Micro Final Exam (4) – Flashcards
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One defining characteristic of pure monopoly is that
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The monopolist produces a product with no close substitutes
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One major barrier to entry under pure monopoly arises from
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Ownership of essential resources
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Refer to the above table for Nina. What is the change in total revenue if she lowers the price from $20 to $18?
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$30
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Refer to the above graph for a profit-maximizing monopolist. The firm will set its price at
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0J
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Refer to the above graph for a profit-maximizing monopolist. The firm will produce the quantity
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0V
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In the short run equilibrium, a monopolist's profits
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May be positive, negative, or zero
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When compared with the purely competitive industry with identical costs of production, a monopolist will produce
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Less output and charge a higher price
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Network effects and simultaneous consumption tend to foster the development of
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Monopoly power
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To practice long-run price discrimination, a monopolist must
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Be able to separate buyers into different markets with different price elasticities
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What is the meaning of the phrase "dilemma of regulation"?
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The socially optimal price achieves allocative efficiency, but may produce economic losses; the fair return price yields a normal profit but may not be allocatively efficient
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Which of the following is a characteristic of monopolistic competition?
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Relatively easy entry
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One difference between monopolistic competition and pure competition is that
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There is some control over price in monopolistic competition
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In the long run, a representative firm in a monopolistically competitive industry will end up
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Earning a normal accounting profit, but not an economic profit
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In which market model is there mutual interdependence?
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Oligopoly
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A high concentration ratio indicates that
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Few firms produce most of the output in an industry
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Based on the following payoff matrix for a duopoly in which the numbers indicate the profit from following either an international strategy or a national strategy... which is true?
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The national strategy is the dominant strategy for both firms
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The kinked demand model of oligopoly assumes that
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Rivals will ignore price increases but will match price cuts
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A cartel is
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A formal agreement among firms to collude
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If a particular bank regularly announces changes in its interest rate schedules before its competitors, who then set rates very close to those announced by that bank, this could be described as
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Price leadership
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Which constitutes an obstacle to collusion among oligopolists?
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A large number of firms
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A Lorenz curve is a graph that shows
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The distribution of household income
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A Lorenz curve showing perfect equality in the distribution of income
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Is a straight line with a 45-degree angle
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The greater the degree of inequality in the distribution of income, the more bowed will be the Lorenz curve toward the
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Lower right-hand corner
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The Gini ratio or Gini coefficient is a measure of the
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Degree of income inequality
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A kingdom where only the king earns all income would have a Gini ratio of
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1
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The difference between income and wealth is that income
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Refers to a flow of earnings, while wealth is the stock of assets one has
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The wages and salaries that people earn differ partly because of differences in
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Ability
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A cause of the unequal distribution of income in the United States is
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Differences in work preferences and risks
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Which of the following is a cause of growing income inequality in the United States since 1975?
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A widening wage gap between skilled and unskilled workers
