Which of the following is correct?

Firm 1's dominant strategy is to price high

Which of the following is correct regarding the four market structures?

Monopolies & monop. competitive firms = price makers

With a price-discriminating monopolist, all of the following would occur EXCEPT:

The monopoly would charge all consumers higher prices

Which of the following occurs when a profit maximizing monopoly is subject to a lump sum tax?

Price and quantity will stay the same

If gov't regulates a natural monopoly with price ceiling where the MC = Demand, then

monopoly will produce the socially optimal quantity

Which of the following best characterizes monopolistic competition?

Low barriers to entry and differentiated products

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AP Micro Review - Imperfect Competition

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ap microeconomics imperfect competition cost curves

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Questions 15

Answers

1
Which of the following is correct?
Firm 1's dominant strategy is to price low
Firm 1's dominant strategy is to price high
Firm 2's dominant strategy is to price low
Firm 2's dominant strategy is to price high
2
Which of the following is true for monopolistically competitive firms in long run equilibrium?
They are productively efficient
Price equals ATC
Firms are maximizing total revenue
Price equals MC
3
Which describes the situation where competitors collude and agree to set prices?
Excess capacity
Cartel model
Collusive competition
Game theory
4
Which of the following is correct regarding the four market structures?
All market structures produce where price = marginal cost
Game theory is used in all market structures to set price
Perfectly competitive firms & monopolies = price takers
Monopolies & monop. competitive firms = price makers
5
Monopolies are able to make economic profit in the long run because
they have barriers to entry
they can price discriminate
they have inelastic demand curves
the demand curve is greater than the MR
6
Identify deadweight loss on this monopoly graph
BCJ
ACF
ADG
ABE
7
If the monopoly shown is maximizing profit, which of the following is true?
Profit is $200
Total revenue is $960
Firms will enter in the long run
Total cost is $600
8
To maximize total revenue, a monopolist producing in elastic range of its demand curve should
produce where the MR is zero
produce where the MR is negative
produce at the minimum point of the ATC curve
decrease its output
9
With a price-discriminating monopolist, all of the following would occur EXCEPT:
The consumer surplus would be zero
The monopoly would charge all consumers higher prices
The demand would equal the MR
There would be no dead-weight loss
10
If four large firms sell similar products and use non-price competition, which is true?
The firms are interdependent
The market is perfectly competitive
The market is monopolistically competitive
The firms are efficient
11
Which of the following occurs when a profit maximizing monopoly is subject to a lump sum tax?
The consumer surplus would get smaller
Price will increase and quantity will decrease
Price will increase but quantity will stay the same
Price and quantity will stay the same
12
If gov't regulates a natural monopoly with price ceiling where the MC = Demand, then
consumer surplus will decrease
monopoly will break even and make no economic profit
monopoly will produce the socially optimal quantity
monopoly will produce the productively efficient quantity
13
For a non-price discriminating monopoly, the marginal revenue is
equal to the price
less than the price
negative when the firm is maximizing profit
increasing at a constant rate
14
Which of the following best characterizes monopolistic competition?
Large number of firms with high barriers to entry
Small number of firms and efficiency
Low barriers to entry and differentiated products
Large number of firms with identical products
15
Identify consumer surplus on this monopoly graph
BCJ
ABE
ADG
ACF

AP Micro Review - Imperfect Competition Flashcards | StudBud