← Ch. 8-11 Test
5 Written Questions
5 Matching Questions
- Profit-Maximization Rule
- Regulatory Lag
- Conglomerate Merger
- Horizontal Merger
- a Time period between when the natural monopoly's costs change and when regulatory agencies adjusts prices for it
- b Merger between companies from two different industries.
- c There is one seller, the single seller sells a product for which no close substitutes exist, and there are extremely high barriers to entry.
examples: postal service, public utilities (gas, electricity,etc.)
- d Merger between firms that are selling similar products in the same market.
- e Profit is maximized by producing quantity of output at which MR=MC
5 Multiple Choice Questions
- The seller does not have the ability to control the price. Example: a perfectly competitive firm.
- Seller charges one uniform price per unit for one specific quantity and charges a lower price for an additional unit.
- There are many sellers and buyers, sellers sell a homogenous good, buyers and sellers all have relevant information, and easy entry and exit.
- Merger between companies in the same industry but different stages of production process
- The net value of difference between monopoly Qo and competitive Qo.
5 True/False Questions
Resource Allocative Efficiency → Firm produces its output at the lowest possible per-unit cost.
Network Good → Buying a good at a low price and selling it for a higher price.
Short-Run (Firm) Supply Curve → Portion of firm's MC curve that lies above AVC Curve
Increasing Cost Industry → An industry in which ATC increases as output increases and decreases as output decreases.
Cartel Theory → Mathematical technique used to analyze the behavior of decision makers who try to reach an optimal position for themselves through game playing.