Econ Quiz #6
Bailey_Sandon
When compared to firms in perfect competition, monopolists tend to charge __________ prices and offer___________ quantities of output.
higher; lower
The free entry and exit of firms in a monopolistically competitive market guarantees that...
both economic profits and economic losses disappear in the long run.
Hotels in NYC frequently experience an average vacancy rate of about 20 percent. This kind of excess capacity id indicative of what kind of market?
A monopolist is...
a single seller of a product with no close substitutes
The demand curve any monopolist uses in making an output decision is...
the same as he market demand curve
Sizable economic profits can persist over time under monopoly if the monopolist
is protected by barriers to entry
An example of a barrier to entry...
Dick obtains a copyright for the new computer game that he invented
De Beers Consolidated Mines has monopoly power...
through its control of an essential resource
Which of the following is true?
Patents give a temporary exclusive right to produce a new good
The defining characteristic of a natural monopoly is
economies of scale over the relevant range of output
Price Discrimination...
is an attempt by a monopoly to increase its profit by selling the same good to different customers at different prices
If we observe a great deal of advertising of men's shaving products, we can infer that...
those products are highly differentiated
The implicit rental rate to a firm of owning a building is
T or F: The restaurant industry has adopted a rule of thumb that says the highest-priced entree on a menu should cost no more than 2.5 times the lowest-priced entree.
What is the effect of a price change on consumer surplus?
The law of demand applies in labor markets
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Verified questions
What was the reasoning behind the creation of the Federal Reserve?
A & B is a private limited company. It produces a breakfast cereal which has a price-elastic demand. The costs of producing each box of cereal is $1. The cereals are sold in shops at a price of$ 2 per box. The prices of competitors' cereals range from $1.90 to$ 2.50 a box. The Marketing Manager says 'we should change to psychological pricing strategy' to increase sales. $$ \begin{matrix} \text{a) Price is one element of the marketing mix. Identify two other elements. } & \text{[2]}\\ \text{b) What is meant by 'price-elastic demand'? } & \text{[2]}\\ \text{c) Identify and explain two reasons why demand for cereals might be price elastic.} & \text{[4]}\\ \text{d) Identify and explain two factors A \& B should take into account when deciding which pricing strategy to use. } & \text{[6]}\\ \text{e) Do you think changing to psychological pricing strategy will increase sales? Justify your answer.} & \text{[6]}\\ \end{matrix} $$
Demand is ________ if the percentage change in quantity demanded is less than the percentage change in price.
The market price of a security is $40. Its expected rate of return is 13%. The risk-free rate is 7%, and the market risk premium is 8%. What will the market price of the security be if its beta doubles (and all other variables remain unchanged)? Assume the stock is expected to pay a constant dividend in perpetuity.