MicroFall2002%5B3%5D

MicroFall2002%5B3%5D - E CONOT{rCS1 100 rdA!.IE ( IAST, F...

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Unformatted text preview: E CONOT{rCS1 100 rdA!.IE ( IAST, F IRST) EXAII III FAI,I,2OO2 VERfIION B ss* rNsTRIrcTroNs: s elect t he b est r esponse t o e ach i tem a nd b ubble i n l etter E ach c orrect the c grresponding o n y our a nswer s heet. p oints o ut o f 1 50 p ossible p oints. resporlse i s w orth 3 .75 Refer t o t h6 g raph b elorr t o a Dsti€r q uestiols 1 - 3. vn 1. The a. b. c. d. profiL-maximizing 50 and $?5. 70 and $60. 50 and S30. 90 and $50. quantity and price are: 2. At the profi t-maximi zing is: a. 51,500. b. $3,000. c. $3,?50. d. $4,s00. level of output, total cost (Tc) 3. Ievel of outpuE, this At the proiiL-maximizing a. incurs an economic loss of $750. of $750. b. earns an economic profit incurs an economic loss of 51.500. c. of $1,500. d. earns an economic profit firm: 4- Which oL the lollowLng is Dot true lor a profiL-maximizing monopolist? Price is greater thdn marginal revenue a, lM>,^ i -r l !!.!r-q! equdas . .'r p/dfifs M: r^ in: I 116r 9 r t'ar LUrL @dral ra\ran,o toial ia revenue n1 c^t ar minus I h^. ^r botal i.a cost 5. Monopofists: --^-^-i^r^fi'a in i - h A -n n g r u n . l a. drwdys eor e conomic p rofits i n t he L ong r un c an m aintain s hort-run b. to entry exist. if barriers i n L he l ong r un e ven i f s hortc annot e xit t he i ndustry c. run economic losses Persist. produce the ouLput where price equals marginal cost. d. hthi ai-i ^f rlio l^l l^.'in^ ic : F,ar rici a a. b- d. e. '7. F^n^n^ a Diseconomies of scale a nd l icenses c overnment f ranchises e^r 6 ^Lmarchin ^ f . d } (ey r e source A11 of the above (b) and (c) only Lhe follov,/ing is o chara.teristic m:Yl.ai hr^rl't-r 2 h:c m:h1/ -l^<c c,,l_rer ill'ree Which ol 1 \r r"h6 of d b. ^ There are no barriers T}1a'o callarc fo entry. ^f iha 6,^/t"^r d. B. The demand curve is d o w n 0 , t a r ds l o p i n g . The def in.ing characcerisLic ol a natural monopoly is: a. economies of scale over fhe le.LevanL range of ouLput. b. d iseconomies o f s caLe o ver t he r elevanL r ange o f oucpuE. marginal cosr is U shaped ovar thp relevanl range ot oucpur . d. marginal cost is constanf over Lhe rel6vanF rdnge of output. T he d emand c urve f or a m onopoly f irm i s: or market, dernand than the industry, a. more elastic curve for its product. o r m arket, d emand c urwe f or b. t he s ame a s t he i ndustry, its product. or markeL, demand than the industry, c. less elastic product. curve for its perfectly at the output lvher.eMR=MC. inefastic d. 9. 10. z ing c han MR, t hen a p roflt-maximi If M C i s g reater s hould: monopolist o ubput t o i n c r e a s e p r o f i t . i ncrease a. -,^f if d ecrease o utput F ^ I h ^ ? a a c 6 b. it i s a lready m aximizingr p rofit. c. do nothing since -,^f i id. d ecrease o utput F ^ . i a ^ r a . c 6 to t h€ g Ealth b elaw to a ttsrer q ueatioDs 1 1 a att 1 2. Refer 11 firm will Thj s profi t-maximizing output a nd c harge a P lice o f a. 0' ; P,' b. Q, r P,. d. Q, ; P.. produce - unils of 1-2. T he d eadweight l oss o f t his i ndustry is c ompeLitive t han p erfectfy tather . Q,BDQ, ADE. b. c. d. Q,ADQ,. b eing e qual m onopolistic t o t he a reai 13 a ssociated t o r educe L he i nefficiency Government a ttempts w ays e xcept: with m onopoly i n a ll o f t he f ollowing c ornpetition. a ntitrust l aws t hat i nclease e nforcing a. t he p r.ice a m onopoly c an c harge f or o utput. r egnrlating b. t he m onopoly i tself. o perating c. t he m onopoly m ay s e1l i n t he a mount o f o utput l irnitinq d. profit. order to limit 14. A monopoly produces: a. m ore t han t rhe e fficient m!'