incumbent firms to exit, exit, left
- Csignal new firms to enter, entry, left
- Dsignal new firms to enter, entry, right
43In monopolistically competitive markets, economic losses ____________, and __________________ shifts the demand curve of incumbent firms to the ___________________.
- Asignal some incumbent firms to exit, exit, right
- Bsignal some incumbent firms to exit, exit, left
- Csignal new firms to enter, entry, left
- Dsignal new firms to enter, entry, right
44As new firms enter a monopolistically competitive market, economic profits of existing firms ____________ and product diversity in the market _________________.
- Adecline, decreases
- Brise, decreases
- Crise, increases
- Ddecline, increases
45As some incumbent firms exit a monopolistically competitive market, economic losses of existing firms ____________ and product diversity in the market _________________.
- Adecline, decreases
- Brise, increases
- Crise, decreases
- Ddecline, increases
46Which of the panels shown reflects a long run equilibrium in a monopolistically competitive market?
- APanel a
- BPanel b
- CPanel c
- DPanel d
47Which of the panels shown could not characterize a short-run or a long-run equilibrium in a monopolistically competitive market?
- APanel a
- BPanel b
- CPanel c
- DPanel d
48Panel b in the set of images shown is consistent with
- Aa perfectly competitive firm that is incurring economic losses.
- Ba monopolistically competitive firm in short-run equilibrium, but not a long-run equilibrium.
- Ca monopolistically competitive firm in both a short-run and a long-run equilibrium.
- Da monopolistically competitive firm in a long-run equilibrium, but not a short-run
equilibrium.
49Which of the panels shown depicts a monopolistically competitive firm earning economic profits in the short run
- Aboth Panels c and d
- BPanel d
- CPanel c
- Dnone of the above.
50For a monopolistically competitive firm in long-run equilibrium ___________________ like in a monopoly market, and ________________________ like in a competitive market.
- Aprice equals average total cost, price exceeds marginal cost
- Bmarginal revenue equals marginal cost, average revenue exceeds average total cost
- Caverage revenue exceed average total cost, marginal revenue exceeds average revenue
- Dprice exceeds marginal cost, price equals average total cost
51Since a monopolistically competitive firms faces a ____________________ demand curve, it will always operate at ___________________.
- Aperfectly elastic, excess capacity
- Bdownward sloping, excess capacity
- Cdownward sloping, efficient scale
- Dperfectly inelastic, efficient scale
52Hotels in New York City frequently experience an average vacancy rate of about 20% (i.e., on an average night, 80% of their rooms are full). This excess capacity is indicative of a (an) ________________ industry.
- Amonopolistic
- Bcompetitive
- Coligopoly
- Dmonopolistically competitive
53In theory, a monopolistically competitive market could be considered inefficient since
- Amarginal cost exceeds price leading to a deadweight loss.
- Bexcess capacity is a short-run problem.
- Cmark-up pricing does not occur in any other market structure.
- Dprice exceeds marginal cost leading to a deadweight loss.
54If regulators were to ensure that monopolistically competitive firms set price equal to marginal cost in the long run
- Anew firms would be likely to enter the market.
- Bthe most efficient firms are not likely to be affected.
- Call monopolistically competitive firms would experience economic losses.
- Dfirms would also operate at maximum efficient scale.
55Advertising enhances the competitive structure of markets when
- Ait is psychological rather than informational.
- Bit reduces the elasticity of demand for a product.
- Cit provides information that is useful to consumers in choosing among a variety of products.
- Dit increases brand loyalty.
56Advertising that identifies the location and hours of operation of retail outlets
- Aenhances the competitive structure of markets.
- Bgives consumers more information to make better choices.
- Cenhances the ability of markets to allocate scarce resources more efficiently.
- Dall of the above.
57Advertising that conveys information about the prices of different goods being offered for sale
- Aincreases brand loyalty and product differentiation.
- Bis psychological rather than informational.
