MANECON 6

9,900

Cab Company has a taxi monopoly in Wen Kroy. The demand for taxi services in Wen Kroy is given by Q = 1,500 − P. Cab Company's costs are given by TC = 100 −Q2 + 5Q3. Its maximum monopoly profit is:

−1Php

Sea Food Restaurant is the only restaurant in Manila, Pampanga, that sells Korean food. The demand for Korean food is given by Q = 25 − P. The costs are given by TC = 25 + Q + 5Q2. Its maximum monopoly profit is:

marginal cost equals marginal revenue

So long as price exceeds average variable cost, in the model of monopolistic competition, a firm maximizes profits by producing where: the difference between marginal revenue and marginal cost is maximized marginal cost equals marginal revenue marginal revenue equals price the difference between price and marginal cost is maximized

marginal cost equals marginal revenue

So long as price exceeds average variable cost, in the model of monopoly, the firm maximizes profits by producing where: marginal revenue equals price the difference between price and marginal cost is maximized price equals marginal cost marginal cost equals marginal revenue

All of the statements associated with this question are correct.

The source(s) of monopoly power for a monopoly may be: economies of scale. economies of scope. patents. All of the statements associated with this question are correct.

467Php

so as to cover the costs of the potential firms My Big Banana (MBB) has a monopoly in Middletown on large banana splits. The demand for this delicacy is given by Q = 80 − P. MBB's costs are given by TC = 40 + 2Q + 2Q2. Its maximum monopoly profit is:

The statement is incorrect.

"Monopolistic competition is literally a kind of competition. Hence, there is no deadweight loss in a monopolistically competitive market." The statement is by definition correct but empirically incorrect. The statement is correct. The statement is incorrect. None of the preceding answers is correct.

input prices and technology do not change as firms enter or exit the industry

A constant-cost industry is one in which: input prices do not change over time technology does not change over time input prices and technology do not change as firms enter or exit the industry input prices and technology do not change over time

input prices fall or technology improves as firms enter the industry

A decreasing-cost industry is one in which: technology deteriorates over time input prices and technology do not change over time firms are in the growth phase of the industry's life cycle input prices fall or technology improves as firms enter the industry

6

A producer of fixed proportion goods X and Y (Q = QX = QY) has marginal costs and revenues of MC = 12Q, MRX = 54 − 6QX, MRY = 126 − 12QY. The producer should produce how many units?

the vertical sum of MRA and MRB

A producer of two fixed proportion outputs A and B, producing QA = QB with marginal revenues MRA and MRB, should equate marginal cost to: the minimum (MRA, MRB) MRA, which should equal MRB the horizontal sum of MRA and MRB the vertical sum of MRA and MRB

MRA < 0

A producer refuses to sell some of one joint product. MRA is the marginal revenue for a low-demand good. If the producer were to sell all its production, what would be true of MRA? MRA = demand for A MRA = 0 MRA = marginal cost of A MRA < 0

2 units

A representative firm with long-run total cost given by TC = 20 + 20q + 5q2 operates in a competitive industry where the short-run market demand and supply curves are given by QD = 1,400 − 40P and QS = − 400 + 20P. If it continues to operate in the long run, its profit-maximizing level of output is:

7 units

A representative firm with short-run total cost given by TC = 50 + 2q + 2q2 operates in a competitive industry where the short-run market demand and supply curves are given by QD = 1,410 − 40P and QS = −390 + 20P. Its short-run profit-maximizing level of output is:

marginal revenue is equal to marginal cost

At the profit-maximizing level of output for the monopolist: total revenue is equal to total cost total costs are minimized total revenue is maximized marginal revenue is equal to marginal cost

economies of scope

Chris raises cows and produces cheese and milk because he enjoys: economies of scale. economies of scope. cost complementarity. None of the preceding answers is correct.

6,750Php

Company Perfume has exclusive rights to sell its perfumes. The demand for its perfumes faced by Company Perfume is given by Q = 250 − 0.5P. Company Perfume's costs are given by TC = 50Q + 5.5Q2. Its maximum monopoly profit is:

total revenues for the store

Consider G's tires, who is employed by a national tire store and who earns a commission selling tires. He earns 25 percent of his gross sales revenue as a bonus. G's objective is to maximize: total profits for the store total revenues for the store marginal revenue from sales the difference between marginal revenues and marginal cost for the store

average total costs decline as output increases.

Economies of scale exist whenever: average total costs decline as output increases. average total costs increase as output increases. average total costs are stationary as output increases. average total costs increase as output increases and average total costs are stationary as output increases.

build brand loyalty

Firms advertise in order to: build brand loyalty appeal to the price-sensitive consumers increase the demand elasticities of their loyal customers shift the market supply curve to the left

appeal to the price-sensitive consumers

Firms offer promotions in order to: build brand loyalty appeal to the price-sensitive consumers increase the demand elasticities of their loyal customers shift the market supply curve to the left

product group

Firms that produce similar, slightly differentiated products are called a(n): oligopoly cabal cartel product group

A is a low-demand good

If John produces joint products A and B and refuses to sell all the A he produces, then: A is a high-demand good A is a low-demand good A is a high-cost good A is a low-cost good

is equal to the elasticity of its demand curve

If a firm in a monopolistically competitive industry is profit maximizing, it should choose its level of advertising such that the marginal revenue of an additional dollar of advertising: is exactly 1Php increases revenues by 1Php is equal to 1 plus the elasticity of its demand curve is equal to the elasticity of its demand curve

is equal to the elasticity of its demand curve

If a firm in a monopolistically competitive industry is profit maximizing, it should choose its level of advertising such that the marginal revenue of an additional dollar of advertising: is exactly 1Php increases revenues by 1Php is equal to 1 plus the elasticity of its demand curve is equal to the elasticity of its demand curve

