Reference no: EM131436257

Assignment

Question 1
Evidence from empirical studies of long-run cost-output relationships lends support to the:
existence of a non-linear cubic total cost function
hypothesis that marginal costs first decrease, then gradually increase over the normal operating range of the firm
hypothesis that total costs increase quadratically over the ranges of output examined
hypothesis that total costs increase linearly over some considerable range of output examined

Question 2
Theoretically, in a long-run cost function:
all inputs are fixed
all inputs are considered variable
some inputs are always fixed
capital and labor are always combined in fixed proportions

Question 3
George Webb Restaurant collects on the average $5 per customer at its breakfast & lunch diner. Its variable cost per customer averages $3, and its annual fixed cost is $40,000. If George Webb wants to make a profit of $20,000 per year at the diner, it will have to serve__________ customers per year.
10,000 customers
20,000 customers
30,000 customers
40,000 customers
50,000 customers

Question 4
A ____ total cost function implies that marginal costs ____ as output is increased.
linear; increase linearly
quadratic; are constant
cubic; increase linearly
linear; are constant

Question 5
The degree of operating leverage is equal to the ____ change in ____ divided by the ____ change in ____.
percentage; sales; percentage; EBIT
unit; sales; unit; EBIT
percentage; EBIT; percentage; sales
unit; EBIT; unit; sales

Question 6
In the linear breakeven model, the breakeven sales volume (in dollars) can be found by multiplying the breakeven sales volume (in units) by:
one minus the variable cost ratio
contribution margin per unit
selling price per unit
standard deviation of unit sales

Question 7
In the short-run for a purely competitive market, a manufacturer will stop production when:
the total revenue is less than total costs
the contribution to fixed costs is zero or less
the price is greater than AVC
operating at a loss

Question 8
The price for used cars is well below the price of new cars of the same general quality. This is an example of:
The Degree of Operating Leverage
A Lemon's Market
Redeployment Assets
Cyclical Competition
The Unemployment Rate

Question 9
All of the following are mechanisms which reduce the adverse selection problem except ____.
warranties from established enterprises with non-redeployable assets
high interest rates
large collateral requirements
brand names and product-specific promotions and retail displays
higher prices in repeat customer transactions

Question 10
If price exceeds average costs under pure competition, ____ firms will enter the industry, supply will ____, and price will be driven ____.
more; decrease; down
more; decrease; up
more; increase; down
more; increase; up

Question 11
Under asymmetric information,
you never get what you pay for
you sometimes get cheated
you always get cheated
at best you get what you pay for
sellers make profits in excess of competitive returns

Question 12
Asset specificity is largest when
value in first best use is large
value in second best use is large
customers choose their supplier at random
very valuable assets are non-redeployable
customers are loyal to a particular seller

Question 13
Long distance telephone service has become a competitive market. The average cost per call is $0.05 a minute, and it's declining. The likely reason for the declining price for long distance service is:
Governmental pressure to lower the price
Reduced demand for long distance service
Entry into this industry pushes prices down
Lower price for a barrel of crude oil
Increased cost of providing long distance service

Question 14
Regulatory agencies engage in all of the following activities except _______.
controlling entry into the regulated industries
overseeing the quality of service provided by the firms
setting federal and state income tax rates on regulated firms
setting prices that consumers will pay

Question 15
The practice by telephone companies of charging lower long-distance rates at night than during the day is an example of:
inverted block pricing
second-degree price discrimination
peak-load pricing
first-degree price discrimination
none of the above

Question 16
___ as practiced by public utilities is designed to encourage greater usage and therefore spread the fixed costs of the utility's plant over a larger number of units of output.
Peak load pricing
Inverted block pricing
Block pricing
First degree price discrimination

Question 17
Declining cost industries
have upward rising AC curves.
have upward rising demand curves.
have-shaped total costs.
have diseconomies of scale.
have marginal cost curves below their average cost curve.

Qiestion 18
In the electric power industry, residential customers have relatively ____ demand for electricity compared with large industrial users. But contrary to price discrimination, large industrial users generally are charged ____ rates.
similar, similar
elastic, lower
elastic, higher
inelastic, lower
inelastic, higher

Question 19
When the cross elasticity of demand between one product and all other products is low, one is generally referring to a(n) ____ situation.
oligopoly
monopoly
pure competition
substitution
monopolistic competition

Question 20
Some market conditions make cartels MORE likely to succeed in collusion. Which of the following will make collusion more successful?
The products are heterogeneous
The orders are small and frequent
The firms are all about the same size
Costs differ across the firms
Firms are geographically widely scattered

Question 21
In the Cournot duopoly model, each of the two firms, in determining its profit-maximizing price-output level, assumes that the other firm's ____ will not change.
price
output
marketing strategy
inventory

Question 22
Even ideal cartels tend to be unstable because
firms typically prefer competition to collusion as competition, because it leads to more profits.
collusion leads to lowest possible overall profits in the industry.
oligopolistic managers are extremely risk loving.
firms can benefit by secretly selling more than they promised the other firms

Question 23
The existence of a kinked demand curve under oligopoly conditions may result in
volatile prices
competitive pricing.
prices above the monopoly price.
an increase in the coefficient of variation of prices.
price rigidity

Question 24
In a kinked demand market, whenever one firm decides to lower its price,
other firms will automatically follow.
none of the other firms will follow.
one half of the firms follow and one half of the firms don't follow the price cut.
other firms all decide to exit the industry
all of the other firms raise their prices.

Question 25
"Conscious parallelism of action" among oligopolistic firms is an example of ____.
intense rivalry
a formal collusive agreement
informal, or tacit, cooperation
a cartel.