01:220:102 Study Guide - Midterm Guide: Diminishing Returns, Normal Good, Variable Cost

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Published on 15 Oct 2018
School
Rutgers University
Department
Economic
Course
01:220:102
Professor
NAME
94 Multiple choice questions
1. the player will play one action or another
A. Pure Strategy
B. mixed strategy
C. Maximin Solution
D. Trigger Strategy
2. situation of high-wage people who can earn so much that they respond to higher wages by working less hours (counter intuitive)
-common in the long run
A. Pareto Efficient Solution
B. Kinked Demand Curve
C. Deregulation
D. Backward Bending Supply Curve
3. Total Revenue - explicit costs
A. Total Profit
B. Maximizing Utility
C. Accounting Profit
D. Shutdown Point
4. Total Revenue - Total Costs
(where TC is explicit and implicit costs)
--> TR must exceed TC
A. Economic Profit (economic success)
B. Average Profit (Profit Margin)
C. Product Differentiation
D. Qualified Joint Profit Maximization
5. method of understanding consumer choices by combining psychology and economics
A. Predatory Pricing
B. Behavioral Economics
C. Decreasing Cost Industry
D. Intellectual Property
6. player has a probability distribution over the various actions that are available, sometimes taking one strategy and other times another
A. Tying Sales
B. Trade Secrets
C. Substitution Effect
D. mixed strategy
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7. assumption that money has equal value to an individual regardless of the situation
A. Bundling
B. Short Run
C. Marginal Cost
D. Fungible
8. Firm can adjust all factors of production
- derived from many SRAC
A. Shutdown Point
B. Market Share
C. Long Run Average Cost
D. Long Run
9. amount of additional utility received given the price of the product
= MU / P
A. Marginal Utility per Dollar (MU/$)
B. Marginal Profit
C. Herfindahl-Hirshman Index (HHI)
D. Economic Profit (economic success)
10. additional cost of producing one more unit of output
generally upward sloping because of diminishing marginal returns = (change
total cost / change in Q)
A. Normal Good
B. Marginal Cost
C. Tying Sales
D. Market Structure
11. when the ratio of the prices of goods is equal to the ratio of the marginal utilities (point at most satisfaction aka max utility) (P1 / P2) = (MU1
/ MU2)
- where P ratio remains constant and MU ratio changes with quantity
A. Pareto Efficient Solution
B. Consumer Equilibrium
C. Prisoners Dilemma
D. Concentration Ratio
12. incurred in the act of producing (increases with production) e.g. labor
A. Marginal Profit
B. total utility
C. Variable Cost
D. Normal Good
13. expenditures that do not change regardless of level of production in the short run (e.g. lease)
A. Shutdown Point
B. Trade Secrets
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C. Bundling
D. Fixed Cost
14. = (variable cost / Q output)
always below average total cost because it is a part ATC
A. Long Run Average Cost
B. Price Cap Regulation
C. Restrictive Practices
D. Average Variable Cost
15. when the firms supposedly being regulated end up playing a larger role in setting the regulations that they will follow and as a result, "capture"
the people doing the regulation, usually through the promise of a job after term has ended A. Long Run Equilibrium
B. Perfect Competition
C. Regulatory Capture
D. Pareto Efficient Solution
16. All information is available and people make consistent, informed choices in their best interest - always
assumed in economics
A. Monopoly
B. mixed strategy
C. Rationality
D. Price Taker
17. - many firms produce identical products
- many buyers and sellers available in the market
- sellers and buyers have all relevant information to make rational decisions
- free entry and exit in the market - implies perfectly elastic demand
(hypothetical extreme --> closest e.g. Agricultural Market)
- MR = D = P
A. Long Run Equilibrium
B. Perfect Competition
C. Kinked Demand Curve
D. Regulatory Capture
18. legal, technological or market forces that discourage and prevent potential competitors from entering a market
A. Income Effect
B. Minimum Resale Price Agreement
C. Barriers of Entry
D. Backward Bending Supply Curve
19. competing firms agree to match price cuts but not price increases (silent form of cooperation)
A. Intellectual Property
B. Constant Cost Industry
C. Inferior Good
D. Kinked Demand Curve
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Document Summary

Derived from many srac: shutdown point, market share, long run average cost, long run, amount of additional utility received given the price of the product. Free entry and exit in the market - implies perfectly elastic demand (hypothetical extreme --> closest e. g. agricultural market) > outputs > inputs: mixed strategy, firm (business, trigger strategy, tying sales, barriers to entry are something other than legal prohibition, caused by economics of scale. Firm must produce at least normal profit for the owner to stay in business. Supply inelastic (e. g. skilled workers: diminishing marginal returns, constant cost industry, increasing cost industry, decreasing cost industry, follows the same rules as budget constraint graph, except with different variables. People seek utility maximizing point, which depends on personal preference: long run equilibrium, monopolistic competition, differentiated product, labor-leisure constraint graph, requires dealers to sell for at least a certain minimum price.