34. Which of the following describes a situation in which every good or service is produced up to the point where the last unit provides a marginal

34. Which of the following describes a situation in which every good or service is produced up to the point where the last unit provides a marginal benefit to consumers equal to the marginal cost of producing it? (Points : 1) productive efficiency allocative efficiencymarginal efficiencyprofit maximization36. Assume that price is greater than average variable cost. If a perfectly competitive seller is producing at an output where price is $11 and the marginal cost is $14.54, then to maximize profits the firm should (Points : 1) continue producing at the current output.produce a larger level of output. produce a smaller level of output. not enough information given to answer the question.Market supply is found by (Points : 1) vertically summing the relevant part of each individual producer’s marginal cost curve.horizontally summing the relevant part of each individual producer’s marginal cost curve.vertically summing each individual producer’s average total cost curve. horizontally summing each individual producer’s average total cost curve. 42. In Walnut Creek, California, there are three very popular supermarkets: Safeway, Whole Foods and Lunardi’s. While Safeway remains open twenty-four hours a day; Whole Foods and Lunardi’s close at 9 pm. which of the following statements is true? (Points : 1) Safeway is a monopoly all day because it produces a service that has no close substitutes. Safeway has a monopoly at midnight but not during the day. Safeway can ignore the pricing decisions of the other two supermarkets. Safeway probably has a higher markup to compensate for its higher cost of production.44. Because a monopoly’s demand curve is the same as the market demand curve for its product, (Points : 1) the monopoly’s marginal revenue equals its price.the monopoly is a price taker.the monopoly must lower its price to sell more of its product. the monopoly’s average total cost always falls as it increases its output.45. Consumers benefit from monopolistic competition by (Points : 1) being able to choose from products more closely suited to their tastes.paying the lowest possible price for the product.paying the same price as everyone else. being able to purchase high quality products at low prices. 46. You are planning to open a new Italian restaurant in your hometown where there are three other Italian restaurants. You plan to distinguish your restaurant from your competitors by offering northern Italian cuisine and using locally grown organic produce. What is likely to happen in the restaurant market in your hometown after you open? (Points : 1) Your competitors are likely to change their menus to make their products more similar to yours. The demand curve facing each restaurant owner shifts to the right.The demand curve facing each restaurant owner becomes more elastic.While the demand curves facing your competitors becomes more elastic, your demand curve will be inelastic 48. Which of the following statements is true about advertising by a monopolistically competitive firm? (Points : 1) Since the monopolistic competitor, like the perfect competitor, makes zero profit in the long run, it is a waste of resources to advertise its products.Advertising could make the monopolistic competitor’s demand more inelastic but advertising has no effect on a perfect competitor’s demand.Advertising will be more beneficial if a monopolistic competitor colludes with other firms to advertise the products of the industry as a whole rather than an individual firm’s product.Monopolistically competitive firms tend to shun advertising because advertising draws attention to the variety of differentiated products available in the industry. 49. What type of demand curve does a monopolistically competitive firm face? (Points : 1) HorizontalVerticalDownward slopingUpward sloping50. Until the late 1990s, airlines would post proposed changes in ticket prices on computer reservations systems several days before the new ticket prices went into effect. Then the federal government took action to end the practice. Now airlines can only post prices on their reservations systems for tickets that are immediately available for sale. Source: Scott McCartney, “Airfare Wars Show Why Deals Arrive and Depart,” Wall Street Journal, March 19, 2002.Why would the federal government object to the old system of posting prices before they went into effect? (Points : 1) because it is a form of price discrimination in that consumers who need to travel immediately are subject to different fares compared to those who will travel at a later date when the price changes go into effect because it is essentially a form of price signaling; airlines try to determine the reaction of competitors before committing to a price changebecause it creates chaos in the air travel market: if an airline plans to cut fares, then consumers are likely to postpone purchases but if an airline plans to increase fares, then a shortage will result.because it makes it more difficult for airlines to agree on ticket price changes and likely to spark an airfare war51. Why does a prisoners’ dilemma lead to a noncooperative equilibrium? (Points : 1) because each player had agreed before the game started to minimize the harm that he can inflict on the other playersbecause each player is uncertain how other players will play the gamebecause players must choose from have a limited number of non-dominant strategiesbecause each rational player has a dominant strategy to play a certain way regardless of what other players do

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