- Cis likely to enhance the ability of markets to allocate scarce resources more efficiently.
- Dall of the above.
58When advertising encourages customers to become more informed about all firms in the market,
- Ademand curves for specific brands in the market are likely to become less elastic.
- Beach firm is likely to have less market power and prices are likely to be lower.
- Cfirms are able to foster stronger brand loyalty.
- Dthe market power of individual firms is strengthened.
59Firms which have large advertising budgets, such as those firms that advertise during the Super Bowl, are likely to be providing consumers with
- Ainformation about product price.
- Ba potential signal about product quality.
- Ca good example of wasted resources.
- Da glimpse of ostentatious capitalism.
60Professional organizations and producer groups that represent firms in the same industry have an incentive to _______________ advertising through government regulation in order to ________________ competition on the basis of price. Research suggests that this type of rent-seeking ________________ prices in that industry.
- Arestrict, enhance, decreases
- Bencourage, reduce, increases
- Cencourage, enhance, decreases
- Drestrict, reduce, increases
61When compared to perfect competition, the theoretical disadvantages of monopolistic competition are __________ and __________, whereas the practical benefit that consumers get in return is __________.
- Aproduct variety, excess capacity, marginal cost pricing
- Bexcess capacity, deadweight losses, product variety
- Cproduct variety, deadweight losses, average cost pricing
- Ddeadweight losses, product variety, excess capacity
62When large-scale firms have tacit agreements among themselves on the quantity to produce and the price to sell output, they are organized
- Aas a Nash arrangement.
- Bon a competitive scale.
- Cas competitive oligopolists.
- Das a cartel.
63In markets characterized by oligopoly,
- Acollusive agreements will always prevail.
- Bthere is often tension between cooperation with rivals and pursuit of self interest.
- Ccollective profits are lower under cartel arrangements.
- Dpursuit of self interest by profit maximizing firms always maximizes collective profits in the market.
64Equilibrium quantity in markets characterized by Oligopoly is usually________________ than in monopoly markets and _______________ than in perfectly competitive markets.
- Alower, higher
- Blower, lower
- Chigher, higher
- Dhigher, lower
65Equilibrium price in markets characterized by Oligopoly is usually ________________ than in monopoly markets and _______________ than in perfectly competitive markets.
- Alower, higher
- Bhigher, lower
- Clower, lower
- Dhigher, higher
66As the number of firms in an oligopoly market _________________ the market approaches a ____________________________.
- Adecreases, cartel equilibrium
- Bincreases, competitive market equilibrium
- Cdecreases, competitive market equilibrium
- Dincreases, monopoly market equilibrium
67When a profit maximizing oligopolist makes a production decision
- Ait should ensure that the output effect is dominant.
- Bit should ensure that the price effect is dominant.
- Cit generally must consider the behavior of competing firms.
- Dit must always assume that competing firms will maintain their current level of production.
68There are two types of markets in which firms face some competition yet are still able to have some control over the prices of their products. The names given these market structures are
- Aoligopoly and duopoly.
- Bimperfect competition and monopolistic competition.
- Cduopoly and imperfect competition.
- Dmonopolistic competition and oligopoly.
69An agreement among firms over production and price is called _______. This group of firms that are acting in unison is called a ________.
- Acollusion, cartel
- Bconspiracy, cartel
- Ccollusion, union
- Dconspiracy, union
70Individual members of a cartel almost always have an incentive to ________ to increase their profits further.
- Acollude by lowering ouptut and increasing price
- Blower production
- Ccheat by increasing output and reducing price
- Dlimit membership
71The goal of an oligopolist is assumed to be to
- Amaximize revenue.
- Bmaximize profits.
- Cincrease market share.
- DAll of the above.
72An oligopolist is part of a cartel that is collectively producing at the monopoly level of output. The oligopolist, being self-interested will
- Alower production below the agreed-upon level and drive up prices further.
- Bincrease production beyond the agreed-upon level to undercut rivals within the cartel.
