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

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

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 ...
View Full Document

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.

Ask a homework question - tutors are online