Pure Competition
Monopolistic Competition
Oligopoly
Monopoly
Other
100
You must answer all of these correctly to get points: DOES A PURELY COMPETITIVE FIRM MAKE OR TAKE THE PRICE? IS IT EASY OR HARD TO ENTER THE INDUSTRY? ARE THERE ARE LARGE OR SMALL NUMBER OF FIRMS?
Takes the price Easy to enter Large number of firms
100
You must answer all of the following questions correctly to get points: DO MONOPOLISTICALLY COMPETITIVE FIRMS HAVE A RELATIVELY LARGE OR SMALL NUMBER OF SELLERS? DO THEY HAVE HOMOGENOUS OR DIFFERENTIATED PRODUCTS? IS IT EASY OR HARD TO ENTER THE INDUSTRY?
Relatively large number of sellers. Differentiated products. Easy to enter.
100
You must answer all of the following questions correctly to get points. DO OLIGOPOLISTIC FIRMS SELL HOMOGENEOUS OR DIFFERENTIATED PRODUCTS? ARE THEY MANY OR FEW PRODUCERS? ARE THERE MANY OR FEW BARRIERS TO ENTRY?
They can sell either homogeneous or differentiated products. There are few producers. There are many barriers to entry.
100
You must answer all of the following questions correctly to get points. IS A PURE MONOPOLY A PRICE MAKER OR PRICE TAKER? DOES IT HAVE MANY OR NO SUBSTITUTES? DOES IT HAVE MANY OR FEW BARRIERS TO ENTRY? IS IT EASY OR HARD TO ENTER?
It is a price maker. It has no substitutes. It has many barriers to entry. It is hard to enter.
100
Which economic term is defined below? THE PRACTICE OF SELLING A SPECIFIC PRODUCT AT MORE THAN ONE PRICE WHEN THE PRICE DIFFERENCES ARE NOT JUSTIFIED BY COST DIFFERENCES.
Price discrimination.
200
Sally takes a course on purely competitive firms. What is her teacher's name?
Mrs. Meek!!! (jk it's Mr. Darp)
200
Which of the following teachers got fired for teaching monopolistic competition incorrectly, and why? A: Mrs. Meek B: Mr. Darp C: Mrs. Krabapple D: John Travolta
Mr. Darp, because MR < D in monopolistic competition.
200
Which of the following economic terms is defined below? A SITUATION IN WHICH EACH FIRM'S PROFIT DEPENDS NOT ENTIRELY ON ITS OWN PRICE AND SALES STRATEGIES BUT ALSO ON THOSE OF ITS RIVALS.
Mutual interdependence.
200
Sally is the only person in the world to sell clothes (and she is very wealthy indeed). For every blouse that she sells she must lower the price to attract more customers, and this lower price applies to all prior blouses that she sells. This explains what phenomenon about the MR curve?
It is lower than the demand curve (the price).
200
Which of the following best represents price discrimination? A: Sally sells biscuits at $1 to the rich and 50 cents to the poor. B: Sally sells biscuits at 50 cents to the rich and $1 to the poor. C: Sally sells biscuits to everyone at the same price. D: Sally sells biscuits at $1 to the rich and 50 cents to the poor and murders anyone who tries to resell the biscuits.
Choice D.
300
Sally sells apple cores in a purely competitive market. It costs her 50 cents to buy and eat each apple and she earns 1 cent for each core. In economic terms, why should she shut down?
Her price is far lower than her average variable cost.
300
Monopolistically competitive firms cannot experience what type of profit in the long run?
Economic profit.
300
Fill in the following symbols with the appropriate economic terms. IN THE GAME-THEORY MODEL, TWO OLIGOPOLIES USE ♠, OR COOPERATION WITH RIVALS, TO EXPERIENCE A ♣ EQUILIBRIUM.
♠ = collusion ♣ = Nash
300
Sally has a monopoly over tennis balls. After selling one more tennis ball she loses $3.00. Is she operating at the elastic or inelastic portion of her MR curve?
Inelastic.
300
Sally and Samuel sell hot dogs in a duopoly. They agree to sell them for $10 each. Sally and Samuel both secretly "cheat" and sell them for $8 each. Theoretically, would their profits be greater or less than what they would have been if they both chose not to cheat?
Less. They should've kept their promises.
400
Fill in the ☼ AND THE ♫ with the appropriate economic terms: IT IS HIGHLY ADVANTAGEOUS TO CONSUMERS THAT PURELY COMPETITIVE FIRMS ARE BOTH ☼ EFFICIENT AND ♫ EFFICIENT.
☼ = productively efficient ♫ = allocatively efficient (or vice versa)
400
Sally's boyfriend Sam sells pencils for $1.00 each, so Sally jealously draws smiley-faces on her pencils and sells them for $1.00 each. Is she being productively or allocatively efficient?
Neither!
400
Fill in the ☺ with an appropriate word. THE KINKED-DEMAND CURVE HELPS EXPLAIN WHY PRICES ARE GENERALLY ☺ IN NONCOLLUSIVE OLIGOPOLISTIC INDUSTRIES.
☺ = stable
400
Sally's MR = MC = $5. Her average variable cost =$8. Her ATC = $10. Her price = demand = $12. She sells 5 of her items. What is her economic profit?
Economic profit = $10
400
Which economic term is being defined below? ANY ACTIVITY DESIGNED TO TRANSFER INCOME OR WEALTH TO A PARTICULAR FIRM OR RESOURCE SUPPLIER AT SOMEONE ELSE'S EXPENSE.
Rent-seeking behavior.
500
Read the following statement and choose from the words in the parentheses. IN THE LONG RUN, THE SUPPLY OF A PERFECTLY COMPETITIVE FIRM IS (PERFECTLY OR SOMEWHAT) (ELASTIC OR INELASTIC).
Perfectly elastic.
500
Which of the following economic terms is defined below? PLANT AND EQUIPMENT THAT ARE UNDERUSED BECAUSE FIRMS ARE PRODUCING LESS THAN THE MINIMUM-ATC OUTPUT.
Excess capacity.
500
For an industry to be considered oligopolistic, the largest four firms must make up what percent of the market?
40%
500
What happens to the supply curve of a monopoly as output increases? A: increases linearly B: increases exponentially C: decreases linearly D: decreases exponentially E: all of the above F: none of the above
F: none of the above
500
The ATC of Sally's lemonade stand is greater than the lowest possible ATC of selling lemonade. Which economic term describes this scenario? Is she being productively or allocatively inefficient?
X-inefficiency; productively inefficient.
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