Holt 7525-9 S15_IT

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3. On the graph below for a monopolistic competitor: (1) Draw the approximate marginal revenue curve. (2) Indicate the profit-maximizing quantity and price. Price Quantity 4. On the graph below, based on the kinked demand curve theory of oligopoly: (1) draw the approximate marginal revenue curve and indicate the profit-maximizing price and quantity (2) explain what will happen to price and quantity if the marginal cost curve shifts slightly to the right. Price Quantity D = P FOR REVIEW ONLY - NOT FOR DISTRIBUTION MC MC D Monopolistic Competition and Oligopoly 23 - 14
Answers for Chapter 23 Fill-in-the-blanks: 1. Monopolistic competition 5. Game theory 2. Product differentiation 6. Dominant strategy 3. Oligopoly 7. Nash equilibrium 4. cartel Multiple Choice: 1. c. 7. b. 13. c. 2. a. 8. a. 14. a. 3. d. 9. d. 15. c. 4. c. 10. d. 16. b. 5. d. 11. c. 17. d. 6. d. 12. d. 18. c. Problems: 1. Because there are only a few firms in an oligopoly market, each firm produces a significant quantity of output. Thus, each firm’s production decision affects market price, and the other firms in the industry. This is mutual interdependence. Each firm’s actions affect the other firms. 2. Even if a cartel is legal, it will prove difficult to maintain because of: (1) Noncartel competition (2) The tendency of cartel members to “cheat” on the agreement 3. Price Quantity FOR REVIEW ONLY - NOT FOR DISTRIBUTION MC D MR 23 - 15 Monopolistic Competition and Oligopoly
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PRINCIPLES OF ECONOMICS JEFF HOLT S
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Principles of Economics, 6th Editio
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16. Study Guide for Chapter 7 17. C
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11. Appendix: Book Review - “The
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20. Appendix: The NCAA Cartel 21. S
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Introduction: A Brief History of U.
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In the twentieth century, per capit
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Appendix: The 35 Largest National E
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Multiple Choice: ___ 1. The Jamesto
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2. Describe the economic cost of th
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Chapter 1 Scarcity and Choices The
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Example 5B: At the end of 1982, the
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Example 11: When Cindy quits her jo
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consequences may result in failure
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An upward sloping curve (as in Exam
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In making decisions, humans tend to
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5. ______________________ _________
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___ 13. If the value of one variabl
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Y Point X Y A 0 1 B 3 3 C 6 5 D 9 7
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Chapter 2 Trade and Economic System
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Example 4B: The following quantitie
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1. An increase in the quantity of r
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3. For whom to produce? This is det
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The graph below illustrates the shi
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The two primary economic systems ar
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___ 12. The capitalist vision sees
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___ 25. According to the book “Ca
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Chapter 3 Demand, Supply, and Equil
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. For inferior goods, income and de
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The same information can be placed
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Not only does a free market elimina
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$7 - 6 - 5 - S 3 S1 S 2 Price 4 - 3
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Example 17: The graph below illustr
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Questions for Chapter 3 Fill-in-the
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___ 12. Assuming a market originall
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$8 - 7 - 6 - 5 - Price 4 - 3 - 2 -
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Chapter 4 Inflation and Unemploymen
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Computing the Rate of Inflation The
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Full Employment Though unemployment
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3. Cyclical unemployment - due to d
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During the Great Depression, the ec
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Appendix: Think Like an Economist -
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Answer questions 8. and 9. based on
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___ 25. The extension of unemployme
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Chapter 5 Measuring Total Output: G
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5. Leisure. Leisure time is by defi
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The U.S. is a high per capita GDP c
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Example 17: In “An International
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The simple circular flow diagram be
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___ 3. Which of the following would
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2. Explain what nonproduction trans
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Chapter 6 The Aggregate Market The
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Example 2C: Assume the same facts a
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Example 5B: The price of crude oil
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Price Level Real GDP SRAS AD 2 AD 1
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Appendix: Why the Aggregate Demand
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___ 3. DEF Company can invest in ne
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2. List and explain the two factors
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Chapter 7 Classical Economic Theory
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Notice that the investment demand c
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Long-Run Equilibrium If Real GDP is
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Example 6B: When the economy is in
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Laissez-faire If the economy is sel
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___ 5. According to Say’s Law: a.
