Chapter 10
1.) Determine whether each of the following is characteristic of monopolistic competition, or oligopoly. (12 points)
a.) A large number of sellers
.) Zero economic products in the long run
c.) High ba
iers to entry.
d.) Interdependence among firms
e.) A few suppliers
f.) Extensive economies of scale
2.) The figure above shows the demand, marginal revenue, and cost curves for a monopolistic competitor. The monopolistic competitor's profit-maximizing level of output is: _____ and profit maximizing price is ___. (4 points)
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3.) What is the shut- down price for a firm in a monopolistic competition industry in the short-run? (2 points)
4.) Give three examples of oligopolies. (3 points)
Chapter 13 – Questions 2, 3 and 4 are from the supplement Time Value of Money Power Point
1.) Provide four factors that contribute to differences in interest rates. (4)
2.) If you deposit $10,000 in a bank account that pays 10% interest annually, how much will be in your account after 5 years? (5 points)
3.) What is the present value of a security that will pay $5,000 in 20 years if it 7% discount rate - interest? ( 5 points)
4.) Your parents will retire in 18 years. They cu
ently have $250,000 and they think they will need $1 million to retire. What annual interest rate must they earn to reach their goal assuming they don’t save any additional funds? (5 points)
5.) Explain why the supply of loanable funds is upward sloping. ( 2 points)
6.) Explain why the demand for loanable funds is downward sloping. ( 2 points)
7.) What is the difference between a stock and a bond? (2 points)
8.) The annual earnings of a rental apartment are expected to be $12,000 and the cost of the apartment is $175,000. What is the expected rate of return on this investment? Would you invest in this apartment if the interest rate on the loan to buy the apartment was 8%? Why or why not? (4 points)