^inal l-\ano Iir ov-oor:c l evef hrr^!n: of | o utput -^cl b ecause b. c. d. I5. less than the efficient level of output llecause marginal benefi L exceeds marginal .ost. more than the efficient 1eve1 of output because m a r g j n a l b e n e f i L - s - L e s st h a n m d r g i n d l c o s L . less than the efficient level of output because marginal benefit is less than marginaf cost. is rhe pracL -Lce ot : p rices i n t he s hort n-i.Fs nn^rr in r. i. -hF lo.o Pr ice discr iminacion l ower a. c harging run . h . rl .harftina l^L'ay ' ha rnro r un rIn nri-oc t han rhan se in t he the l ong shorc run. eFl I inn ep I t ino eama ,liffarpr^-a m,-l.Ff d-ille-renL anolher cusEomers. nrr' n 't h^. market Use t he i nforrnation questl,on6. Price in t he t able b 61ow to a oswer t he n er<t t t{o per unit ouantilv Demanded s72 10 0 1 a 6 2 3 S 4 2 lb. 5 For a monopolisL Lhaf is unable to prrce discrim.inate, Lhe a nd t he m arginal marginal r evenue o f t he 3 '" u nit i s revenue f or t he 4 " u nit i s g1B; 916 a. b. S6; 52 c. $2; $0 d. 92; 92 : :hlF ^ narfa.l Lw ^ri.F disc!iminaLe woufd e arn t otal output and totaf output. a. 9 1 6; 9 1 0 b. $16; S30 g2B; 930 c. d. 92B; 910 r evenue o f revenue of - if if it it 6 o1d 4 u n-its o f sold 5 units of 1 8. A n i ndustry d ominated b y a f ew l arge f irms w hose p ricing output decisions dre dependenr on one anolher is i11egra1 in the United Si:ates. a. b. oligopolistic. m^n^n^l i cFi ^ a nd d. 19. m ore e fficient t han a p erfectly c ompetitive i ndustry. T he g ame t heory m odel a ssumes t hat: f ir.ms ignore rival firms' decisions when they make a. their o wn d ecisions d ecisions w hen t hey n ake r ivaf f irms' b. f irms a nticipate their own decisions. b ecause t here a re n o b arriers c. m arkets a re c ontestable EO encry. strateg-y of the d. a firm wilf afways fo1low the pricing dominant f irm i n t he i ndustrry. When an oligopofy market is in a Nash equilibrium: for each firrn. market price will always be different a. maximizets. firms will not behave as profit b. lndividual c. each firn chooses its best strategy given the straLegies t hat t he o ther f irms h ave c hosen c ost e quals m arginaf r evenue. d. a verage t otal i nforrutioa b elow !o a nalter t h€ n erats q ueation. 2A. UEe t h6 p roducers, P roctor & t wo L aundry d etergent SLrppose t haL CanJcIe (P&G) and Lever Brothers, are aEtempting Lo increase profits. advertising, but is considering Each is their T he r esults o f t heir d o. concerned a bout w hat L he o ther w ill decisions a re s hown b elow. P&C Advenrse Advedise Don t A dvenise P&Gprofits=$2b I-everp rofits = $ 5b P & G p r o f i r s= $ 4 b I-evcrp rofits = $ 4b e arn a P&Gprofits=$3b Lrver p rofits = $ 3b P&Gprofirs=$5b kver p rotlts - $ 2b l-evcr Don't A dvcrtise 