Exam 10: Market Power

Resource allocation is efficient from a societal standpoint if a good is produced until the_____ is equal to the _____ of production.

Use Figure: Payoff Matrix Shell & BP I. The figure shows the payoff matrix where the hypothetical daily profits of BP and Shell (in millions of dollars) depend on each other's decision about whether to lower prices. If each firm follows its dominant strategy, then BP's payoff would be _____, and Shell's payoff would be: ​ Figure: Payoff Matrix Shell & BP I

Suppose that a firm in a monopolistically competitive market is operating at its profit-maximizing point in the long run. The firm has a total revenue of $800, its marginal revenue is $10, and it sells 50 units of output. Given this, we can conclude that the price of the good is _____ and the marginal cost of production is:

A firm will NOT have any market power if it operates in which one of the following types of markets?

A monopolist maximizes profit at the point where the _____ of production is equal to:

Which one of the following type of markets has many identical firms selling the same goods or services?

Suppose that a monopolist is operating at its profit-maximizing point where the profit per unit is $8. If the average total cost of production is $4, then what is the price charged by the monopolist?

Which of the following statements is FALSE?

A market where two large firms dominate is known as a:

Which one of the following is NOT a characteristic of monopolistically competitive markets?

Use Figure: Payoff Matrix Alpha and Beta Motors II. The figure shows the payoff matrix where the hypothetical daily profits of Alpha Motor and Beta Motors (in millions of dollars) depend on each other's decision about whether to hold on to their inventories or release them at a discount at the end of the year. If both firms follow their dominant strategy, then Alpha Motor's payoff will be _____, and Beta Motor's payoff will be: ​ Figure: Payoff Matrix Alpha and Beta Motors II

Because a monopolist must _____ price to sell additional output, its marginal revenue is _____ than the price.

In a natural monopoly, the government regulations often require firms to price their goods at:

Use Figure: Payoff Matrix Alpha and Beta Motors III. The figure shows the payoff matrix where the hypothetical daily profits of Alpha Motor and Beta Motor (in millions of dollars) depend on each other's decision about whether to hold on to their inventories or release them at a discount at the end of the year. Based on these payoffs, which one of the following statements is true? ​ Figure: Payoff Matrix Alpha and Beta Motors III

If _____ in output causes _____ in average total cost, then a firm is said to be experiencing economies of scale.

In any type of market, the profit per unit of output for a firm is equal to:

If the average total cost of a firm decreases with an increase in its output, then the firm experiences:

If a firm has market power, then it has:

Use Figure: Monopoly Profit-Maximization and Deadweight Loss. The figure shows the demand curve, marginal revenue curve, marginal cost curve, and average total cost curve that are facing a monopolist. Based on this information, the profit-maximizing price for the firm is_____, and the profit-maximizing quantity is _____ units. ​ Figure: Monopoly Profit-Maximization and Deadweight Loss

Suppose that the profit-maximizing price for a monopolist is $10 and the profit-maximizing quantity is 50 units. Further, the average total cost of producing 50 units is $8. The total profit for the monopolist in this scenario is: