final_review_questions - Econ 101 Principles of...

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Econ 101 – Principles of Microeconomics Review Questions for the Final Exam Professor Korinna K. Hansen 1) The _____ broadly a market is defined; the more difficult it becomes to find _________. a) less/goods that are independent. b) less/ substitutes. c) more/substitutes. d) more/complements. 2) Which of the following is LEAST likely to be considered a firm in an imperfectly competitive industry: a) Madison Gas and Electric. b) A corn farm in Fitchburg Wisconsin. c) The Noodles restaurant on University Avenue. d) The only locally owned and operating bank in Cooper Wisconsin. 3) An important distinction between perfect competition and monopoly is that a) in perfect competition, the market demand faces the firm. b) in monopoly the firm produces less than the total quantity supplied. c) in perfect competition there is no distinction between the firm and the industry. d) in monopoly the market demand faces the firm. 4) Market power refers to a firm’s ability to a) charge any price it wants. b) raise price without losing all demand for its product c) monopolize a market completely. d) sell any quantity of output it desires at the market-determined price 5) Health Economics research has shown that the price of most brand name drugs tends to increase after the patent expires and generic drugs flood the market. So, although there is a lot more competition after the introduction of all the generic drugs (same chemical entity, not original manufacturer) the price of the brand name drug tends to increase and not decrease. This must be occurring because: a) all customers still want to buy the brand name drug and are too scared of all the generics. b) the brand name company acts like a price leader and sets up an even higher price than before the expiration of the patent law. c) the brand name company is left with fewer, loyal consumers who have a more inelastic demand for the brand name product and are willing to pay the higher price. d) that’s the only thing the brand name company can still do to maintain market power.
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6) A candle maker raises the price of candles by 5% and the quantity demanded of candles falls by about 3%. This firm has a) a monopoly power in the output market b) some output power c) some market power d) is not able to able the prevent the rival firms from competing with it on price. 7) A coffee producer raises the price of its coffee by 10%, and the quantity demanded of its coffee falls by 8%. This firm a) is not able to prevent other firms from competing in price b) has a lot of output power c) is acting like a perfectly competitive firm d) has some market power 8) For a monopolist to sell one more unit, it must __________. a) lower the price of the last as well as all previous units produced. b)
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final_review_questions - Econ 101 Principles of...

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