Question 1

A monopolist's demand curve is P = 10 - 2 Q. So its MR is

Accepted Answer

A)  5 - 2 Q 
B)  10 - Q 
C)  10 - 4 Q 
D)  5 - Q 
A)  5 - 2 Q 
B)  10 - Q 
C)  10 - 4 Q 
D)  5 - Q C

Question 2

If the competitive firm can sell its product at $16 per unit and the marginal costs of the firm are MC = 1,100 + 2Q, then the firm will produce:

Accepted Answer

A)  1,084 units. 
B)  542 units. 
C)  16 units. 
D)  1,100 units. 
A)  1,084 units. 
B)  542 units. 
C)  16 units. 
D)  1,100 units. B

Question 3

Under what market structure do we have strategic play?

Accepted Answer

A)  Perfect Competition 
B)  Monopoly 
C)  Monopolistic Competition 
D)  Oligopoly 
A)  Perfect Competition 
B)  Monopoly 
C)  Monopolistic Competition 
D)  Oligopoly D

Question 4

Under monopoly we have "unexploited gains from trade" because:

Accepted Answer

A)  if the firm were competitive it would have increased output in the long run 
B)  if the firm were competitive it would have decreased output in the long run 
C)  if the firm were competitive it would have not changed output in the long run 
D)  FCC is always trying to regulate it 
A)  if the firm were competitive it would have increased output in the long run 
B)  if the firm were competitive it would have decreased output in the long run 
C)  if the firm were competitive it would have not changed output in the long run 
D)  FCC is always trying to regulate it

Question 5

As a source of market power, a precommitment contract is:

Accepted Answer

A)  newcomer advantage. 
B)  incumbent advantage. 
C)  incumbent reaction. 
D)  newcomer reaction. 
A)  newcomer advantage. 
B)  incumbent advantage. 
C)  incumbent reaction. 
D)  newcomer reaction.

Question 6

In a Nash equilibrium, firms are clearly strategically interdependent and:

Accepted Answer

A)  they cooperate with each other to determine market outcomes. 
B)  they determine price in a closed auction bid system. 
C)  they are dependent on differentiated goods. 
D)  they are non-cooperative in determining market outcomes. 
A)  they cooperate with each other to determine market outcomes. 
B)  they determine price in a closed auction bid system. 
C)  they are dependent on differentiated goods. 
D)  they are non-cooperative in determining market outcomes.

Question 7

The shut down condition - the point where the company finds it is no longer viable to produce and sell a product - for a competitive firm is where price is:

Accepted Answer

A)  less than marginal revenue. 
B)  less than short run average total cost. 
C)  greater than marginal revenue. 
D)  less than average variable cost. 
A)  less than marginal revenue. 
B)  less than short run average total cost. 
C)  greater than marginal revenue. 
D)  less than average variable cost.

Question 8

Sometimes an old company in an industry can build a larger plant that has lower costs per unit than a potential entrant (newcomer) can duplicate. That is market:

Accepted Answer

A)  weakness based on cost. 
B)  power based on scale economies. 
C)  power based on specific assets. 
D)  weakness based on reputation deficiency. 
A)  weakness based on cost. 
B)  power based on scale economies. 
C)  power based on specific assets. 
D)  weakness based on reputation deficiency.

Question 9

Manifold Manufacturing, a large producer of motorcycle parts, is accused of monopolizing the market for a particular motorcycle part. Why would its legal defense team be so interested in a statistical estimate that the price elasticity of demand for its part was 0.62?

Accepted Answer

A monopolist would never maximize its pr

Question 10

There are four structural components to a perfectly competitive market. Which one of the four is the most important to market operation and why?

Accepted Answer

The four structural components to a perf

Question 11

For any company operating in a marketplace, the firm attempts to maximize the value of company's worth by setting output where:

Accepted Answer

A)  costs are lowest. 
B)  P < AVC. 
C)  MR = MC. 
D)  AR = MC. 
A)  costs are lowest. 
B)  P < AVC. 
C)  MR = MC. 
D)  AR = MC.

Question 12

Why would precommitment contracts, licenses, learning curve effects, and brand advantages protect an established corporation from new competitors?

Accepted Answer

Precommitment contracts, licen

Question 13

Under duopoly are two firms 1 and 2 which face an industry demand curve P = 69 - Q, where Q = Q1 + Q2. MC for each firm is 0. How many units should each firm produce? How much money will each firm make?

Accepted Answer

First the anticipated demand curves for

Question 14

A necessary condition for market power to exist for a particular company in a market is that:

Accepted Answer

A)  information must be understood by both buyers and sellers. 
B)  effective barriers to entry must exist. 
C)  the number of firms is over 150. 
D)  consumers perceive all products as homogeneous. 
A)  information must be understood by both buyers and sellers. 
B)  effective barriers to entry must exist. 
C)  the number of firms is over 150. 
D)  consumers perceive all products as homogeneous.

Question 15

In this chapter, the discussion on competitive markets tells us that each firm's demand curve is horizontal. Is this not inconsistent with the industry's demand curve which slopes downwards?

