Unit 3 test Microeconomics
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which of the following characteristics relate to imperfect competition
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competition that does not to the definition of perfect competition either because it involves a smaller number of units or only one firm, or products that aren't identical
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deregulation occurs when a government eliminates or scales back rules relating to all but one of the following which one is it
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natural monopoly
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which of the following will present the least amount of concern to a firm that has a monopoly over a particular industry
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the competitive actions of other business firms
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if the north american newsprint paper market has barriers to entry then
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entry will be blocked even if firms are earning high profits
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if it was possible for one company to gain ownership control all of the uranium processing plants in the U.S. then
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that firm could set up barriers to entry to discourage competition
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roughly speaking, patent laws cover _______ and _________ law protects an authors original book
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original inventive creations, copyright
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which of the following is the most accurate description of a monopolist
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a sole producer of a product for which good substitutes are lacking in a market with high barriers to entry
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following assumption that firms maximize profits, now ill the price and output policy of an unregulated monopolist compare with ideal market efficiency
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output will be too small and its price too high
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the two primary factors determine monopoly market power are the firms
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demand curve and cost structure
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when the demand for a good or service limit the quantity that can be sold to an output at which the firm experiences economies of scale
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the firm is a natural monopoly
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which if the following refers to when firms act together to reduce output and keep prices high
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collusion
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the branch of mathematics that analyzes situations in which players must make decisions and then receive payoffs most often used by economists is
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game theory
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shopping malls typically lease retail space to large number of clothing stores. when this group of retailers competes to sell similar but not identical products, they engage in that economists call
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monopolistic competition
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in the highly competitive setting in which oligopoly firms operate, which of the following are considered to be typical temptations each form may face
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to cooperate to act as a single monopoly and all the above
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if a monopoly to a monopolistic competitor raises their price then
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decline in quantity demanded will be larger for he monopolistic competitor
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the typical slope of the demand curve as perceived by a monopolistic competitor will
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reflect that firms ability raise its price without losing all of its customers
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if the firm is producing at a quantity of output where marginal revenue exceeds marginal cost then
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the firm should keep expanding production
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in monopolistic competition, the end result if entry and exit is that firms end up with a price that lies
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on the downward-sloping portion of the average cost curve
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when entry occurs in a monopolistically competitive industry
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a smaller quantity will be demanded at any given price
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which of the following is a question economists have struggled to address with only partial success
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whether a market-oreiented economy produce the optimal amount of variety
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what is meant by cartel
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a group pf firms that collude to produce the monopoly output and sell at the monopoly price
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the perceived demand curve for a group of competing oligopoly firms will appear kinked as a result of their commitment to
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match price cuts, not price increases
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if monopolistic competitors must expect a process of entry and exit like perfectly competitive firms
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they will be unable to earn higher-than-normal profits in the long run
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which of the following best identifies what the concept of differentiated products is closely related to
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the degree of product variety that is available
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would raising the price for a product create a larger decline in quantity demanded for a monopolistic competitors than it would for a monopoly
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yes, consumers will buy from competitors offering lower priced substitutes
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the first step to be undertaken by a profit-maximizing monopolistic competitor wanting to decline what price to charge is
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select the profit maximizing quantity to produce
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the long-term result of entry and exit in perfectly competitive market is that all firms end up selling at the price level determined by the lowest point on the line
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average cost curve
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in a monopolistically competitive market, the rule or maximizing profit is to set MR=MC which means
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price is higher than marginal revenue
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when exit occurs in monopolistically competitive industry the
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perceived demand and marginal revenue curves will shift to the right
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how can parties who found themselves in a prisoner's dilemma situation avoid the undesired outcome and cooperate with each other
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find effective ways to penalize firms who do not cooperate
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what is meant by monopolistic competition
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many firms competing to sell similar but differentiated products
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which of the following is most likely to be a monopoly
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local electricity distributor
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a firm that holds a monopoly position in the market place is
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a price maker
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a natural monopoly occurs hen the quantity demanded is ________ the minimum quantity it takes ti be at the bottom of the long-run average cost curve
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less than
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the US law dealing with original works if authorship allow the US copyright office to enforce protection for all but one of the following which one is it
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ancient bible texts
