1.In contrast with perfect competition, in monopolistic… 1.???n contrast with perfect competition, in monopolistic competition:a.???ntry and exit are easy.b.???here are many firms.c.???roducts are differentiated.d.??? firm will produce where?R??C?n order to maximize profits.2.???Ref 31-10 Figure: Pricing Strategy in Cable TV Market II) Use Figure 31-10: Pricing Strategy in Cable TV Market II. The Nash equilibrium in the cable TV market occurs when:a.???oth firms set a low price and each earns $90,000.b.???oth firms set a high price and each earns $100,000.c.???ableNorth sets a high price and earns $80,000, and CableSouth sets a low price and earns $130,000.d.???ableNorth sets a low price and earns $130,000, and CableSouth sets a high price and earns $80,000.3.???hich factor is not associated with production at a college?a.???he facultyb.???lassroom buildingsc.???lectricityd.???he computer labs4.???f the marginal social benefit received from a good is greater than the marginal social cost of production:a.???n increase in production will improve society’s well-being.b.??? decrease in production will improve society’s well-being.c.???o change in production can improve society’s well-being.d.???he market is producing too much of the good.5.??? formal agreement to limit production and raise prices leads toa.??? cartel.b.???erfect competition.c.???onopolistic competition.d.???ligopoly.6.???ary’s Gas and Frank’s Fuel are the only two providers of gasoline in their small town. Gary summarizes his pricing strategy as, “I’ll do to Frank (price-wise) what Frank did to me last time.” This is an example of:a.??? dominant strategy.b.??? tit-for-tat strategy.c.???n irrational strategy.d.???roduct differentiation.7.??? market produces too much of a good when the price of the good is:a.???reater than the marginal social cost of providing it.b.???qual to the marginal social cost of providing it.c.???ess than the marginal social cost of providing it.d.???qual to 1.8.??? public good is _____ and _____ in consumption.a.???xcludable; rivalb.???onexcludable; nonrivalc.???xcludable; nonrivald.???onexcludable; rival9.???acit collusion in an industry is limited by:a.??? small number of firms.b.???imple products and pricing.c.???onopoly power.d.??? large number of firms and the bargaining power of buyers.10.?(Ref 36-2 Table: Street Cleanings) Use Table 36-2: Street Cleanings. Suppose that the marginal cost of each street cleaning is $18. Which statement is true?a.???f the city decided to clean the streets only once per month, Peter would be willing to pay the entire cost of the cleaning.b.???f the city decided to clean the streets only once per month, Wendy would be willing to pay the entire cost of the cleaning.c.???f Wendy and Peter were the only people in society, the efficient number of street cleanings would be one per month.d.???f Wendy and Peter were the only people in society, the efficient number of street cleanings would be at least two per month.11.?A common resource is a good or service for which exclusion is _____ and that is _____ in consumption.a.???ossible; rivalb.???ossible; nonrivalc.???ot possible; rivald.???ot possible; nonrival12.?Suppose the federal government determines the total level of municipal sewage that can be discharged by cities along a river. If the cities are able to buy and sell rights to the total discharge level among themselves, then the government’s environmental policy includesA.??emissions taxes.B.??Pigouvian subsidies.C.???radable pollution permits.D.??command and control.13.?The efficient price for a good that is nonrival in consumption is necessarily greater than zero.a.???rueb.???alse14.?Which statement is correct?a.???n emissions tax is a more efficient way to reduce pollution than is an environmental standard because an emissions tax equalizes the marginal benefit of pollution from all sources.b.???n environmental standard is a more efficient way to reduce pollution than is an emissions tax because an environmental standard can be structured to equalize the reduction in pollution from all sources.c.???f an emissions tax and environmental standards lead to the same total reduction in pollution, then they will also lead to the same reduction in pollution by individual polluters.d.???t is easy to set emissions taxes at the “correct” level since the relationship between emissions taxes and the reduction in emissions that they induce has been extensively studied and is well known.15.?