Exam 3 Review – In which type of market can firms increase

Exam 3 – ReviewStudent: ___________________________________________________________________________ 1. In which type of market can firms increase output without having to lower the price of their product?A. Monopoly marketsB. Imperfectly competitive marketsC. Discriminatory marketsD. Competitive marketsE. Oligopoly markets 2. Refer to the graph below: If this industry changes from pure competition to monopoly, price changes fromA. P3 to P2.B. P3 to P1.C. P2 to P1.D. P1 to P3.E. P2 to P3.3. If the demand curve faced by a firm is downward sloping and the market price of the product is abovemarginal cost of production, which of the following is correct?A. Not enough of the economy’s resources are being allocated to producing the goodB. Too much of the economy’s resources are being allocated to producing the goodC. The firm is in a competitive marketD. The firm is making profitsE. The firm is losing money 4. Which of the following provides the strongest economic justification for regulation?A. Natural monopolyB. Excess consumer informationC. Shortages and high pricesD. All of the aboveE. None of the above 5. Which of the following is likely to have the most monopoly power?A. Ford Motor CorporationB. Your local water companyC. Mobil Oil CorporationD. Avon products (cosmetics)E. A fast food restaurant 6. Profits and losses in a private enterprise economic systemA. contribute toward a breakdown of the system.B. lead to a monopolization of the industries in which they occur.C. show where productive capacity should be expanded and where it should be contracted.D. do all of the above.E. do both (a) and (b). 7. Refer to the graph below: If this industry changes from pure competition to monopoly, output changes fromA. X4 to X1.B. X4 to X2.C. X2 to X4.D. X3 to X2.E. X2 to X3. 8. Refer to the graph below: Suppose that this market is a monopoly. Determine the firm’s profit, given that the firm’s cost per unit atthe profit maximizing level is P1.A. P3 * X2B. (P2 – P1) * X3C. (P3 – P1) * X2D. P1 * X2E. P2 * X3 P19. Refer to the graph below: Monopolization of this market leads to a deadweight loss equal toA. $0.B. $50.C. $100.D. $150.E. cannot be determined. 10. The supply curve for a monopolyA. is its marginal revenue curve.B. is its total revenue curve.C. is its marginal cost curve.D. is its total cost curve.E. does not exist.11. Shortages are important evidence that firms are exercising monopoly power.True False12. If its marginal revenue is less than its marginal cost, a firm should reduce its output product.True False13. Severe competition in a market leads to a dead weight welfare loss to society.True False14. When the value of a product to a consumer is enhanced when others also consume the good, economiesof scale exist.True False15. Which of the following statements is false?A. Anti-trust laws make most cartels illegal in the U.SB. Formation of a cartel ensures that each firm will earn greater profits than without a cartelC. Cartels maximize joint profits not individual firm profitsD. Professional sports leagues insure the stability of teams by cooperating through cartel arrangementsE. Cartels are difficult to maintain when cheating is possible16. Why does a monopsony’s marginal cost of labor (MCL) curve lie above the market supply of labor curve?Because the monopsonyA. must raise the wage it pays all employees in order to attract and hire additional workers.B. must pay higher wages to only the last workers hired in order to attract and hire additional workers.C. faces the market demand and marginal revenue curves.D. must lower the wage it pays all employees in order to maintain profitability.E. has such high labor costs relative to the supply of labor.17. A monopsony will hire ______ workers at a _____ wage than an employer in a competitive labormarket.A. more; lowerB. more; higherC. fewer; higherD. fewer; lowerE. the same number of; higher 18. Refer to the graph below: How many workers will this firm hire?A. 0B. L1C. L2D. L3E. More than L319. Refer to the graph below: If this labor market is competitive, what wage will workers be paid?A. W1B. W2C. W3D. W4E. A wage above W4 20. Refer to the graph below: What wage will maximize this firm’s economic profit?A. $500B. $800C. $1,000D. Less than $1,000 but greater than $0E. $021. If a worker adds 20 units to a firm’s total output, the output is sold for $2 per unit, and the worker is paid$100, then the worker’s marginal revenue product isA. 20.B. 40.C. 60.D. 100.E. 200.22. If major league sports teams were to negotiate broadcast rights individually, rather than as a singleleague, this would lead to what impact on the team’s revenues?A. Clearly increase all team revenuesB. Clearly decrease all team revenuesC. Leave revenues unchanged, since this has no impact on the demand to broadcast gamesD. Increase revenues for some teams and decrease revenues for othersE. Produce scrutiny by federal