ECON 211 Final sample exam mistakes

14. New firms entering a competitive market lower the market price

26.  Buyers can buy all they want to buy, and sellers can sell all they want to sell at the equilibrium price, but not above or below the equilibrium price.

39.  Generally, a firm is more willing and able to increase quantity supplied in response to a price change when the relevant time period is long rather than short.

42. Producer surplus is the amount a seller is paid minus the cost of production.

56. When a nation allows international trade, there is an increase in consumer surplus.

76. Economic profit will never exceed accounting profit.

82. If MC equals ATC, ATC is minimized.

83. Whenever MC is greater than ATC, ATC is rising.

85. Economies of scale occur when a firm’s LRATC is decreasing as output increases.

88. A characteristic of natural monopoly is that ATC declines over large regions of output.

90. For a monopolist, MR is less than price, whereas MR is equal to P for perfect competition.

91. For a monopolist, when the price effect is greater than the output effect, MR is negative.

102. For a monopolistically competitive firm, at the profit-maximizing quantity of output, price exceeds MC.

103. If the price is smaller than ATC, the firm will exit the market in the long run.

104. For a profit-maximizing monopolistically competitive firm, MR equals MC in both the short run and long run.

105. Only a monopoly and monopolistic competition charge a price that exceeds MC.

112. Perfect price discrimination eliminates DWL.

114. When a firm operates under conditions of monopoly, its price is constrained by demand.

121. If duopolists collude but then stop colluding, the price would fall, and quantity would rise.

129. In addition to the information in a normal form game, extensive form games include the order of play.