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Definition
| can choose any price along the market demand curve |
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Term
| A monopoly's demand curve is |
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Definition
| the same as its average revenue curve |
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Term
| The market demand curve and the demand curve faced by a monopoly are |
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Definition
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Term
| If the monopolist is operating in the elastic portion of its demand curve |
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Definition
| an increase in price will decrease total revenues |
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Term
| A monopoly will maximize profits by producing the level of output where |
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Definition
| it maximizes the difference between total cost and total revenue |
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Term
| To maximize profits, the price markup should |
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Definition
| equal the inverse of demand elasticity |
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Term
| When a monopoly is maximizing profits, which of the following conditions generally holds? |
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Definition
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Term
| Marginal revenue is negative when |
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Definition
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Term
| Assume that a firm's price is $4, marginal cost is $3 and the price elasticity of demand is estimated to be -4. Based upon this information we can conclude that the firm |
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Definition
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Term
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Definition
| is an industry in which production cost is minimized if one firm supplies the entire output |
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Term
| A monopoly’s demand curve is____________where_______________ is positive |
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Definition
| elastic; marginal revenue |
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Term
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Definition
| a firm’s ability to set price above marginal cost |
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Term
| As the Lerner index approaches zero |
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Definition
| the firm’s price is closer to marginal cost |
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Term
| As the Lerner index approaches one |
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Definition
| the firm has increasing monopoly power |
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Term
| Which of the following does not constitute a barrier to entry into a market? |
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Definition
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Term
Monopolistic competition is characterized by which of the following:
(i) free entry and exit, (ii) differentiated product, (iii) few sellers |
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Definition
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Term
| A monopolistic competitor who is maximizing profits will choose quantity such that |
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Definition
| marginal revenue equals marginal cost |
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Term
| The "monopolistic" element of monopolistic competition is due to the fact that |
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Definition
| the firm, facing a downward sloping demand curve, has some control over price |
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Term
| The "competition" in monopolistic competition is likely due to |
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Definition
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Term
| Monopolistically competitive firms earn zero economic profits |
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Definition
| in long-run equilibrium only |
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Term
| Product differentiation is associated with |
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Definition
| monopolistic competitor firms, but not competitor firms |
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Term
| Long-run equilibrium for the typical monopolistically competitive firm is characterized by |
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Definition
| price equal to average cost at the chosen level of output |
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Term
| For a monopolistic competitor, excess capacity is the difference in output |
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Definition
| at minimum of average total cost minus where MR intersects MC |
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Term
| Product differentiation in monopolistically competitive markets |
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Definition
A) must reflect real differences in the product, not perceptions.
B) cannot simply be due to a different type of packaging.
C) is hard to identify in practice.
D)*** None of the above |
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Term
| Product differentiation can be achieved through |
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Definition
A) friendly service.
B) advertising designed to make consumers think a firm’s product is superior to its competitors’ product.
C) a really cool package.
D)*** All of the above. |
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Term
| Which of the following is true of a firm operating in a perfectly competitive market but not true of a monopoly? |
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Definition
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Term
| Which of the following is the best example of an oligopoly market |
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Definition
A) *** cigarette producers
B) dine in pizza restaurants
C) hair cutting salons
D) auto repair facilities |
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Term
| Game theory is a method of analyzing |
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Definition
| situations in which there are interdependent outcomes |
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Term
| The three main elements in game theory models are |
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Definition
| players, strategies, and payoffs |
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Term
| With reference to the payoff matrix in Figure 14-1, which firm has a dominant strategy? |
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Definition
| both Firm A and Firm B. see diagram in PQ14 #3 |
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Term
| With reference to the payoff matrix in Figure 14-1, Firm A's dominant strategy is |
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Definition
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Term
| With respect to the payoff matrix in Figure 14-1, the dominant firm equilibrium is |
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Definition
| both firms produce high output. |
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Term
| With respect to the payoff matrix in Figure 14-1, the Nash equilibrium is |
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Definition
| both firms produce high output |
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Term
| a Nash equilibrium is a set of strategies such |
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Definition
| each firm's choice is the best one given the strategy chosen by the other player |
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Term
| The prisoners' dilemma illustrates a situation in which |
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Definition
| each player pursuing its self-interest generates a collective outcome that is inferior for both |
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Term
All dominant strategy games ______ have a Nash equilibrium; all games with Nash
equilibrium ______ be dominant strategy games |
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Definition
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Term
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Definition
A) no equilibrium.
B) a dominant-strategy equilibrium.
C) a Nash equilibrium.
D) *** Both (b) and (c) |
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Term
| In a two-person game where each player has a dominant strategy, each player chooses |
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Definition
| his best strategy independent of the other player’s choice |
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Term
| In a two-person game with a Nash equilibrium, each player chooses |
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Definition
| his best strategy depending on the other player’s choice |
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