antitrust authorities23. Over the past twenty years, free agency in professional sports hasA. increased the monopsonistic power of leagues and caused salaries to stagnate.B. reduced the bargaining power of players and raised owner profits.C. reduced the monopsonistic power of leagues and caused salaries to rise.D. improved the economic position of owners by increasing the competition for good players.E. had little effect on the sports industry.24. In a resource market,A. buyers and sellers exchange goods and services.B. resourceful buyers find goods that are otherwise unavailable.C. buyers and sellers exchange factors of production.D. firm managers exchange production techniques and ideas.E. workers exchange their labor for the firm’s output. 25. Under which of the following conditions will a monopsony hire an additional worker? WhenA. MCL > MRP.B. MCL < MRP.C. MRP = D.D. MC = MR.E. D > S.26. Professional baseball enjoys an exemption from ________ laws that make cartels illegal in most otherindustries.A. minimum wageB. antitrustC. commonD. laborE. anti-competition27. Omega can produce either two microcomputers or ten TV sets. Alpha can produce one microcomputer orfive TV sets. Which of the following statements is correct?A. Alpha has a comparative disadvantage in producing both productsB. Both countries have a comparative advantage in producing microcomputersC. The countries are unlikely to engage in trade in these two itemsD. Labor costs are obviously too high in AlphaE. All of the above28. Which of the following will give rise to U.S. demand for foreign exchange?A. U.S. sales of airplanes to Japanese buyersB. U.S. investments abroadC. U.S. purchases of French perfumeD. Both (b) and (c)E. All of the above29. Refer to the graph below: The opportunity cost of a million loaves of bread is how many millions of gallons of milk for thiscountry?A. .5B. 1C. 2D. 150E. 300 30. Refer to the graph below: Based upon the diagram, this country would benefit if it tradedA. two loaves of bread per gallon of milk.B. one loaf of bread for two gallons of milk.C. one gallon milk for one loaf of bread.D. three gallons of milk for one loaf of bread.E. this country would not benefit from trading bread or milk.31. Refer to the graph below: Without trade, the Republic of Alpha’s production possibilities curve is AB. If consumption along thecurve A1B is possible with trade, Alpha must have a comparative advantage in the production ofA. bread.B. milk.C. both bread and milk.D. neither bread nor milk.E. it cannot be determined with the information given. 32. Refer to the graph below: Without trade, the Republic of Alpha’s production possibilities curve is AB. With no trade, Alpha’sconsumption possibilities curve isA. AB.B. A1B.C. CB.D. C1B.E. CC1.33. Which of the following demands Kenyan Shillings?A. U.S. importers of Kenyan goodsB. U.S. investors in KenyaC. U.S. tourists visiting KenyaD. All of the aboveE. None of the above34. Refer to the graph below: Pegging the exchange rate at $1.25A. imposes a price floor.B. results in a balance of payments problem.C. will increase British demand for U.S. exports.D. will increase U.S. demand for British imports.E. will do of the above. 35. Refer to the graph below: If D and S are the relevant supply and demand curves, an increase in Nigerian travelers to the U.S. wouldresult in which of the following changes in the graph? A movement fromA. S to S1.B. S1 to S.C. R1 to r.D. Q2 to q1.E. Q to q.36. Assuming everything else constant, an increase in the demand for Russian rubles willA. reduce the price of rubles.B. increase the exchange rate for rubles.C. cause a surplus of rubles.D. reduce exports to Russia.E. all of the above.37. Which of the following will occur when a tariff is placed on imported sugar?A. The price of imported sugar will riseB. The price of domestic sugar will riseC. The price of imported and domestic sugar will riseD. The price of sugar will fallE. More sugar will become available in the marketplace38. If a country will be imposing a trade restriction on the imports of foreign goods, the foreign producerswould prefer, other things equal, that the country imposeA. an embargo.B. a tariff.C. a quota.D. the combination of a tariff and a quota.E. an export subsidy.39. A tariff leads to a leftward shift of the _______ curve, resulting in ______ prices and __________imports.A. demand; lower; greaterB. supply; lower; lowerC. supply; higher; lowerD. demand; higher; lowerE. consumption possibilities; higher; lower 40. Which of the following statements about NAFTA is FALSE?A. NAFTA is a free trade zone and not a customs unionB. Canada, Mexico, and the U.S. are the only three members of NAFTAC. It is difficult to empirically measure the economic effects of NAFTA on the U.S. economyD. In the long run, NAFTA will increase the number of low-paid jobs in the U.SE. NAFTA is based on the belief that nations, in the aggregate, gain economically from free internationaltrade