OnRamps Economics College Practice Exam

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• Why do firms in most markets locate at or near the bottom of the long-run average cost curve?
• Monopolies' market power is limited by
• Patents historically provided exclusive rights to inventions. Which pair is a classic example?
• If a price searcher has barriers to enter and many firms, it is a...
• Which of the following is a club good?
• Profit-maximizing quantity is found where
• What is perfect competition?
• Which of the following is NOT listed as a solution to monopoly?
• Dynamic pricing allows for consumers with _________ demand to benefit from paying really high prices when trying to find a parking spot.
• Which market structure is characterized by many firms with differentiated products and free entry?
• What describes the tragedy of the commons?
• Which expression correctly defines economic profit?
• What is a monopoly?
• If a price searcher has no barriers to enter, it is a ...?
• Which statement describes the short run in production?
• What happens to average fixed cost as output increases?
• In a perfectly competitive market, a single firm's price is determined by
• On a monopoly diagram, which area represents operating but at a loss?
• If price covers average variable costs but not total costs, what should a firm do in the short run?
• Which of the following is typically a fixed cost in the short run?
• What does marginal revenue represent?
• Which is the equation for average variable cost (AVC)?
• In the presence of a negative externality, social costs typically exceed private costs.
• Why is the price paid by consumers typically above the marginal cost in a monopoly at equilibrium?
• In monopoly pricing, marginal revenue is typically
• Do monopolies have unlimited market power?
• In monopolistic competition, firms differentiate products, giving them some pricing power. Which statement best describes pricing in this market?
• Which two lines on a cost curve diagram intersect at the zero-profit point?
• Will the free market produce the socially desired amount of a good when positive externalities are present?
• In a perfectly competitive market, what is the relationship between marginal revenue and the market price?
• Which characteristic describes a club good?
• What concept is Elinor Ostrom associated with?
• Socially optimal consumer surplus on a monopoly graph is the triangle above
• Allocative efficiency on a monopolistic graph occurs at the output level where which condition holds?
• Which type of costs remain constant as you produce more output?
• An interest payment on a loan to a firm is considered
• What is a common resource good?
• Profit on a monopoly graph is equal to
• Which of the following is a club good?
• How do you calculate a firm's profit?
• Explicit costs are those that involve outlay of cash such as wages and materials.
• What best describes a negative externality?
• What shape of a long-run average cost curve illustrates economies of scale, constant returns to scale, and diseconomies of scale?
• Which of the following is an example of a price taker?
• Profit maximization for a monopolist occurs where which condition holds?
• In perfect competition, price is determined by?
• Which of the following are explicit costs?
• In a monopoly, which statement describes profits in the short run and long run?
• Given revenue of 200,000, wages of 100,000, and opportunity cost of owner's capital 30,000, calculate the economic profit.
• Profit-maximizing price is determined by
• Which statement best describes monopolistic competition?
• What happens when there is a per-unit tax?
• Which curve intersects with MC at the minimum point of the average variable cost curve?
• Socially optimal quantity on a monopoly graph occurs where
• In perfectly competitive firms, there is zero profit. This is true only in the:
• Which statement best distinguishes fixed costs from variable costs?
• True or False: A firm's TR is $100 when it sells the first unit and $200 when it sells the second unit. This firm is a monopolist.
• A price taker operates in which market structure when there are no barriers to entry?
• Which statement best describes a free rider?
• When starting a new business, most entrepreneurs might find it difficult to find opportunities to invest in ___________ in order to lower their expenses and produce more.
• When a good has a positive externality, the free market tends to produce:
• Which costs vary with the level of production?
• To reduce the size of a negative externality, what must happen to the price of the good?
• Which statement best captures Coase's view on externalities?
• Which characteristic applies to private goods but not to public goods?
• Given the demand function P = 35 - 4Q, the marginal revenue function MR = 36 - 8Q, and marginal cost MC = 4, what is the profit-maximizing price?
• What is price gouging?
• What is an oligopoly?
• Which methodological contribution is Esther Duflo credited with?
• On a monopoly graph, the revenue-maximizing quantity occurs where MR equals zero is true.
• The output level at which a firm's average total costs are minimized is commonly referred to as the...
• A gym membership is a...
• Which of the following are implicit costs?
• How is marginal product calculated?
• Opportunity cost is defined as the value of the next best alternative forgone.
• Rent seeking typically involves gaining wealth through
• Profit equals Total Revenue minus Total Cost is
• Which of the following is an explicit cost?
• Allocative efficiency is defined as
• National Defense is a...
• How does the average variable cost curve help a firm know whether it should shut down immediately?
• Which is the best example of a monopolist?
• What distinguishes the long-run average cost curve from the short-run average cost curve?
• Total revenue on a monopoly graph is calculated by
• Ostrom's work suggests that addressing commons problems is most effectively done through
• What is rent seeking?
