ECON 202 UPDATED COMPREHENSIVE EXAM
QUESTIONS AND ANSWERS SURE A+
✔✔Demand Curve of Monopolies - ✔✔Downward sloping. Same as demand curve for
market. Pushes up the price by limiting output.
✔✔Short-run Profits of Monopoly - ✔✔Marginal Cost=Marginal Revenue
✔✔Deadweight Loss - ✔✔reductions of combined consumer and producer surplus
associated with underproduction or overproduction of a product
✔✔Lost Beneficial Transactions - ✔✔Total value of lost opportunities resulting from
monopoly pricing or some other reason that the price is out of the consumers range.
✔✔Cartel Behavior - ✔✔People have the tendency to cheat and steal and lie. This
ultimately brings down the cartel which is the long-run situation for cartels.
✔✔Examples of Cartels - ✔✔OPEC, steel cartels
✔✔Cartel Characteristics - ✔✔Lots of profits. No consequences for cheating. Lots of
cheating. Eventual shut down
✔✔Monopolistic competition - ✔✔market structure of an industry in which there are
many firms and freedom of entry and exit but in which each firm has a product
somewhat differentiated from the others, giving it some control over its price. Market
info readily available.
✔✔Non-Price Competition - ✔✔competition based on factors that are not related to
price, such as product quality, service and financing, business location, and reputation.
✔✔How are Price and Output Determined? - ✔✔Price and output based on what
customers want and what other firm"s pricing is
, ✔✔Profit for Monopolistic Competition - ✔✔In the short-run, there is no guarantee they
will make money. But in the long-run the will make normal profits
✔✔Oligopoly - ✔✔A market in which control over the supply of a commodity is in the
hands of a small number of producers and each one can influence prices and affect
competitors. Very similar products. Cost is the main barrier to entry. Easy to get market
info.
✔✔Mutual Interdependence - ✔✔The situation that exists when two or more groups
need each other and must depend on each other to accomplish a goal that is important
to each of them
✔✔Market Share - ✔✔the specific percentage of total industry sales of a particular
product achieved by a single company in a given period of time
✔✔Collusive Tendency - ✔✔Oligopolies tend to have price-fixing schemes :)
✔✔Vertical Merger - ✔✔the combining of two or more firms involved in different stages
of producing the same good or service
✔✔Horizontal Merger - ✔✔the combining of two or more firms competing in the same
market with the same good or service
✔✔Conglomerate Merger - ✔✔A merger of firms in unrelated industries. Example: If
Purina Dow Chow merged with Pampers Diaper Company.
✔✔Externalities - ✔✔unintended side effects that have an influence on third parties.
Negative and Positive which are self explanitory
✔✔Derived Demand - ✔✔Demand for business or organizational products (tires)
caused by demand for consumer goods of services (autos).
✔✔Marginal Physical Product - ✔✔the additional quantity that is produced when one
additional unit of a resource is used in combination with the same quantities of all other
resources
✔✔Marginal Revenue Product - ✔✔the change in total revenue resulting from the use
of each additional unit of a resource (labor, in this case). MRP= Change in total
revenue/ unit change in resource quantity
✔✔Marginal Factor Cost - ✔✔The change in total factor cost resulting from a change in
the quantity of factor input, found by dividing the change in total factor cost by the
change in quantity of factor input.
QUESTIONS AND ANSWERS SURE A+
✔✔Demand Curve of Monopolies - ✔✔Downward sloping. Same as demand curve for
market. Pushes up the price by limiting output.
✔✔Short-run Profits of Monopoly - ✔✔Marginal Cost=Marginal Revenue
✔✔Deadweight Loss - ✔✔reductions of combined consumer and producer surplus
associated with underproduction or overproduction of a product
✔✔Lost Beneficial Transactions - ✔✔Total value of lost opportunities resulting from
monopoly pricing or some other reason that the price is out of the consumers range.
✔✔Cartel Behavior - ✔✔People have the tendency to cheat and steal and lie. This
ultimately brings down the cartel which is the long-run situation for cartels.
✔✔Examples of Cartels - ✔✔OPEC, steel cartels
✔✔Cartel Characteristics - ✔✔Lots of profits. No consequences for cheating. Lots of
cheating. Eventual shut down
✔✔Monopolistic competition - ✔✔market structure of an industry in which there are
many firms and freedom of entry and exit but in which each firm has a product
somewhat differentiated from the others, giving it some control over its price. Market
info readily available.
✔✔Non-Price Competition - ✔✔competition based on factors that are not related to
price, such as product quality, service and financing, business location, and reputation.
✔✔How are Price and Output Determined? - ✔✔Price and output based on what
customers want and what other firm"s pricing is
, ✔✔Profit for Monopolistic Competition - ✔✔In the short-run, there is no guarantee they
will make money. But in the long-run the will make normal profits
✔✔Oligopoly - ✔✔A market in which control over the supply of a commodity is in the
hands of a small number of producers and each one can influence prices and affect
competitors. Very similar products. Cost is the main barrier to entry. Easy to get market
info.
✔✔Mutual Interdependence - ✔✔The situation that exists when two or more groups
need each other and must depend on each other to accomplish a goal that is important
to each of them
✔✔Market Share - ✔✔the specific percentage of total industry sales of a particular
product achieved by a single company in a given period of time
✔✔Collusive Tendency - ✔✔Oligopolies tend to have price-fixing schemes :)
✔✔Vertical Merger - ✔✔the combining of two or more firms involved in different stages
of producing the same good or service
✔✔Horizontal Merger - ✔✔the combining of two or more firms competing in the same
market with the same good or service
✔✔Conglomerate Merger - ✔✔A merger of firms in unrelated industries. Example: If
Purina Dow Chow merged with Pampers Diaper Company.
✔✔Externalities - ✔✔unintended side effects that have an influence on third parties.
Negative and Positive which are self explanitory
✔✔Derived Demand - ✔✔Demand for business or organizational products (tires)
caused by demand for consumer goods of services (autos).
✔✔Marginal Physical Product - ✔✔the additional quantity that is produced when one
additional unit of a resource is used in combination with the same quantities of all other
resources
✔✔Marginal Revenue Product - ✔✔the change in total revenue resulting from the use
of each additional unit of a resource (labor, in this case). MRP= Change in total
revenue/ unit change in resource quantity
✔✔Marginal Factor Cost - ✔✔The change in total factor cost resulting from a change in
the quantity of factor input, found by dividing the change in total factor cost by the
change in quantity of factor input.
