Econ 1 Third Exam on Competition, Monopoly, etc. (Chs.9. 14. 15. 16))

__H_ marginal revenue__E_ price taker

_D__ barrier to entry__A_ price discrimination

_K__ collusion_J__ excess capacity

A This activity often occurs when the firm can identify different types of buyers.

B A really inept buyer, especially one who is reluctant to bargain.

C The situation faced by most airlines, especially after 9/11.

D The number of firms in an industry is often limited because of this.

E This is what the firm is considered when its product is identical with that of its rivals.

F What a poor speller calls the meeting of two cars each going 6o miles per hour.

G What a really smart buyer does, especially one who looks for discounted sale items.

H Once the competitive firm knows the market price, changes in output have no impact on this.

I These are established at most of the American occupied sites in Iraq.

J This sort of problem is often offset by increasing consumer choice.

K This is generally illegal, but really tempting when the market is limited to a few firms.

L What the firm experiences when selling a really lousy product.

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In each of the following, indicate whether the statement is true or false, and explain your answer briefly; two sentences to three sentences.

T F The fact that movie theaters will often charge students a lower price than others can be explained by their interest keeping college age students off the streets.

FALSE, this is as aspect of price discrimination, assuming students have less income than other film goers.

T F If two TV cable companies are operating in the same market decide to share their transmission lines, this may well lead to illegal collusion.

This could be true or false---based on your problem set, this would likely be true since having information on each other’s specific market could be a basis for “conversation.” On the other hand, it could simply be a way of increasing efficiency for both firms.

3. T F While there are several differences in outcome (price, quantity, and efficiency), between firms in monopolistic and perfect competition, there is one significant similarity as well.

The similarity in OUTCOME is the fact that with ease of entry in both industries, excess profits are eliminated in the long run.

Answer to the bonus question: HOW MANY BONUS POINTS!!!!! OR SOMETHING TO THAT EFFECT.