2L. P & G w ill W hen L his g ame r eaches a N ash e quilibrium, of -. profiL of earn a profit and Lever will a. $4 biLlion; $4 biltion. b. $3 billion; $3 biflion. c. 55 bi I lion: $2 bil ion. d. $5 bl1Lion. $2 billion; 2 2. f irm: m eans t hat e ach o ligopolistic M utual i nterdependence demand for its product. faces a perfectly elastic a. w hen i t o f i ts r ivals t he r eactions b. m ust c onsider det e.L ines iLs price po1.icy. m produces a product identical to those of iCs rivals. c. d nr6d,,.c< F nrodlct to Lhe similar but noL identical products of its rivals. r elevant t o u nderstandj'ng: c ame t heory i s e speciafly ' a^t I v .^Fnp- itive ma-rKets. l-, 6^n^n^ ^1i -^-^ 1r' \/ marL6i c m>rLai-c 23. d. 24- n one o f t he a bove i s c orrecc. indusLry) in ^n of firms: A carLe1 is an organization Lhat aftempLs to decrease toLal {or for their producL. l-, .hir rF.rrr.pc ^rrt-n,,- rn.r i n..F:ca ininr nrofi cs. -ri cpe demand !o n, :.a elfort c. d. 25. to as dominated by one firm, which is usually referred the price leadet. attempts to disr.upt the market for that deliberately PoIj t ical r easons . because: Cartels are often short-1ived collusive agreements among explicit laws often prohibit a. competitors. with coopetation. often conflicts b. self-interest Lo enforce agreenents reached by carteL c. it is difficult mernlcers. d. a1L of the above are correcL. c ompetitlon b etween o ligtopoly a nd m onopolisbic O ne d lfference is that: b est s trateqy c hoose t heir f irms au nder o ligtopoly, io Lhe sftdLeg-ies .hosen by wirhout consjderal ion oEners. t han i n m onopolisLic f ewer f irns c ompete i n o ligopolies b. competi t ion. p roducts a re t he c ompetition, in m onopolistic c. identical. t o e ntry h as m any b arriers m onopolistic c ompetition d. b y m any f irms p roducing A m ar:ket c haractetized differentiaLeo produ^ts and enLry and exiL are lelaLively easy is: oligropofistic. a. h nFr 'F.l Iv ^omnaritive. 26. 2'/. c. d. m o n o p o li s t i c . monopoli stical ly competitive. 2 8- b etween a m onopoli s tically A .n i mportant s imilarity compeEitive t irm and a monopolisL js Lhal borh: in the .tonq run. a. realize an economic profit i n d eadweight f ail t o p roduce w here P = M C, r esulting b. 1oss. i nelastic. c. f ace d emand c urves w hich a re p etfectfy A Fa.a cidni ! i-^n' h^rriarc r. Fnr r\/ 29. teve.L of che proL-iL maximizing'loss minjmizing Suppose at A firm in this output, P = $10, ATC = $13, and AVC = S11. position would: s o i E s hould c ontinue e conomic p rofit, a, e arn a s hort-run ,^ ^r^/r .-a ,.,hora MR _ MC. b. c. d. 30. i n t he s hort r un aEs operaElons . i n t he s hort r un nrndfl.c uhFrF m inimize m inimize MC. i ts i ts l osses l osses by by s hutting c ontinuing d own to r''lR - conLinue to produce, but cul back produclion c osts. where M R < M C t o r educe p roduction to a point competiLive Compared to a monopolist, a monopolistically produces a good with so it has substitutes, firm elastic demand curve. a_ a, fewer; more b. fewer; less c. more; more d. more; less m^n^h^lici-i^:ll a-^n^mi^ ^r^fii in i-ha ch^,, irilta r,,n iF fitm u,i I | ;. rhe 1^nd ^^<il-iIF rrn' a. b. c. d. 32. to b ecause o f b arriers e arn p ositive e conomic p rofits