- Cdo nothing thus allowing the cartel to realize monopoly profits.
- DNone of the above.
73________ is the study of how people behave in strategic situations.
- AEconometrics
- BStatistics
- CGame theory
- DWelfare economics
74A(n) ________ is a situation in which economic actors interacting with one another each choose their best strategy given the strategies the others have chosen.
- Asocially optimal solution
- Bcompetitive equilibrium
- CNash equilibrium
- Dopen market solution
75The prisoners' dilemma is an important game to study because
- Ait identifies the fundamental difficulty in maintaining cooperative agreements.
- Bmost games present zero-sum alternatives.
- Cstrategic decisions faced by prisoners are always identical to those faced by firms engaged in illegal collusive agreements.
- Dall of the above.
76A prisoners' dilemma game demonstrates how _______________ is often rational even though ________________________.
- Afailure to cooperate, cooperation would make everyone worse off
- Bfailure to cooperate, cooperation would make everyone better off
- Ca desire to cooperate, cooperation would make everyone worse off
- Dall of the above can be demonstrated with a prisoner's dilemma game
77When the player of a game chooses a dominant strategy
- Ait is the best strategy, only if other players are cooperative.
- Bit is always leads to a Nash equilibrium that makes all players equally well off.
- Cthe game can never reach a Nash equilibrium.
- Dit is the best strategy, regardless of choices made by other players.
78Dominant strategies in a two-person game often lead to
- Athe best possible outcome for both players.
- Ba less preferred outcome for both players.
- Cone person gaining advantage at the expense of the other person.
- Da disequilibrium outcome.
79Oligopolies would like to act like ________, but self-interest drives them closer to ________.
- Acompetitive firms, monopolies
- Bmonopolies, duopolies
- Cmonopolies, competition
- DNone of the above.
80Given the following prisoners' dilemma table, if Bonnie and Clyde make the appropriate self-interested decision independent of the other, how much time should each spend in jail?
- ABonnie goes free, Clyde gets 20 years
- B1 year for each
- C8 years each
- DBonnie gets 20 years, Clyde goes free
81Given the following prisoners' dilemma table, if Bonnie and Clyde could successfully collude regarding their decisions, how much time should each spend in jail?
- ABonnie goes free, Clyde gets 20 years
- B1 year for each
- C8 years each
- DBonnie gets 20 years, Clyde goes free
82In game theory, a strategy is called a ________ if it is the best strategy for a player to follow regardless of the strategies pursued by other players.
- Adominant strategy
- Bknown probability
- Cperfect strategy
- DNone of the above.
83Individual members of a cartel have a strong incentive to ________________ the cartel agreement because pursuit of _______________ will maximize individual firm profit and potentially increase market share.
- Aadhere to, self-interest
- Bcheat on, collective interest
- Ccheat on, self-interest
- Dadhere to, collective interest
84Games which are repeated and played more than once
- Agenerally make collusive arrangements easier to enforce due to reputation building.
- Blead to outcomes dominated purely by self-interest.
- Calways enhance social well-being.
- Dencourage more cheating on cartel production quotas in the successive multiple rounds.
85In a two-person repeated game, a tit-for-tat strategy starts with ____________________ and then each player ______________________.
- Anon-cooperation, pursues their own self-interest
- Bcooperation, is unresponsive to the strategic moves of the other player
- Ccooperation, mimics the other player's last move
- Dnon-cooperation, cooperates when the other player demonstrates a desire for the
cooperative solution
86If players in a repeated game follow a tit-for-tat strategy
- Aself-interest is likely to lead to a non-cooperative solution.
- Bthe cooperative solution is more likely to prevail than otherwise.
- Cself-interest becomes irrelevant to the outcome of the game.
- Da cooperative solution would be impossible to enforce.
Información
- Descripción
- Test sobre 2Micro 2, creado por Derek Lasky el 05/04/2018.
- Autor
- Derek Lasky
- Idioma
- English
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