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Econ Test 3
final
33
Economics
Undergraduate 1
05/04/2009

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Term
The Sherman Act prohibited...
Definition
collusive price agreements among rival sellers
Term
A monopolistically competitive firm earning profits in the short run will find the demand for its product decreasing and becoming more elastic in the long run as new firms move into the industry until...
Definition
The firm's demand curve is tangent to its average total cost curve
Term
A monopolist is a seller who...
Definition
Can ignore the threat of competition from other firms
Term
The prisoners' dilemma results in a noncooperative equilibrium because...
Definition
Each player has a dominant strategy to play a certain way regardless of what other players do
Term
Patents, occupational licensing, tariffs and quotas are all examples of...
Definition
Government-imposed barriers
Term
A monopolistically competitive firm that is earning profits will, in the long run, experience...
Definition
Demand decreases, demand for the firms product becomes more elastic, and new rivals entering the market
Term
Among the characteristics that monopolistic competition and perfect competition share is...
Definition
Many small independently acting sellers, low barriers to entry into the industry by new firms, and the typical firm breaks even in the long run
Term
With a prisoners' dilemma each prisoner's dominant strategy is to...
Definition
Confess, because this is best regardless of what the other prisoner does
Term
The key characteristics of a monopolistically competitive market structure include...
Definition
All sellers sell a differentiated product
Term
A Nash equilibrium is...
Definition
Where each player chooses its best strategy, given the strategies chosen by the other players
Term
A monopoly is a seller of a product...
Definition
Without a close substitute
Term
A monopolistically competitive firm maximizing profits will produce at a price that is...
Definition
Greater than marginal cost
Term
To sell more output, the monopolist...
Definition
has to advertise the product extensively
Term
How does the long run equilibrium of a monopolistically competitive industry differ from that of a perfectly competitive industry?
Definition
In long-run equilibrium, a monopolistically competitive firm price will be higher than the average cost of production
Term
The DeBeers Company of South Africe was able to block competition by...
Definition
Ownership of an essential input
Term
If a monopolistically competitive firm is producing at an output where marginal revenue is $12 and marginal cost is $12, then to maximize profits this firm will...
Definition
Continue to produce the same quantity
Term
Member firms of a cartel like OPEC have incentives to...
Definition
Argue for larger production quotas for each member of the cartel
Term
A monopolistically competitive firm cuts its price from $10 where it sold 25 units to $9 and sells five more units of output, its marginal revenue is...
Definition
$4
Term
A decision tree is good at analyzing...
Definition
Sequential games
Term
What is the purpose of advertising by a monopolistically competitive firm?
Definition
Earn more economic profit for the firm, increase demand for the firm's product, and make the demand for the firm's product more inelastic
Term
The key characteristics of a monopolistically competitive market structure include...
Definition
Few sellers, high barriers to entry, sellers selling similar but differentiated products
Term
A dominant strategy in a game theory analysis of oligopoly behavior is...
Definition
A strategy that is the best for a firm, no matter what strategies other firms use
Term
Is a monopolistically competitive firm allocatively efficient?
Definition
It is NOT because it does not produce at minimum average total cost
Term
A prisoners' dilemma leads to..
Definition
Noncooperative equilibrium
Term
Economic efficiency in a market occurs when...
Definition
Price is as low as possible
Term
An example of a government-imposed barrier is...
Definition
The granting of a patent to a particular firm
Term
The average person mostly patronizes firms that operated in...
Definition
Monopolistically competitive markets
Term
A market economy benefits from market power...
Definition
If firms with market power do research and development with the profits earned
Term
If buyers of a monopolistically competitive product feel the products of different sellers have little differences between them, then....
Definition
The demand for each seller's product is relatively elastic
Term
A possible advantage of a horizontal merger for the economy is...
Definition
The merging of firms could avoid losses
Term
What type of demand does a monopolistically competitive firm face?
Definition
Downward sloping
Term
If a monopolistically competitive firm is producing at an output where marginal revenue is $111.11 and marginal cost is $118, then to maximize profits the firm will...
Definition
Decrease output
Term
For a monopolistically competitive firm...
Definition
Marginal revenue is less than price
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