MEcon Master of Economics Microeconomics and Market Structure

Question 1

In a perfectly competitive market, a firm's long-run equilibrium occurs where price equals:

Accepted Answer

Both marginal cost and minimum average total cost

Answer

Marginal cost only

Answer

Average total cost only

Answer

Marginal revenue only

Question 2

A monopolist maximizes profit by producing where:

Accepted Answer

Marginal revenue equals marginal cost

Answer

Price equals average cost

Answer

Price equals marginal cost

Answer

Average revenue equals average cost

Question 3

Price discrimination requires that a firm have market power AND be able to:

Accepted Answer

Prevent resale between customer segments

Answer

Lower costs for bulk buyers

Answer

Collude with competitors

Answer

Set prices below marginal cost

Question 4

Consumer surplus is defined as the difference between:

Accepted Answer

The willingness to pay and the price actually paid

Answer

The price paid and the marginal cost

Answer

Total revenue and total cost

Answer

Market price and the producer's price floor

Question 5

The concept of 'deadweight loss' in economics refers to:

Accepted Answer

Reduction in total surplus due to market inefficiency

Answer

Loss of government tax revenue

Answer

Producer losses from competition

Answer

Consumer losses from higher prices alone

Question 6

In oligopoly, the kinked demand curve model predicts:

Accepted Answer

Price rigidity because rivals match price cuts but not price increases

Answer

Constant price changes in response to cost shifts

Answer

Firms always acting as price-takers

Answer

Prices equal to monopoly levels