AP Micro Unit 4 Review (Hybrid)

Which of the following is true of monopolists that practice price discrimination?

• They charge all customers the same price.

• They earn a smaller profit than those that do not practice price discrimination.

• They charge customers different prices.

• They produce lower quantities than pure monopolists.

• They produce the same quantity of output as pure monopolists.

In the long run, a monopolistically competitive firm will make

• more economic profit than a perfectly competitive firm.

• less economic profit than a perfectly competitive firm.

• more economic profit than a monopoly.

• more economic profit than an oligopolist.

• zero economic profit.

Which of the following best characterizes the firms in an oligopoly industry?

• Firms can easily enter the industry when profits are high.

• There are more firms than in a monopolistically competitive industry.

• They are independent.

• There is one firm.

• There is mutual interdependence.

What is the Nash Equilibrium?

• Both fast-food restaurants should choose fries.

• Both fast-food restaurants should choose burgers.

• Brewer’s should choose fries, and Royal’s should choose burgers.

• Brewer’s should choose burgers, and Royal’s should choose fries.

• There is no Nash Equilibrium

The profit maximizing price and quantity are:

• Q1; P6

• Q2; P5

• Q3; P4

• Q4; P3

• Q5; P2

Regardless of market, a firm will maximize profit where:

• MR = MC

• MR = ATC

• MR = min ATC

• P = ATC

• P = MC

If the government wants to ensure no deadweight loss for a monopoly, it will set the price that equals:

• marginal cost

• marginal revenue

• average total cost

• average variable cost

• average fixed cost

A per-unit subsidy for a monopoly will cause the price to ____ and the quantity to ____.

• increase; decrease

• increase; increase

• decrease; increase

• decrease; decrease

• stay the same; stay the same

Why can monopolies make long run positive economic profit?

• Blocked barriers to entry

• They don't. Monopolies make a normal profit in the long run.

• Low barriers to entry

• Differentiated products

• Many sellers

Monopolistic competition relates to all of the following EXCEPT:

• Many firms

• Identical products

• Low barriers to entry

• Normal profit in the long run

• Marginal revenue is less than demand