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a monopolists is able to maximize its profits by
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producing output where MR=MC and charging a price along the demand curve
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when a natural monopoly exists in a given industry, the per-unit costs of production will be
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lowest when a single firm generates the entire output of the industry
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if monopolists are able to produce fewer goods and sell then at a higher price than they could under perfect competition, the result will be
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abnormally high sustained profits
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what quantities would ideally suit a monopolistic form with regard to barriers to entry
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sufficient strength to prevent or discourage potential competitors from entering the marker
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when a firm pursues a predatory pricing strategy it does so
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to maximize profits in the long run
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which of the following characteristics relate to externally
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when a market exchange affects a third party who is outside of the exchange
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why would a typical US business fail to take the social cost of pollution into consideration during the development of their operating strategies
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it isn't required to pay any of the cost of cleaning up its pollution
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which of the following is viewed as a fundamental building block of the US economic way of thinking
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the principle that a system of voluntary exchange benefits both parties
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which of the following would be classified as a situation where a third party benefits from market transaction by others
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city buying 10,000 tress for green space renewal projects
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if no externalities of pollution exists in a particular industry, the interaction of demand and supply _______________________
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will coordinate social costs and benefits
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in the US the command-and-control environment laws of the early 1970's together with the ensuring amendments and updates that have been made to them over time,
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are given considerable credit for cleaner air and water in recent decades
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while the US command-and-control environmental regulations initiated in the 1970s have been very effective at reducing pollution, some economists have difficultly with the legislation because
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it is full of fine print and exceptions, and costly for some firms to comply with
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which of the following characteristics relate to pollution charge
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a tax imposed on the quantity o pollution that a firm emits
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the property rights approach to environmental issues often becomes highly relevant in cases involving ______________
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endangered species
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a beekeeper decides to locate her business on a plot of land that is between an apple orchard and an elementary school a negative externality that can result is
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the possibility of the bees stinging the students at the school
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_________________ give government the power to block certain mergers, and in some cases to break up large firms into smaller ones
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antitrust laws
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which of the following concerns would groups like the consumer federation of american and public knowledge most likely raise with regulators considering a merger application
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the merger would reduce competition
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which of the following typically leads to two formerly separate for being under common ownership
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mergers and acquisitions
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in the closing decades of the nineteenth century, many industries in the US economy were dominated by a single firm that had most of at the sales for the entire country in many cases these large firms were _________________
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organized in the legal form of a trust
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the US federal trade commission justifies their record of approval of most mergers by asserting that even though competition is diminished by consolidating two firms into one, mergers actually benefit
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competition and consumers by allowing firms to operate more efficiently
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what term is used to describe when regulators permit a regulated firm to cover its cost and to make a normal level of profit
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cost-plus regulation
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what is meant by regulatory capture
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when the firms supposedly being regulated end up playing a larger role in setting the regulations that they will follow
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currently the approach to antitrust regulation involves
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detailed analysis pf specific markets and companies
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which of the following poses a difficult challenge for US competition policy
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natural monopoly
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firms operating under cost-plus regulation have an incentive to generate high costs by building huge factories or employing lots of stuff
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because what they can charge is linked to the cost they incur
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what is meant by negative externality
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a situation where a third party, outside the transaction suffers from a market transaction by others
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while the traditional approach of US government policies for environmental protection had had some level of success, some economists are proposing a change to
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a range of more flexible market-oriented pollution control policies
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if you are highly asthmatic then having high levels of industrial air pollutants waft over your house everyday
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would be a negative externality
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if a sell manufacture considers the cost of labor and materials as well as the broader cost of environmental injures resulting from its manufacturing process,
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it is factoring in the social cot of the pollution it generates
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why do US economists commonly refer to externalities as an example of market failure
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externalities present a case where markets only consider some social costs
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which of the following would an economists identify as a difficulty relating to environmental command control regulations
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high degree of inflexibility
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the main categories of market-oriented approaches to pollution control are
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marketable permits, better-defined property rights pollution charges
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if a government wants to establish a marketable permit program, it must begin by determining
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the overall quantity of a certain pollutant that will be allowed
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with respect to the benefits of clean air and water which are of the following would most likely be classified as being relatively east to value in ecumenic terms
