Unit 4: Imperfect Competition (TYU)

Front

Assume Dunder Mifflin experiences high barriers to entry in the paper industry. Which of the following is more likely to occur? The paper industry will be characterized by diseconomies of scale, The firms in the paper industry are price takers, The firms in the paper industry will earn economic profits in the long run, The firms in the paper industry will charge a price equal to average total cost, The firms in the paper industry will charge a price on the inelastic portion of the demand curve

Back

The firms in the paper industry will earn economic profits in the long run

Front

Dunder Mifflin has monopoly power. What could be a cause of this? Options: Free markets, Scarcity, Elasticity of demand, Low profits, Barriers to entry

Back

Barriers to entry

Front

Dunder Mifflin is a single price monopoly. Compared with a perfectly competitive market, the demand and cost curves will:

Back

Decrease output and increase price

Front

Which of the following can give Dunder Mifflin market power?
- Having access to common information
- Lacking barriers to entry or exit
- Having economies of scale in production over the range of market output
- Having a large number of competitors in the market
- Producing a standardized or homogenous product

Back

Having economies of scale in production over the range of market output

Front

If Dunder Mifflin engages in perfect price discrimination, it charges:

Back

Each customer the highest price the customer is willing to pay

Front

If Dunder Mifflin could engage in perfect price discrimination, their total output and price charged for the last unit of output sold would be:

Back

Q2 and P3

Front

Price discrimination occurs when:

Back

Differences in a product's price do not reflect differences in costs of production

Front

The paper industry consists of 100 small firms. Dunder Mifflin, the largest firm, accounts for only 2% of sales. Brand names are considered a sign of quality. This paper industry is best classified as:

Back

Monopolistically competitive

Front

Dunder Mifflin is a monopolistically competitive firm. Which of the following is true for them in long-run equilibrium? MR = MC, P = ATC, P > MC, MR = ATC, P > MR, MC = ATC, P > MR, MC > ATC

Back

MR = MC, P = ATC

Front

Dunder Mifflin is monopolistically competitive. At the long-run equilibrium output, they do not attain allocative efficiency. Why?

Back

P > MC