final_B - 1. Figure 10-10 shows the long-run market demand...

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1. Figure 10-10 shows the long-run market demand curve and the cost structure for a typical monopolistic competitor. The minimum efficient scale (MES) is a. 0 b. 200 units c. 400 units d. 800 units e. 1,200 units 2. Figure 10-10 illustrates the long-run market demand curve and a typical firm's costs. How many firms are likely to exist in the long run in this industry? a. none b. 1 c. 2 d. 3 e. 4 3. Figure 10-10 represents the costs of a typical firm along with the market demand curve. In the long run, this industry is most likely going to be a a. declining industry b. natural monopoly c. natural oligopoly d. natural monopolistically competitive industry e. perfectly competitive industry 4. Figure 10-13 shows the payoff matrix for the only two auto dealerships in a community, Jim's Autos and Tim's Autos. The matrix shows the profits that each firm would earn from choosing either a low price or a high price. In this example, a. both firms would be best off if they charged a low price b. there is no equilibrium to the market c. both firms would be best off if they charged a high price
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d. both firms will go out of business in the long run e. the market is more efficient than a perfectly competitive market 5. Figure 10-13 shows the payoff matrix for two large auto dealerships, Jim's Autos and Tim's Autos. These intense rivals are the largest automobile dealers in the market by far. The matrix shows the profits that each firm would earn from choosing either a low price or a high price. Jim's dominant strategy is to a. always charge a low price b. always charge a high price c. charge a high price if Tim charges a low price d. charge a low price only when Tim charges a low price e. follow the price leadership of Tim's Autos 6. Figure 10-13 shows the payoff matrix for two large auto dealerships, Jim's Autos and Tim's Autos. The matrix shows the profits that each firm would earn from choosing either a low price or a high price. The equilibrium level of profit for Jim's Autos would be a. $250,000 b. $100,000 c. $200,000 d. -$50,000 e. $150,000 7. What characteristic is common to perfect competition, monopolistic competition, and monopoly? a. free entry and exit b. zero economic profit in the long run c. firms treat the market price as given d. firms maximize profits by producing where MR = MC e. small number of buyers relative to the number of sellers 8. Talking loudly in a library creates a. a market for noise b. a positive externality c. a side payment d. a public good e. a negative externality 9. There are main methods that the government uses to cope with external costs, except one: a. Taxes b. Property rights c. Emission charges d. Marketable permits e. Market concentration 10. Suppose that production of the product in Figure 14-2 imposes a cost on society of $7.00 per unit. If the free market equilibrium is at the intersection of demand curve D and supply curve S, what should the government do to
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This note was uploaded on 09/14/2011 for the course ECON 103 taught by Professor Gispy during the Spring '11 term at Prairie State College .

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final_B - 1. Figure 10-10 shows the long-run market demand...

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