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gains in farming, fishing, and tourism
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a beekeeper decides to locate her business on a plot of land that is between an apple orchard and an elementary school a positive externality that can result is
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the bees helping to pollinate the orchard leading to more fruit
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if an industry is perfectly competitive or monopolistic competitive, then the government has relatively little reason for concern about
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the extent of competition
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what role does the US government play with respect to market competition
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policing anticompetitive behavior and prohibiting contracts that restrict competition
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which of he following has the power to allow a merger prohibit it or allow it if certain conditions are met
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department of justice
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what was created by the US government in 1914 to specifically define what types of C13Q039
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federal trade commission
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if the largest four firms in an industry controls less than half the market, their competitive concentration ratio
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would bot be considered particularly high
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which of the following characteristics relate to prove cap regulations
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when the regulator sets a price that a firm cannot exceed over the next few years
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because attempting to define a particular market can be difficult and controversial the federal trade commission has begun to look less at market share and more at the data on actual _______________
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competition between businesses
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for the past two years a cellphone manufacturer has been selling to a group of distractors who then sell the products to retailers to sell to the general public. the firm has now informed its distributors that each of them must sell the cellphones for a minimum price the manufactures has set. in these circumstances
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any resulting minimum resale price maintenance agreements will be legal
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splitting up a the natural monopoly held by a public utility that produces and provides electricity would
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raise the average cost of production and force consumers to pay more
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Norway's government nationalized the country oil resources and it has been accumulating a massive sovereign wealth fund worth billions of dollars ever since. this sovereign wealth fund is used as monetary source for government funded national education and healthcare. this is because the wealth generates by nationalized industries
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is used to serve the citizens of the country
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which of the following would most likely be identified as being the ultimate goal of public policies that pertain to technology
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to encourage a stream of invention that benefits the whole of society
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if I'MSmartCo's research and development project succeeds then
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competitors may find a way to adapt and copy the underlying idea without incurring R&D costs
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some students done by economists have found that the original inventor receives _____________ from innovations, while other businesses new product users receive the rest of the benefits
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one-third to one-half of the total economic benefits
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how does the cost of financial capital influence innovative research and development activities in a competitive market
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ar a low cost firms demand a large quantity as R&D projects will likely return a higher rate
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id a small electric automobile manufacturer is able to gain the social return generates by its electric motor its demand for financial capital would
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shift to the left
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according to the textbook, which sector was the largest funding source (in $) to the US research and development expenditures in 2009
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industry
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by 1900, average life expectancy in the US at birth was ___________. By the start of the twenty-first century, US life expectancy was 77 years
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47 years
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which of the following is the most appropriate response of public policy to a negative externality like pollution
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find ways to account for the social cost of the negative externality in economic decisions
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if the government altered its invention patent from a monopolist policy to a competitive policy then consumers
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would benefit from the lower price and greater quantity sold
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a complementary approach to supporting R&D that does not invoke the governments close scrutiny of particular R&D projects is to give firms
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a reduction in corporate taxes based on amount o R&D preformed
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market competition may sometimes encourage a firm to innovate out of fear because of the perception that
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they will inevitably fall behind other competitors seeking out innovations
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I'MAComputerCo. would likely be more willing to undertake an innovative research project to reduce the amount of electricity require to run its computers if there were some form of guarantee that if it succeeded
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it could sell the new computers as a monopoly for at least a few years
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in economic terms when I'MASoftwareCo. invests in new technology innovations,
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postive externalities arise
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which of the following would be classified as a positive externality
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converting a derelict empty lot to a public vegetable garden
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which if the following refers to a good where, when one person uses the good, others can also use it
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nonrivalrous
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for a postive externality _______________ than the social benefits
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private benefits of an action are less
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if a firms efforts to be technologically innovative will create a positive externality then that firm will likely
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have less incentive to innovate to the extent that the whole of society desires
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which of the following would some economists be likely to perceive as the most appropriate pubic policy response to a positive externality created by the development of a highly innovative new technology
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develop ways to provide a greater share of the social benefits to the innovator
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because of the legal protection for intellectual property such as patents a firm has a better chance of recouping the costs of research if it pursues
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applied technological research
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which of the following represents one of the methods that the government uses to promote technology
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protection of intellectual property