• What tradeoff does society experience when reducing the size of a negative externality?
• Fishing in a lake is a...
• What is the equation for total cost (TC)?
• Which statement describes a public good?
• What describes the demand curve facing a monopolist?
• How do you solve for profit?
• What are some defects of a monopoly?
• What is a sunk cost?
• Which statement correctly describes how short-run and long-run equilibrium behave in a perfectly competitive market?
• If the supply of a good increases, what happens to consumer surplus?
• Which expression gives average total cost (ATC)?
• Which term best describes a good that is non-excludable and non-rival in consumption?
• What is monopolistic competition?
• In the short run, if a firm is not earning very much economic profit, what should it do?
• Which expression gives average fixed cost (AFC)?
• What best describes a price seeker?
• In long-run equilibrium of perfect competition, which statement is true?
• Which good is non-excludable but rival in consumption?
• Ronald Coase argued that clearly defined laws would give parties incentive to
• On a monopoly graph, no economic profit occurs at the intersection of which curves?
• Sandals are a...
• What do we call the act of working together to solve problems related to the tragedy of the commons?
• If a price searcher has barriers to enter and one firm, it is a...
• Regulation consists of government-imposed requirements to achieve purposes, such as cleaner water and safer workplaces.
• What is the standard formula for economic profit or loss?
• If total revenue is 100 and total cost is 70, what is profit?
• Elinor Ostrom is famous for asking which of the following questions?
• Which statement best describes a private good characteristic?
• Which equation correctly expresses total cost (TC)?
• Where is the socially optimal quantity on a monopoly graph?
• True or False: Monopoly prices are higher and output is lower than in pure competition.
• Where is the consumer surplus on a monopoly graph?
• Accounting profit is defined as
• The more units are produced, the more we see this cost curve decline.
• Dynamic pricing is best described as a pricing mechanism that
• What condition defines zero profit for a firm in a perfectly competitive market?
• True or False: Higher trade barriers create more monopoly power.
• A monopolistic firm lowers its price and total revenue increases. Describe the demand curve facing this monopoly.
• If total revenue is 200,000, wages are 100,000, and the opportunity cost of the owner's capital is 30,000, calculate the accounting profit.
• Economic profit is calculated by subtracting which from accounting profit?
• Which of the following is the best example of rent seeking?
• What is the equation for average fixed cost (AFC)?
• Revenue-maximizing quantity occurs at the point where
• If fixed costs are 100 and the variable cost per unit is 3, what is the total cost of producing 20 units?
• Total cost on a monopoly graph is found by
• Regulation is intended to achieve which government purposes?
• Which statement best captures the essence of the Coase Theorem?
• The cost of providing additional output in the long run is known as:
• In a perfectly competitive market, if a firm increases its output, what happens to the market price?
• Which term describes the reduction in average cost per unit as output increases due to spreading fixed costs?
• Which statement about public goods is accurate?
• Socially optimal consumer surplus is represented by
• Which statement best describes fixed costs?
• What is a positive externality?
• In a monopoly diagram, which area represents earning a profit?
• What is a subsidy?
• In the long run, what level of economic profit do firms in a perfectly competitive market earn?
• Which of the following costs is fixed?
• What is a 'price taker' firm?
• Patents have been used since the 1500s to provide inventors exclusive rights; which statement best reflects this?
• Rent seeking is a defect of monopoly because it leads to which outcome?
• Transportation costs and management are two reasons that firms experience:
• In the long run, what happens to all costs?
• If a negative externality exists, an unregulated firm tends to produce more than the social optimum and charge a price that is
• The price effect is greater than the output effect when which of the following is true?
• What is the definition of consumer surplus?
• Which statement describes diminishing marginal returns?
• Under what conditions does the Coase Theorem guarantee an efficient outcome through bargaining?
• Where do marginal cost (MC) and average total cost (ATC) intersect on a typical cost curve?
• Should a firm shut down immediately if it is making losses?
• Do entry and exit occur in the short run, the long run, both, or neither?
• Not acting collectively leads to what outcome?
• Which feature is common in an oligopoly?
• Which statement best describes long-run cost behavior?
• What best describes a negative externality?
• In perfect competition, a seller faces what kind of demand curve?
• Subsidies can take which forms?
• Which area on the graph signals a shutdown for a monopoly?
• Total cost equals?
• As production increases, which statement about average fixed cost is true?
• What is the equation for average total cost (ATC)?
• Which best describes the typical shape of the total product (TP) curve as labor input increases?
• Which expression defines marginal cost (MC)?
• What is the equation for marginal cost (MC)?
• In a monopoly, which statement is true?
• Which scenario is a positive externality?
• Marginal product is the change in total output resulting from a one-unit change in which input?
• What characterizes a price maker?
• Which market structure has a single seller with a unique product and high barriers to entry?
• On a monopolistic graph, there is no economic profit at the point where which curves intersect?