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3. On the graph below, draw an aggr
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Chapter 8 Keynesian Economic Theory
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Example 2B: The graph below illustr
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Example 5: Assume that the table be
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Notice on the graph on the previous
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According to Keynesian theory, a ch
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“The General Theory” also inclu
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___ 8. If the consumption function
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3. If the MPC is .667, and investme
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Chapter 9 Fiscal Policy The basic e
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Keynesian Fiscal Policy Theory and
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Example 5A: The federal government
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The Laffer Curve What will happen t
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Appendix: The Importance of Incenti
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___ 4. A decrease in government exp
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2. Explain what automatic stabilize
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Chapter 10 Money, Money Creation, a
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Example 4B: The castaways on Gillig
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Looking at the balance sheet below,
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Demand-side One-shot Inflation Exam
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4. Inflation increases uncertainty
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life; it came into existence not by
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calculated by using the potential d
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___ 12. If the required-reserve rat
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4. Referring to the balance sheet f
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Chapter 11 The Federal Reserve Syst
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5. After Bank X sells the $300,000
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Low Mortgage Interest Rates Mortgag
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Relaxed Standards for Mortgage Loan
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The Bursting of the Housing Bubble
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On February 17, 2009, the federal g
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Fed policies caused short-term inte
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___ 10. The Fed’s most important
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___ 25. In response to the recessio
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Chapter 12 Monetary Policy The basi
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2. A change in aggregate demand (AD
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Monetarist Transmission Mechanism C
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3. Borrowers do not have to seek ou
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Appendix: Book Review - “The Age
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Questions for Chapter 12 Fill-in-th
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___ 16. The primary source of incom
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7. According to Alan Greenspan, wha
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Chapter 13 Taxes, Deficits, and the
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Example 5: In 2015, Taxpayer A had
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of $5 and a quantity of 10 units. T
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The complexity of the tax law also
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the current government spending and
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cut of 1964. The top rate was lower
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___ 6. Federal excise taxes: a. are
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3. How would eliminating the loopho
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Chapter 14 Economic Growth The basi
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2. Labor. Labor can contribute to e
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estricting international trade (e.g
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An improvement in technology (e.g.
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The table below shows the economic
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will increase both Real GDP and per
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___ 8. Which of the following is co
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___ 26. The opinion that economic g
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Chapter 15 Less Developed Countries
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Example 8: Countries A, B, C, and D
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Obstacles to Economic Development f
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c. Restrictions on international tr
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Appendix: Book Review - “The Powe
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Example 25: In Brazil, about half t
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Study Guide for Chapter 15 Chapter
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___ 13. Among the counterproductive
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4. List four ways that governments
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Chapter 16 International Trade The
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Other Benefits of Free Internationa
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Example 6: The graph below illustra
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competitive disadvantage. But dumpi
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is only 25% as productive as before
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Smith was skeptical of government a
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___ 4. For Country X, what is the o
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___ 18. Frédéric Bastiat’s “P
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4. On the graph below: (1) What is
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Chapter 17 Elasticity We are often
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Example 4A: What is price elasticit
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Example 5A: Gertie’s Gas and Go i
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Example 10A: When the price of Good
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Example 13B: On the graph below, su
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$7 - 6 - 5 - Price 4 - 3 - 2 - 1 -
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In the long run, would the deadweig
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___ 7. The factors that determine w
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3. a. Which price (or prices) from
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Chapter 18 Utility The basic econom
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Nonetheless, society generally assu
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Example 9: Capital City operates a
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Marginal rate of substitution - the
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The diamond-water paradox is the ob
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Complete the table below to answer
