chapter 3 retest

Which of the following statements is not correct? A monopolist's demand curve is the same as the market demand curve for the product. A monopolist's ability to act as a price setter guarantees economic profits in the short run. In the long run, a monopolist will experience only positive or zero economic profits. The monopolist's marginal revenue is less than the price for any output greater than one.

A monopolist's ability to act as a price setter guarantees economic profits in the short run.

Which of the following is likely to be a monopolist? A. A drug firm that has a patent granting it the exclusive right to produce a drug. B. A large firm like GM, which has a substantial portion of the car market. C. The Boeing Company, which is one of the largest producers of airplanes. D. An Indonesian restaurant in a large city.

A. A drug firm that has a patent granting it the exclusive right to produce a drug.

When oligopoly firms collude to raise prices, A. Each firm benefits, but society loses . B. Both the colluding firms and society benefit. C. Everyone is eventually a loser. D. Only the price leader benefits while other firms and society lose.

A. Each firm benefits, but society loses

A monopolist has market power because it A. Faces a downward-sloping demand curve for its own output. B. Can raise price as much as it wishes and not lose any customers. C. Is a price taker. D. Is regulated by the government.

A. Faces a downward-sloping demand curve for its own output.

When new firms enter a monopolistically competitive industry, ceteris paribus, the A. Market price decreases. B. Market price increases. C. Market price remains unchanged. D. Change in market price cannot be determined based on the information given.

A. Market price decreases.

profit per unit is equal to A. Price divided by average total cost. B. Price minus average total cost. C. Total revenue minus total cost. D. Total revenue minus variable cost divided by quantity.

B. Price minus average total cost.

Refer to Figure 23.2 for a perfectly competitive firm. If this firm produces the level of output corresponding to point C in the short run, it will earn A. Zero profit. B. The maximum profit possible. C. A profit, although not the maximum profit possible. D. A loss.

B. The maximum profit possible.

Technological improvements cause A. New firms to enter but existing firms to continue producing their old output levels. B. Some firms to exit but the remaining firms to produce more output. C. Existing firms to produce more output. D. Existing firms to continue producing their old output levels but to lower the price of the products.

C. Existing firms to produce more output.

if new firms enter a monopolistically competitive market, the demand curves for the existing firms will shift to the A. Left and become more price-inelastic. B. Left, and there will be no change in price elasticity. C. Left and become more price-elastic. D. Right, and there will be no change in price elasticity.

C. Left and become more price-elastic

Which of the following characterizes monopolistic competition? A. Many interdependent firms sell a homogeneous product. B. A few firms produce a particular type of product. C. Many firms produce a particular type of product, but each maintains some independent control over its ownprice .D. A few firms produce all of the market supply of a good.

C. Many firms produce a particular type of product, but each maintains some

Market share can be computed by dividing A. The amount that a buyer buys by the total amount that is produced in the market. B. Profit by total cost. C. The amount sold by a single firm by the total sold in the market. D. Price by average total cost.

C. The amount sold by a single firm by the total sold in the market.

if oligopolists start cutting prices to capture a larger market share, the result will be A. Lower prices, decreased output, and larger profits. B. Higher prices, increased output, and larger profits. C. Lower prices, increased output, and larger profits. D. Lower prices, increased output, and smaller profits.

D. Lower prices, increased output, and smaller profits.

For a perfectly competitive market, long-run equilibrium is characterized by all of the following but which one? A. P = MR. B. P = MC. C. P = minimum ATC. D. P = maximum ATC

D. P = maximum ATC

1. Which of the following market structures is characterized by the absence of market power? A. Monopolistic competition. B. Oligopoly. C. Monopoly. D. Perfect competition

D. Perfect competition

An In the News article titled "Eliminating the Competition with Low Prices" indicates that, in order to protect their prices and profits, the major carriers operating at the Washington, DC, Dulles airport A. Used patents. B. Permanently reduced their prices. C. Acquired smaller carriers. D. Practiced predatory pricing

D. Practiced predatory pricing

Which of the following is true for a monopolist? Its marginal revenue curve is equal to its demand curve. It faces a perfectly elastic demand curve. It must lower its price on all of its units in order to sell any additional units. It faces many competitors.

It must lower its price on all of its units in order to sell any additional units.

A profit-maximizing producer seeks to Maximize profit per unit. Minimize marginal cost. Maximize total profit. Minimize average total costs

Maximize total profit.

Examples of barriers to entry include Patents. Price taking. Economic profits. Standardized products.

Patents.

To maximize profits, a competitive firm will seek to expand output until The elasticity of demand equals 1. Price equals marginal cost. Total revenue equals total cost. Price equals $0.

Price equals marginal cost.

To maximize profits, a competitive firm will seek to expand output until The elasticity of demand equals 1. Price equals marginal cost. Total revenue equals total cost. Price equals $0.

Price equals marginal cost.

Suppose this good could somehow be produced at no cost (that is, the total cost at any level of output was zero). This single-price monopoly firm would maximize profit by Producing Q2 and charging P2. Raising the price as high as possible until the quantity demanded began to decrease. Producing Q3 and charging P3. Producing an infinite amount and selling at the highest price possible. Profit is maximized at the output level where MR is equal to MC (which is zero), at output level Q2. At that point, the price consumers are willing and able to pay according to the demand curve is P2.

Producing Q2 and charging P2.

Refer to Figure 23.4. In the long run, which of the following would not be expected? A decrease in MR for the remaining firms. An increase in output for the remaining firms. An increase in total revenue for the remaining firms. A decrease in market supply.

a decrease in MR for the remaining firms.