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- A.the profit maximizing output level for monopolists occurs at lower levels of production than for purely competitive firms
- B.monopolists maximize profits by setting output such that marginal revenue exceeds marginal cost
- C.monopolists maximize profits by setting output such that marginal revenue is maximized
- A.Both the elasticities and absorption approaches consider trade and capital flows
- B.Under the elasticities approach, currency depreciation will result in greater improvement in the trade deficit when either import or export demand becomes more elastic
- C.Under the absorption approach, depreciation of the domestic currency will improve a trade deficit if it increases national expenditures relative to income
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An economist finds the following characteristics for the market for two products, S and T:
Product
Firm s Pricing Power
Concentration Ratio
S
Considerable
High
T
Some
Low
- A.an oligopoly and the industry for Product T is also an oligopoly.
- B.an oligopoly and the industry for Product T is monopolistic competition.
- C.monopolistic competition and the industry for product T is an oligopoly.
- A.marginal product per unit of labor is 1/3 ton.
- B.marginal revenue product of capital is equal to the price of a unit of capital.
- C.ratio of the marginal output per labor unit to labor units employed is at a maximum.
- A.perfectly elastic, meaning elasticity of supply is infinite
- B.perfectly inelastic, meaning elasticity of supply is zero
- C.perfectly inelastic, meaning elasticity of supply is infinite
- A.producer surplus for domestic producers of the good
- B.quantity of the good supplied by domestic producers
- C.quantity of the good demanded in the domestic market
- A.AVC and ATC are at their minimum points
- B.AVC is at its minimum point and ATC is increasing
- C.ATC is at its minimum point and AVC is decreasing
- A.P-0.04Q + 0.75.
- B.P = 0.0042Q + 0.9.
- C.P = 0.18Q + 1.32.
- A.positive, and for substitutes the cross elasticity of demand is negative
- B.negative, and for substitutes the cross elasticity of demand is negative
- C.negative, and for substitutes the cross elasticity of demand is positive
- A.adopt a marginal cost pricing strategy, which will decrease consumer surplus.
- B.increase price, decrease consumer surplus, and increase producer surplus.
- C.reduce output, create a deadweight loss, and decrease both producer and consumer surplus.
- A.decrease output at both factories.
- B.decrease output at the Paris factory and increase output at the Munich factory.
- C.increase output at the Paris factory and decrease output at the Munich factory.
- A.earn positive economic profits in the short run.
- B.maximize economic profits by colluding with the other firms and operating as a single seller.
- C.differentiate its product based on price or quality.
- A.competing firms that collude to restrict output each have an incentive to cheat
- B.a firm's competitors will follow a price decrease but will not follow a price increase
- C.a firm can increase profits by charging different prices to distinct groups of consumers
- A.results in increased unemployment, and setting a minimum wage below the equilibrium wage has no effect on unemployment.
- B.has no effect on unemployment, and setting a minimum wage below the equilibrium wage results in increased unemployment.
- C.results in increased unemployment, and setting a minimum wage below the equilibrium minimum wage results in decreased unemployment.
- A.maximum profits.
- B.at maximum marginal product.
- C.at minimum average variable cost.
- A.Monopolies produce less goods than a competitive market would
- B.Costs of production are higher with monopolies
- C.Monopolists charge the maximum price
- A.upward sloping and its demand curve is perfectly elastic
- B.upward sloping and its demand curve is downward sloping
- C.perfectly inelastic and its demand curve is perfectly elastic
- A.producers more than consumers if demand for the good is less price elastic than supply
- B.consumers more than producers if the supply of the good is more price elastic than demand
- C.consumers and producers equally because the actual incidence of a tax is unaffected by price elasticity
- A.increases
- B.decreases
- C.remains the same
- A.Both firms will cheat on this agreement.
- B.Neither firm will cheat on this agreement.
- C.Only one of the firms will cheat on this agreement.
- A.and substitution effect both tend to increase consumption of the good
- B.is to decrease consumption of the good, and the substitution effect is to increase consumption of the good
- C.is to increase consumption of the good, and the substitution effect is to decrease consumption of the good
- A.no market equilibrium.
- B.a stable market equilibrium.
- C.an unstable market equilibrium.
- A.decreasing as output increases, and the plant is at its minimum efficient scale if LRAC is at its lowest level.
- B.decreasing as output increases, and the plant is at its minimum efficient scale if LRAC is decreasing over the entire range of output.
- C.increasing as output increases, and the plant is at its minimum efficient scale if LRAC is at its lowest level.
- A.$11
- B.$13
- C.$15
- A.Both statements are accurate
- B.Neither statement is accurate
- C.Only one of the statements is accurate
- A.Since economic profits in the long run are positive for firms in monopolistic competition, there are efficiency losses.
- B.Product differentiation under monopolistic competition offers benefits that tend to offset inefficiency from the reduction in output compared to perfect competition.
- C.Advertising expenditures under monopolistic competition represent a deadweight loss to society.
- A.both will increase
- B.price will increase and output will decrease
- C.price will decrease and output will increase
- A.increased more than the growth in the money supply.
- B.been minimal, consistent with the slow growth in real output.
- C.increased at a rate similar to the growth rate in the money supply.
- A.customers who cannot resell the product and whose price elasticities of demand are in a limited range
- B.distinct groups of customers with different price elasticities of demand who are able to resell the product
- C.distinct groups of customers with different price elasticities of demand who cannot resell the product
- A.If their marginal revenue, marginal cost, and average total cost are $50, $43, and $57, respectively, Tetra Corporation can maximize profits by:
- B.expanding output until marginal revenue equals marginal cost.
- C.reducing output until marginal revenue equals average total cost.
- D.expanding output until marginal revenue equals average total cost.
- A.perfect competition
- B.monopolistic competition
- C.oligopoly
- A.9 units.
- B.17 units.
- C.32 units.
- A.Which of the following is the most likely result of this policy?
- B.The marginal benefit of cucumbers will exceed the marginal cost, causing a deadweight loss.
- C.The marginal cost of cucumbers will exceed the marginal benefit, causing a deadweight loss.
- D.The marginal cost of cucumbers will exceed the marginal benefit, and a shortage of cucumbers will emerge
- A.one year or the length of the firm's production cycle
- B.the period during which the firm's plant size and production methods are fixed
- C.the period in which the firm cannot change its input quantities of labor and materials
