Microeconomics Week 9

4 December 2022
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pure competition
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a market structure in which a very large number of firms sells a standardized product, into which entry is very easy, in which the individual seller has no control over the product price, and in which there is no nonprice competition.
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monopolistic competition
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a market structure in which many firms sell a differentiated product, into which entry is relatively easy, in which the firm has some control over its product price, and in which there is considerable no price competition
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pure monopoly
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a market structure in which one firm sells a unique product, into which entry is blocked, in which the single firm has considerable control over product price, and in which nonprice competition may or may not be found
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Oligopoly
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a market structure in which a few firms sell either a standardized or differentiated product, into which entry is difficult,in which the firm has limited control over product price because of mutual dependence, and in which there is typically nonprice competition
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imperfect competition
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monopolistic competition, oligopoly, pure monopoly
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oligopoly
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Economists would describe the U.S. automobile industry as
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Oligopoly
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In which of the following market structures is there clear-cut mutual interdependence with respect to price-output policies?
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agriculture
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Which of the following industries most closely approximates pure competition?
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those markets that are not purely competitive
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Economists use the term imperfect competition to describe
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pure monopoly
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In which of the following industry structures is the entry of new firms the most difficult?
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pure competition
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An industry comprising a very large number of sellers producing a standardized product is known as
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oligopoly
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An industry comprising four firms, each with about 25 percent of the total market for a product, is an example of
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It will not advertise its product.
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Which of the following statements applies to a purely competitive producer?
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a "price taker."
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A purely competitive seller is
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pricing strategies by firms
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Which of the following is not a characteristic of pure competition?
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considerable nonprice competition
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Which of the following is not a basic characteristic of pure competition?
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perfectly elastic.
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The demand schedule or curve confronted by the individual, purely competitive firm is
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The demand curve for a purely competitive firm is perfectly elastic, but the demand curve for a purely competitive industry is downsloping.
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Which of the following statements is correct?
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total profit
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firms seek to maximize
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marginal revenue and marginal cost
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A competitive firm in the short run can determine the profit-maximizing (or loss-minimizing) output by equating
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that output at which economic profits are zero
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In the short run, a purely competitive firm that seeks to maximize profit will produce
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total revenue exceeds total cost by the greatest amount
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A competitive firm will maximize profits at that output at which
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to firms in all types of industries
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The MR = MC rule applies
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maximizing the difference between total revenue and total cost
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When a firm is maximizing profit, it will necessarily be
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many firms producing differentiated products.
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Monopolistic competition means
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large number of firms and low entry barriers
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Monopolistic competition is characterized by a
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more difficult than under pure competition but not nearly as difficult as under pure monopoly.
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Under monopolistic competition, entry to the industry is
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pure competition, monopolistic competition, oligopoly, pure monopoly
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In which of these continuums of degrees of competition (highest to lowest) is monopolistic competition properly placed?
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barriers to entry are either weak or nonexistent.
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Monopolistic competition resembles pure competition because
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recognized mutual interdependence
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Which of the following is not a basic characteristic of monopolistic competition?
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advertising, product promotion, and changes in the real or perceived characteristics of a product.
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Nonprice competition refers to
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monopolistic competition
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The restaurant, legal assistance, and clothing industries are each illustrations of
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the industry would more closely approximate pure competition.
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If the number of firms in a monopolistically competitive industry increases and the degree of product differentiation diminishes,
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product differentiation.
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A monopolistically competitive industry combines elements of both competition and monopoly. The monopoly element results from
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low entry barriers.
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A monopolistically competitive industry combines elements of both competition and monopoly. The competition element results from
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there are few, if any, barriers to entry
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Monopolistically competitive and purely competitive industries are similar in that
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former sells similar, although not identical, products.
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A significant difference between a monopolistically competitive firm and a purely competitive firm is that the
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there are few, if any, barriers to entry.
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Monopolistically competitive and purely competitive industries are similar in that
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firms will engage in nonprice competition.
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The monopolistic competition model assumes that
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highly elastic demand curve.
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A monopolistically competitive firm has a
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part of economics that examines either the economy as a whole or its basic subdivisions or aggregates, such as government, household, and business sectors
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Macroeconomics
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the social science concerned with how individuals, institutions, and society make optimal (best) choices under conditions of scarcity
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Economics
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a viewpoint that envisions individuals and institutions making rational decisions by comparing the marginal benefits and costs associated with their actions.
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Economic Perspective
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all things being equal
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Ceteris Paribus
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Economic Growth
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an increase of real output (gross domestic product) or real output per capita
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Human made resources (building, machinery, and equipment) used to produce goods and services
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capital
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Economic perspective
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a viewpoint that envisions individuals and institutions making rational decisions by comparing the marginal benefits and costs associated with their actions
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true
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Economic resources = factors of production
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Land, labor, capital, and entrepreneurial ability
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Factors of production
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the human resource that combines the other resources to produce a product, make nonroutine decisions, innovates and bears risk
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Entrepreneurial Ability
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economic growth
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an increase of real output (gdp) or real output per capita
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part of economics concerned with decision making by individual customers, workers,households and business firms
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microeconomics
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true
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Government owns most property resources and economic decision making occurs through a central economic plan
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interest
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Income associated with Capital is
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opportunity cost
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the amount of other products that must be forgone or sacrificed to produce a unit of products
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true
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A production possibility curve shows the different combinations of two products a consumer can purchase with a specific money income, given the product's price
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full employment of labor and resources
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All points on the PPC represent
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law of increasing opportunity costs
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The PPC is curved because
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full employment of labor and resources
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all points on the PPC represent
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the development of a low-cost electric automobile
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Other things equal, which of the following might shift the demand curve for gasoline to the left?
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independent goods
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Running shoes and staplers are
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substitute goods
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The demand for most products varies directly with changes in consumer incomes. Such products are known as
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used clothing
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Which of the following is most likely to be an inferior good?
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complementary goods
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Blu-ray players and Blu-ray discs are
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a decrease in the price of one will increase the demand for the other
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If two goods are complements,
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the income effect
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Steve went to his favorite hamburger restaurant with $3, expecting to buy a $2 hamburger and a $1 soda. When he arrived, he discovered that hamburgers were on sale for $1 each, so Steve bought two hamburgers and a soda. Steve's response to the decrease in the price of hamburgers is best explained by
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he income effect
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When the price of a product falls, the purchasing power of our money income rises and thus permits consumers to purchase more of the product. This statement describes
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is the satisfaction or pleasure one gets from consuming it.
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The utility of a good or service
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positive, negative, or zero.
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Marginal utility can be
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utility.
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The ability of a good or service to satisfy wants is called
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-5
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Units Consumed Total Utility Marginal Utility 0 0 - 1 W 20 2 35 X 3 Y 10 4 40 Z Refer to the data. The value for Z is
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law of diminishing marginal utility.
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Units Consumed Total Utility Marginal Utility 0 0 - 1 W 20 2 35 X 3 Y 10 4 40 Z The data illustrate the:
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satisfies consumer wants
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A product has utility if it
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beyond some point, additional units of a product will yield less and less extra satisfaction to a consumer.
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The law of diminishing marginal utility states that
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change in total utility obtained by consuming one more unit of a good.
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Marginal utility is the
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satisfaction that a consumer derives from a good or service.
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Utility refers to the
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demand curves slope downward.
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The law of diminishing marginal utility explains why
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consumers behave rationally, attempting to maximize their satisfaction.
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The theory of consumer behavior assumes that