Term
| an excise tax levied on producers in a constant cost competative industry will, in the long run, |
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Definition
| harm consumers but not producers who continue to operate. |
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Term
| the welfare loss associated with an excise tax is measured by |
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Definition
| the reduction in producer surplus plus the reduction in consumer surplus minus the tax revenue |
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Term
| a per-unit excise tax on a single competative firm causes |
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Definition
| all per-unit cost curves and the marginal cost curve to increase by the amount of the tax |
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Term
| an excise tax is imposed on the product produced by an increasing cost competitive indurstry. The price elasticity of demand is greater in abolste terms than is the price elasticity of supply. as a result of the tax |
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Definition
| sellers bear a greater burden of the tax than do consumers |
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Term
| if the monopolist is operating in the elastic portion of its demand curve, then |
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Definition
| an increase is price will decrease total revenues |
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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
| which of the following statements about a monopoly in the longrun equilibrium is incorrect? |
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Definition
a) a monopoly has no supply curve
b) * a monopoly will never sell where the price elasticity of demand is elastic
c) a monopoly will not alway make economic profits
d) a monopoly's demand curve coincides with its average revenue curve |
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Term
| all of the following are sources of monopoly power except |
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Definition
a) patents
b) control of inputs
c) economies of scale
d) * high prices |
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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
| compared to a competitive industry, ceteris paribus, a monopoly |
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Definition
| restricts output and charges a higher price |
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Term
| the deadweight loss of monopoly refers to |
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Definition
| the loss of consumer and producer surplus from monopoly pricing |
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Term
| if the marginal cost of producing a baseball bat is $30, and the elasticity of demand for Acme Baseball Bat Company is estimated to be -4, at what price should Acme set its price if it wants ot maximize profits? |
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Definition
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Term
| a monopolys demand curve is ___ where ____ is positive |
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Definition
| elastic; marginal revenue |
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Term
| when the lerner indez is zero, |
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Definition
| the elasticity of demand is infinitely elastic |
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Term
| a monopolistic competitor differs from a perfectly competitive form in that |
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Definition
| it faces a downward sloping demand curve |
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Term
| the demand curve that a monopolistically competitive firm faces is |
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Definition
| downard sloping but fairly elastic |
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Term
| long run equilibrium in monopolistic competition is characterized by |
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Definition
| an output rate associated with a tangency between the demand curve and the average cost curve |
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Term
| which of the following is not a reason why cartels fail? |
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Definition
a) cartel members cheat on cartel agreement.
b) cartels are illegal and subject to antitrust prosecution in the United States
c) cartel profits will attract entry.
d) cartel members face a low price elasticity of demand for their product. |
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Term
| if a firm is better off with a particular strategy regardless of what the other firm does, then the strategy s the firm's |
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Definition
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Term
| a Nash equilibrium is a set of strategies such that |
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Definition
| each firm's choice is the best one given the strategy chose by the other player |
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Term
| price theory is another name for |
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Definition
|
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Term
| positive economics differs from normative economics in that |
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Definition
| positive economics deals with propositions that can be tested |
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Term
| in microeconomics, the term price generally refers to the |
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Definition
| relative price of an item |
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Term
| which of the following is not an assumption usually made about market participants? |
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Definition
a)* collective welfare maximization
b) goal-oriented behavior
c) scarce resources
d) rational behavior |
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Term
|
Definition
| implicity cost but explicity cost |
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Term
| the law of demand is illustrated graphically by |
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Definition
| negative slope of the demand curve |
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Term
|
Definition
| both technology and input prices are held fixed |
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Term
| if the supply curve is vertical and the demand curve slopes down, what will happen to the equilibrium price if demand increases? |
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Definition
|
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Term
| an excess demand for a good or service tends to cause |
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Definition
| its price to increase over time |
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Term
| along a linear demand curve, elasticity |
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Definition
|
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Term
| all of the following are common responses to a price ceiling except |
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Definition
|
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Term
| an example of goods which are perfect complements in consumption is |
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Definition
|
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Term
| which of the following properties is not assumed to hold for a typical consumers preference? |
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Definition
a) nonsatiation
b) completeness
c)transitivity
d) * rationality |
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Term
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Definition
| implies that consumers spend all of their income on one good |
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Term
| suppose you have hamburgers on the horizontal axis and root beer on the vertical axis. if the price of hamburgers increased, how would this be shown using the consumer's income constraint? |
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Definition
| it would roatate the horizontal intercept inward |
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Term
| with a composite good on the vertical axis, the slope of the budget line is |
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Definition
| the price of the good on the horizontal axis |
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Term
| which of the folliwng statements about the law of diminishing marginal utility is most correct. |
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Definition
| as mre of a given good is consumed beyond some level, the marginal utility associated with consumption of additional units tends to decline. |
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Term
| the price-consumption curve traces the optimal market baskets |
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Definition
| for different prices of goods |
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Term
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Definition
| the consumers well being varies |
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Term
| assume that hamburgers and buns are complements. as the price of hamburger decreases, we would expect the demand curve for buns to |
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Definition
|
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Term
| for a giffen good, which of the following must be true? |
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Definition
| the good must be inferior and the income effect must be larger than the substitution effect. |
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