Accepted Answer

No this is not inconsistent. The industr

Question 16

The Prisoner's Dilemma and the problem of the cartel are very similar. In both cases:

Accepted Answer

A)  cooperation would improve the outcome, but it rarely happens. 
B)  cooperation is the only solution. 
C)  non-cooperation would improve the outcome, but it rarely happens. 
D)  non-cooperation is an instable solution. 
A)  cooperation would improve the outcome, but it rarely happens. 
B)  cooperation is the only solution. 
C)  non-cooperation would improve the outcome, but it rarely happens. 
D)  non-cooperation is an instable solution.

Question 17

Currently a monopolist's MR = $5 and its MC = $10 and it services 10 consumers. An 11th consumer walks in. Should the company service her?

Accepted Answer

A) Yes, MR > MC, so it should service her. B) Yes, MR MC, so it should not service her. D) No, MR < MC, so it should not service her. A) Yes, MR > MC, so it should service her. B) Yes, MR MC, so it should not service her. D) No, MR < MC, so it should not service her.

Question 18

If a firm with monopoly pricing power in the market faces a demand curve of P = 2,000 - 2Q and marginal costs of MC = 1,100 + 2Q, then the firm will produce at a price of:

Accepted Answer

A)  $16. 
B)  $1,400. 
C)  $1,700. 
D)  $1,600. 
A)  $16. 
B)  $1,400. 
C)  $1,700. 
D)  $1,600.

Question 19

A monopoly's demand curve is P = 200 - 3 Q. It MC = $20. How many customers should be serviced by this company? What is the price paid by each customer? What will the company's gross revenue be in this venture?

Accepted Answer

If P = 200 - 3 Q then, MR = 200 - 6 Q. T

Question 20

If a firm with monopoly pricing power in the market faces a demand curve of P = 2,000 - 2Q and marginal costs of MC = 1,100 + 2Q, then the firm will produce:

Accepted Answer

A)  542 units. 
B)  150 units. 
C)  200 units. 
D)  900 units. 
A)  542 units. 
B)  150 units. 
C)  200 units. 
D)  900 units.

Exam 6: Market Structure

A monopolist's demand curve is P = 10 - 2 Q. So its MR is

If the competitive firm can sell its product at $16 per unit and the marginal costs of the firm are MC = 1,100 + 2Q, then the firm will produce:

Under what market structure do we have strategic play?

Under monopoly we have "unexploited gains from trade" because:

As a source of market power, a precommitment contract is:

In a Nash equilibrium, firms are clearly strategically interdependent and:

The shut down condition - the point where the company finds it is no longer viable to produce and sell a product - for a competitive firm is where price is:

Sometimes an old company in an industry can build a larger plant that has lower costs per unit than a potential entrant (newcomer) can duplicate. That is market:

Manifold Manufacturing, a large producer of motorcycle parts, is accused of monopolizing the market for a particular motorcycle part. Why would its legal defense team be so interested in a statistical estimate that the price elasticity of demand for its part was 0.62?

There are four structural components to a perfectly competitive market. Which one of the four is the most important to market operation and why?

For any company operating in a marketplace, the firm attempts to maximize the value of company's worth by setting output where:

Why would precommitment contracts, licenses, learning curve effects, and brand advantages protect an established corporation from new competitors?

Under duopoly are two firms 1 and 2 which face an industry demand curve P = 69 - Q, where Q = Q1 + Q2. MC for each firm is 0. How many units should each firm produce? How much money will each firm make?

A necessary condition for market power to exist for a particular company in a market is that:

In this chapter, the discussion on competitive markets tells us that each firm's demand curve is horizontal. Is this not inconsistent with the industry's demand curve which slopes downwards?

The Prisoner's Dilemma and the problem of the cartel are very similar. In both cases:

Currently a monopolist's MR = $5 and its MC = $10 and it services 10 consumers. An 11th consumer walks in. Should the company service her?

If a firm with monopoly pricing power in the market faces a demand curve of P = 2,000 - 2Q and marginal costs of MC = 1,100 + 2Q, then the firm will produce at a price of:

A monopoly's demand curve is P = 200 - 3 Q. It MC = $20. How many customers should be serviced by this company? What is the price paid by each customer? What will the company's gross revenue be in this venture?

If a firm with monopoly pricing power in the market faces a demand curve of P = 2,000 - 2Q and marginal costs of MC = 1,100 + 2Q, then the firm will produce:

Introduction

Economists View of Behavior

Markets, Organizations, and the Role of Knowledge

Demand

Production and Cost

Pricing With Market Power

Economics of Strategy: Creating and Capturing Value

Economics of Strategy: Game Theory

Incentive Conflicts and Contracts

Organizational Architecture

Decision Rights: The Level of Empowerment

Decision Rights: Bundling Tasks Into Jobs and Subunits

Attracting and Retaining Qualified Employees

Incentive Compensation

Individual Performance Evaluation

Divisional Performance Evaluation

Corporate Governance

Vertical Integration and Outsourcing

Leadership: Motivating Change Within Organizations

Understanding the Business Environment: The Economics of Regulation

Ethics and Organizational Architecture

Organizational Architecture and the Process of Management Innovation

Filters

Under duopoly are two firms 1 and 2 which face an industry demand curve P = 69 - Q, where Q = Q₁ + Q₂. MC for each firm is 0. How many units should each firm produce? How much money will each firm make?

Currently a monopolist's MR = $5 and its MC = $10 and it services 10 consumers. An 11^th consumer walks in. Should the company service her?