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The linear breakeven model


  1. Which of the following is not an assumption of the linear breakeven model:
  2. Theoretically, in a long-run cost function:
  3. George Webb Restaurant collects on the average $5 per customer at its breakfast & lunch diner. Its variable cost per customer averages $3, and its annual fixed cost is $40,000.  If George Webb wants to make a profit of $20,000 per year at the diner, it will have to serve__________ customers per year.
  4. In a study of banking by asset size over time, we can find which asset sizes are tending to become more prominent.  The size that is becoming more predominant is presumed to be least cost. This is called
  5. In the linear breakeven model, the difference between selling price per unit and variable cost per unit is referred to as:
  6. In the linear breakeven model, the breakeven sales volume (in dollars) can be found by multiplying the breakeven sales volume (in units) by:
  7. Barometric price leadership exists when
  8. If a cartel seeks to maximize profits, the market share (or quota) for each firm should be set at a level such that the ____ of all firms is identical.
  9. “Conscious parallelism of action” among oligopolistic firms is an example of ____
  10. A(n) ____ is characterized by a relatively small number of firms producing a product
  11. Which of the following is an example of an oligopolistic market structure?
  12. In a kinked demand market, whenever one firm decides to lower its price
  13. Buyers anticipate that the temporary warehouse seller of unbranded computer equipment will
  14. Under asymmetric information,
  15. All of the following are mechanisms which reduce the adverse selection problem except ____.
  16. The price for used cars is well below the price of new cars of the same general quality.  This is an example of:
  17. A firm in pure competition would shut down when
  18. If price exceeds average costs under pure competition, ____ firms will enter the industry, supply will ____, and price will be driven ____.
  19. A “search good” is:
  20. In natural monopoly, AC continuously declines due to economies in distribution or in production, which tends to found in industries which face increasing returns to scale.  If price were set equal to marginal cost, then:
  21. When the cross elasticity of demand between one product and all other products is low, one is generally referring to a(n) ____ situation.
  22. ____ as practiced by public utilities is designed to encourage greater usage and therefore spread the fixed costs of the utility’s plant over a larger number of units of output.
  23. In the electric power industry, residential customers have relatively ____ demand for electricity compared with large industrial users.  But contrary to price discrimination, large industrial users generally are charged ____ rates.
  24. Declining cost industries
  25. The demand curve facing the firm in ____ is the same as the industry demand curve.



  1. A dominant strategy differs from a Nash equilibrium strategy in that
  2. A key to analyzing subgame perfect equilibrium strategy in sequential games is
  3. To trust a potential cooperator until the first defection and then never cooperate thereafter is
  4. Consider the game known as the Prisoner’s Dilemma.  What’s the dilemma?
  5. Cooperation in repeated prisoner’s dilemma situations seems to be enhanced by all of the following except
  6. ___ is the price at which an intermediate good or service is transferred from the selling to the buying division within the same firm.
  7. To maximize profits, a monopolist that engages in price discrimination must allocate output in such a way as to make identical the ____ in all markets.
  8. The segmenting of customers into several small groups such as household, institutional, commercial, and industrial users, and establishing a different rate schedule for each group is known as:
  9. Vacation tours to Europe invariably package visits to disparate regions:  cities, mountains, and the seaside.  Bundling, a type of second degree price discrimination, is most profitable when:
  10. Third-degree price discrimination exists whenever:
  11. Which of the following is not among the functions of contract?
  12. Vertical integration may be motivated by all of the following except:
  13. Governance mechanisms are designed
  14. Which of the following are not approaches to resolving the principal-agent problem?
  15. To accomplish its purpose a linear profit-sharing contract must
  16. ____ occurs whenever a third party receives or bears costs arising from an economic transaction in which the individual (or group) is not a direct participant.
  17. The sentiment for increased deregulation in the late 1970’s and early 1980’s has been felt most significantly in the price regulation of
  18. ____ yields the same results as the theory of perfect competition, but requires substantially fewer assumptions than the perfectly competitive model.
  19. The lower the barriers to entry and exit, the more nearly a market structure fits the ____ market model.
  20. The Herfindahl-Hirschman index (also shortened to just the Herfindahl index) is a measure of ____.
  21. Any current outlay that is expected to yield a flow of benefits beyond one year in the future is:
  22. Which of the following would not be classified as a capital expenditure for decision-making purposes?
  23. The social rate of discount is best approximated by:
  24. If the acceptance of Project A makes it impossible to accept Project B, these projects are:
    1. The ____ method assumes that the cash flows over the life of the project are reinvested at the



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