entry. ( zero e conomic p rofit) d ue t o t he e arn a n ornal p rofit t o e ntry. absence o f b artiers to e arn a n e conomic l oss b ecause t here a re n o b arriers exi c rhe industry a monopolistically r T = T A Tc. C=P. ATC. C<P. competitive firrd will In Lhe long run, produce w here: llc = t 4R - P b. MC=MR<A C. MC=MR=P MC=MR=A d. 1 3. T n a g r.aph i llustrating c ompetitive l abor a p erfectly f irm i s the s upply c urve o f l abor f or t he i ndividual and t he t Darket s upply c urve o f l abor i s a norra-r'11' alzcFi^. rrnl'-r,'l cl^^in^ m arket, b. cd. 34. perfecr ly inelasL;c; upward sloping Lpwa d-s lop i ng; upward-sloping r upward-sloping; per fec' ly elastic T he d emand f or: f abor.: a. i s d erived f rom t he d emand f or t he o utout t he l abor helps p roduce. bc annot b e a nalyzed u sing c onventional s upply a nd d enand graphs. d epends o n t he c ost o f l abor. c. j "s p er:fectfy t he m arket a s a w ho1e, b ut d. e lastic f or downlvard-sloping f or a n i ndiwidual e nployei. A d ecrease i n t he E a-rket s upplv o f l abor w ill a equilibrium v rage a nd c ause f irm's competitive v alue o f t he m arginal p roduct in a. raise; shift b. r aise; m ovement a fong lower; shift in c. d. l owet; m ovemenc a fong r n67Fa^tl \. 35. c urve. 36. If the price of televisions decrea€es, the value product of workers making Lefevisions wilI: marginal a. decrease. increase. b. c. noc cnange. d. rise then fall . of the 3'7. profib-naximizing choose to hire A competitive, firm wifl workers up to Lhe point in which rhF value o[ L]e naroinal product: : ha^i nc r^ A6^.o>c- bc. d- is is is e qual t o t he w age. equal to zero. e qual t o t be p rice o f t he g rood b eing p ioduced. Refer la.bor (L) in t so t he t atrle b elon o f a f irm n arket t o a !6wer q uest'ioDs 3 8 - 4 0. (TP=Q) OuLput ( per Hour) ( M P) Mar.ginal Product a p erfectly c otqtetitive {P) Price of iVMP) Vafue o f Marginal Product (per h our) #of workers 0 I 0 9 24 2 3 4 30 35 -1 (MP) of the fourch worker is - 5 38. Marginal product a. a.'75 b. 10 c. 5 35 d. V alue o f is-. a. $9 c. d. 4A. t he 39. m arginal p roduct ( VI,IP) o f i rhe f irst w orker b. s2'/ $15 $30 $ 15 p er s hould h ire A ccording t o L he t able a bove, i f L he , 'tage r aLe i s h^,,r v 'h^f i c l -he ^ m.rtnt o f l abor t hat t his f irm i^ miYi mi ?o n,^fi raz a. b. c. d. 4I42. 5 4 2 1 w orkers w orkers workers w orker 'C' 'B' on your scanfron; on your scantron; this this denotes exam 3. denoEes version B. Bubble in Bubble in P ].itrt y our l ast 4 0 q uestions. Be s ure y ou l tave a .tlswereal a ll e xam a nd t urn i n b oth t sbi5 n ane o t! C he f ront. o f t hi6 llarne, f irst g caneroll. exarn a nal y our c ompleteal E CON I 1 00( MTCRO) EXAM 3 V ERSIONB FALL 2 OO2 L 2. 3. 4. 5. 6. 7. 8, 9. 10. lt. t2. 13. t4. |5. 16. A 8 B D B E D A B B B B D B C D t'7. c t8. B t9. 20. 2t. 22. 23. 24. 25. 26. 21. 28. 29. B c B B C B D B D B B 30. 3I. 32. 33. 34. 35. 36. 3'1. 38. 39. ,10. c B B A A B A B C B B ...
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This note was uploaded on 12/06/2009 for the course ECON 1100 taught by Professor Staff during the Fall '08 term at North Texas.

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