ECO 550 Final Exam

Break-even analysis usually assumes all of the following except:

The short-run cost function is:

George Webb Restaurant collects on the average $5 per customer at its breakfast & lunch diner. Its variable cost per customer averages $3, and its annual fixed cost is $40,000.  If George Webb wants to make a profit of $20,000 per year at the diner, it will have to serve__________ customers per year.

In the linear breakeven model, the difference between selling price per unit and variable cost per unit is referred to as:

In a study of banking by asset size over time, we can find which asset sizes are tending to become more prominent.  The size that is becoming more predominant is presumed to be least cost. This is called:

Which of the following is not an assumption of the linear breakeven model:

What is the profit maximization point for a firm in a purely competitive environment?

If price exceeds average costs under pure competition, ____ firms will enter the industry, supply will ____, and price will be driven ____.

In the purely competitive case, marginal revenue (MR) is equal to:

Under asymmetric information,

Buyers anticipate that the temporary warehouse seller of unbranded computer equipment will

Experience goods are products or services

A firm in pure competition would shut down when:

In the electric power industry, residential customers have relatively ____ demand for electricity compared with large industrial users.  But contrary to price discrimination, large industrial users generally are charged ____ rates.

In natural monopoly, AC continuously declines due to economies in distribution or in production, which tends to found in industries which face increasing returns to scale.  If price were set equal to marginal cost, then:

____ as practiced by public utilities is designed to encourage greater usage and therefore spread the fixed costs of the utility's plant over a larger number of units of output.

Of the following, which is not an economic rationale for public utility regulation?

When the cross elasticity of demand between one product and all other products is low, one is generally referring to a(n) ____ situation.

Declining cost industries

Some market conditions make cartels MORE likely to succeed in collusion.  Which of the following will make collusion more successful?

In a kinked demand market, whenever one firm decides to lower its price,

In the Cournot duopoly model, each of the two firms, in determining its profit-maximizing price-output level, assumes that the other firm's ____ will not change.

A(n) ____ is characterized by a relatively small number of firms producing a product.

A cartel is a situation where firms in the industry

“Conscious parallelism of action” among oligopolistic firms is an example of ____.