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4. The graph below shows indifferen
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Chapter 19 The Firm The basic econo
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than contributing to team productio
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1. Difficulty in raising large amou
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Corporations also use self-financin
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Example 24: A blacksmith who produc
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For financing needs, proprietorship
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___ 13. Corporations: a. are comple
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5. List two things that the absence
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Chapter 20 Production and Costs The
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In Example 5B, Birdwell finds that
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variable cost initially decreases,
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Quantity TC MC AFC AVC ATC 0 240 X
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If the scale of operation is increa
Page 339 and 340: average total cost. Average fixed c
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Page 345 and 346: Chapter 21 Perfect Competition The
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Page 349 and 350: Example 6C: This example builds on
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Page 353 and 354: Appendix: Perfect Competition in th
Page 355 and 356: Multiple Choice: ___ 1. A perfect c
Page 357 and 358: ___ 17. Perfect competition: a. req
Page 359 and 360: Answers for Chapter 21 Fill-in-the-
Page 361 and 362: Chapter 22 Monopoly Of the four mar
Page 363 and 364: 3. Exclusive ownership of an essent
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Page 369 and 370: 2. Negotiating, beginning at a high
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Page 375 and 376: Price Quantity 3. List some of the
Page 377 and 378: Chapter 23 Monopolistic Competition
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Page 381 and 382: Example 7A: The graph below represe
Page 383 and 384: Example 9: The Organization of the
Page 385 and 386: Example 12 illustrates the dilemma
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Page 389: ___ 14. Game theory: a. is a method
Page 393 and 394: Chapter 24 Factor Markets The basic
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Page 397 and 398: Since producers will attempt to equ
Page 399 and 400: 2. Differences in nonmoney aspects
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Page 403 and 404: ___ 3. To maximize profits, a produ
Page 405 and 406: ___ 19. According to the book, “M
Page 407 and 408: Multiple Choice: 1. a. 8. c. 15. d.
Page 409 and 410: Chapter 25 Labor Unions The primary
Page 411 and 412: The elasticity of demand for union
Page 413 and 414: Example 4A: Assume that the graph b
Page 415 and 416: Notice from the graph in Example 6
Page 417 and 418: Wage Factory A Quantity of Labor S
Page 419 and 420: As a cartel, a labor union faces a
Page 421 and 422: ___ 10. For a monopsony: a. there i
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Page 425 and 426: Chapter 26 Interest, Present Value,
Page 427 and 428: An increase in expected rates of re
Page 429 and 430: An asset is valuable because we exp
Page 431 and 432: Example 13B: General Ordnance prove
Page 433 and 434: Appendix: Present Value Table One f
Page 435 and 436: ___ 4. An increase in expected rate
Page 437 and 438: Problems: 1. List and explain the t
Page 439 and 440: Chapter 27 Market Failure The basic
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External Benefit If a market genera
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Example 2: To encourage the consump
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$100 - 90 - 80 - MSC 70 - $ 60 - 50
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A common good is nonexcludable. Non
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___ 5. What government policy would
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4. Based on the information on the
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Chapter 28 Public Choice and Govern
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Candidates and the Median Voter Mod
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Example 8: According to State and F
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Example 10: When Elvis Presley was
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4. Pessimistic bias. This is the te
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___ 5. An elected official will: a.
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2. If a certain policy will yield s
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Chapter 29 Government Regulation of
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underproduction is the amount that
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micromanagement results in business
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market. They may agree with their c
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Questions for Chapter 29 Fill-in-th
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___ 10. The public interest theory
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4. List the four types of costs imp
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Chapter 30 Agriculture and Health C
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weather may cause bumper crops. Bad
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Security and Rural Investment Act o
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Example 12: From 1960 to 2013, the
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1. NHI would provide universal heal
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d. Insurance providers are not allo
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Answer questions 7. through 10. by
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___ 21. If there were no individual
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Chapter 31 Income Distribution and
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Income is more equally distributed
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over a typical career is the accumu
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Ideal Income Redistribution The ide
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Poverty - a family whose income fal
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Appendix: Income Inequality around
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How is this story an analogy for th
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___ 2. In 2013, the Lowest Income 6
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Problems: 1. Explain the two primar
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Absolute advantage - when one natio
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Fiat money - money by government de
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Nonrivalrous good - a good for whic
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Absolute advantage, 16-9 Absolute e
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“Company town”, 25-6 Comparativ
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Eli Lilly and Company, 22-1 Emergen
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Houston, Texas, 15-10 Human capital
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Market, 3-1, 3-8-9 Market basket, 4
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Political bias, 9-4, 12-7 Political
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Short run production, 20-2-3 Short-
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Upturns, 9-4 USDA, 27-9, 30-1-2, 30
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Holt 7525-9 S15_IT

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