(Ref 35-8 Figure: Marginal Private Benefits and Marginal Social Benefits) Use Figure 35-8: Marginal Private Benefits and Marginal Social Benefits. Without government intervention, this market will produce _____ units at a price of _____.Image transcription textPrice, MSB MPB S Po P1 P2 MSB MPB On Q1 02Quantity… Show morea.???0; P0b.???1; P0c.???1; P2d.???2; P116.?Clean water in a river is nonexcludable because:a.???t is not possible to prevent consumption by people who do not pay for it.b.???ore than one person can consume the same unit of the good at the same time.c.???ndividuals ignore the effect their use has on the amount of the resource remaining for others.d.???onsumption is inefficiently low17.?(Ref 32-13 Figure: Profit Maximization in Monopolistic Competition) Use Figure 32-13: Profit Maximization in Monopolistic Competition. If other firms see economic profits in the industry, they will enter it, and the demand curve for firms already in the industry will shift to the _____; in the long run, this will result in an economic profit _____ zero and a price _____?TC.Image transcription textA B Price, Price, marginal revenue,marginal revenue, marginal cost,marginal cost, average to… Show more… Show morea.???ight; equal to; equal tob.???ight; greater than; greater thanc.???eft; less than; less thand.???eft; equal to; equal to18.?(Ref 32-11 Figure: Monopolistic Competition V) Use Figure 32-11: Monopolistic Competition V. In the figure, in the long run firms will:Image transcription textPrice, cost, MC marginal revenue ATC PM Profit ATCM MR DQM Quantity… Show morea.???nter this market until all firms earn zero economic profit.b.???xit this market until all remaining firms earn zero profit.c.???nter this market, leading to excess profit for all the firms.d.???xit this market, leading to excess profit for all the remaining firms.19.?(Ref 31-6 Figure: Payoff Matrix for Jake and Zoe) Use Figure 31-6: Payoff Matrix for Jake and Zoe. Jake and Zoe are the only producers of slushies in their tourist town. Every week, each decides whether to price high or price low for the following week. The figure shows the profit per week earned by their two firms. Suppose the firms each decide to price high initially and adopt a tit-for-tat strategy for the following weeks. After a few weeks, Jake’s weekly profit would be _____ and Zoe’s weekly profit would be _____.Image transcription textZoe High price Low price Zoe earns Zoe earns $1,000 per $1,500 perHigh week week Jake Jake price earns earns $1,000 $200 per weekper week Jake Zoe earns SUJB8 907 $200 per $800 per… Show more… Show moreA.??$800; $800B.??$1,000; $1,000C.???1,500; $200D.??$200; $1,50020.?(Ref 34-1 Figure: Pollution and Efficiency) Use Figure 34-1: Pollution and Efficiency. In this market, in which sulfur emissions are a result of production, if _____ units of emissions are produced, then _____.Image transcription textPrice per unit $25 and C D marginal costMarginal 20 social cost 15 F 10 B E. AMarginal social benefit 10 20 30… Show more… Show morea.???0; MSB = MSCb.???0; MSB < MSCc.???0; MSB < MSCd.???0; MSC < MSB21.?_____ is the unwritten or unspoken agreement through which firms limit _____.a.??? satisfying agreement; price increasesb.???acit collusion; competition among themselvesc.???vert collusion; competition among rivalsd.??? cartel; price changes22.?(Ref 30-1 Table: Demand Schedule of Gadgets) Use Table 30-1: Demand Schedule of Gadgets. The market for gadgets consists of two producers, Margaret and Ray. Each firm can produce gadgets at a marginal cost of $2 and no fixed cost. Suppose that these two producers have formed a cartel, agreed to split production of output evenly, and are maximizing total industry profits. Each firm's output would be _____, and each firm's profit would be _____.Image transcription textTable: Demand Schedule of Gadgets Price of Quantity of a GadgetGadgets Demanded $10 100 200 300 400 500 600 700 800 9001,000... Show moreA.??500; $2,500B.??200; $800C.???,000; $500D.??1,000; $10,00023.?A negative externality:a.???s any cost above the economic cost.b.???quals the social cost plus the firm's private cost.c.???s an uncompensated cost imposed by an individual or firm on others.d.???quals the opportunity cost minus the social costs.24.?Which example is considered a public good?a.???chool attendanceb.???ational defensec.???igarettesd.??? flu shot25.?Since a monopolistically competitive firm has the same long-run profits as a perfectly competitive firm, both types of industries are efficient.a.???rueb.???alseBusinessEconomicsMicroeconomicsECONS 101
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