Micro Economics Exam (Essay Sample)

Micro economics Econ201
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Micro economics Econ201
One defining characteristic of pure monopoly is that:
C. The monopolist produces a product with no close substitutes
Which is a barrier to entry?
C. Government licensing


Other things equal, which reduces competition in an industry?
D. An increase in the number of buyers
The representative firm in a purely competitive industry:
D. Will earn an economic profit of zero in the long run
An example of a monopolistically competitive industry would be:
D .Retail clothing


Firms in an industry will not earn long-run economic profits if:
C. There is free entry and exit of firms in the industry
Marginal product is:
A .the increase in total output attributable to the employment of one more workerThe law of diminishing returns indicates that:Beyond some point the extra utility derived from additional units of a product will yield the consumer smaller and smaller extra amounts of satisfaction.
Which of the following is most likely to be a variable cost?
A. fuel and power payments
A.marginal cost must be greater than average total cost.


The selling of stock is debt financing for a corporation.
B. False
Average fixed costs diminish continuously as output increases.
* True
Patents and copyrights were established by the government to reduce oligopoly and monopoly power.
* False
Prices in oligopolistic industries are predicted to fluctuate widely and frequently compared to other market structures.
* False
The positive view of advertising suggests that it contributes to economic efficiency in the economy.
B. False
Price fixing is illegal under Section 1 of the Sherman Act.
* True
* Rent-seeking behavior refers to activities designed to transfer income or wealth to a particular firm or resource supplier at someone else's or society's expense.

*
A. True

A purely competitive firm is a price maker, but a monopolist is a price taker.
B. False
Part 2 of 4 - Short-Run Costs

 
Question 19 of 295.0 Points
(Exhibit: Short-Run Costs) At the given price, the most profitable level of output occurs at quantity
C.S

(Exhibit: Short-Run Costs) If the price declines, the minimum quantity of output supplied in the short run is quantity:
B.Q
(Exhibit: Short-Run Costs) If the price declines, production will continue in the short run, even though the firm incurs a loss, between quantities:

A.O and Q.


(Exhibit: Short-Run Costs) This firm's supply curve begins at quantity:

A.Q.


(Exhibit: Profit Maximization in Monopolistic Competition) A firm in monopolistic competition will maximize profits by producing the level of output where:
B.MR = MC
(Exhibit: Profit Maximization in Monopolistic Competition) In the short run, a firm in monopolistic competition may experience economic profits as shown in Panel (a) as the distance:
C.PS times the quantity Q.
Exhibit: Profit Maximization in Monopolistic Competition) If other firms see economic profits in the industry, they will enter it, and the demand