60 firms

If a representative firm with long-run total cost given by TC = 2,000 + 20q + 5q2 operates in a competitive industry where the market demand is given by QD = 10,000 − 40P, in the long-run equilibrium there will be:

106 firms

If a representative firm with long-run total cost given by TC = 50 + 2q + 2q2 operates in a competitive industry where the market demand is given by QD = 1,410 − 40P, in the long-run equilibrium there will be:

530

If a representative firm with long-run total cost given by TC = 50 + 2q + 2q2 operates in a competitive industry where the market demand is given by QD = 1,410 − 40P, the long-run equilibrium output of the industry will be:

5 units

If a representative firm with long-run total cost given by TC = 50 + 2q + 2q2 operates in a competitive industry where the short-run market demand and supply curves are given by QD = 1,410 − 40P and QS = −390 + 20P, its long-run profit-maximizing level of output is:

1 unit

If a representative firm with total cost given by TC = 20 + 20q + 5q2 operates in a competitive industry where the short-run market demand and supply curves are given by QD = 1,400 − 40P and QS = − 400 + 20P, its short-run profit-maximizing level of output is:

there will be exit from the industry over time

If price is above the average variable cost but below the average total cost of a representative firm in a competitive industry: there will be entry to the industry over time there will be exit from the industry over time the firms in the industry are just earning a normal rate of return the firms in the industry are earning a supranormal rate of return

short-run price goes up, but long-run price remains constant

If the demand increases for the product of a constant-cost industry: long-run output goes up, but long-run price may go up or down short-run output goes up, but long-run output may go up or down short-run price goes up, but long-run price remains constant long-run output goes up, but short-run price remains constant

short-run price goes up, but long-run price falls

If the demand increases for the product of a decreasing-cost industry: short-run price goes up, but long-run price falls long-run output goes up, but long-run price may go up or down short-run output goes up, but long-run output may go up or down long-run output goes up, but short-run price remains constant

70Php

If the perfectly competitive market demand for cholesterol-free cookies shifts from QD,93 = 1,150 − 5P to QD,94 = 1,640 − 5P, and the market supply is given by QS = −100 + 2P, then the change in equilibrium price will be:

P = 30 and Q = 70

If the perfectly competitive market demand for gym shoes is given by QD = 100 − P and the market supply is given by QS 10 + 2P, then the equilibrium price and quantity will be: P = 50 and Q = 50 P = 40 and Q = 90 P = 40 and Q = 60 P = 30 and Q = 70

-140 units

If the perfectly competitive market demand for tanning beds shifts from QD2020 = 1,230 − 5P to QD2021 = 740 − 5P and the market supply is given by QS −100 + 2P, then the change in equilibrium quantity will be:

1Php

If the perfectly competitive market supply of pork bellies shifts from QS,2020 = 250 + 50P to QS,2021 = 400 + 40P, and the market demand is given by QD = −10,000 − 200P, then the change in equilibrium price will be:

All of the statements associated with this question are correct.

In a competitive industry with identical firms, long-run equilibrium is characterized by: P = AC. P = MC. MR = MC. All of the statements associated with this question are correct.

at the intersection of the market demand and supply curves

In a competitive market the equilibrium price is determined: at the intersection of the firm's demand and the market supply curves at the intersection of the market demand and supply curves at the intersection of the firm's demand and marginal cost curves so as to cover the costs of the potential firms

above the minimum of average total cost.

In the long run, monopolistically competitive firms charge prices: equal to marginal cost. below marginal cost. equal to the minimum of average total cost. above the minimum of average total cost.

differentiated product with some control over price

In the model of monopolistic competition, firms produce a: differentiated product with considerable control over price standardized product with no control over price differentiated product with no control over price differentiated product with some control over price

losses or profits, but there must be neither profits nor losses in long-run equilibrium

In the model of monopolistic competition, there can be short-run: losses or profits, but there must be profits in long-run equilibrium profits, but there must be losses in long-run equilibrium losses or profits, but there must be losses in long-run equilibrium losses or profits, but there must be neither profits nor losses in long-run equilibrium

differentiated product with considerable control over price

In the model of monopoly, firms produce a: standardized product with considerable control over price differentiated product with considerable control over price standardized product with no control over price differentiated product with no control over price

is one firm producing a highly differentiated product

In the model of monopoly, there: are a few firms producing undifferentiated products are a few firms producing differentiated products are many firms producing undifferentiated products is one firm producing a highly differentiated product

price equals marginal cost

In the model of perfect competition, firms maximize profits by producing where: the difference between marginal revenue and marginal cost is maximized marginal revenue equals price the difference between price and marginal cost is maximized price equals marginal cost

standardized product with no control over price

In the model of perfect competition, firms produce a: standardized product with considerable control over price differentiated product with considerable control over price standardized product with no control over price differentiated product with no control over price

low barriers to entry and no nonprice competition

In the model of perfect competition, there are: high barriers to entry and no nonprice competition very high barriers to entry and some advertising and product differentiation high barriers to entry and some advertising and product differentiation low barriers to entry and no nonprice competition

are many firms producing undifferentiated products

In the model of perfect competition, there: are many firms producing differentiated products are many firms producing undifferentiated products are a few firms producing undifferentiated products are a few firms producing differentiated products

P = 50 − 0.5Q.

Let the demand function for a product be Q = 100 − 2P. The inverse demand function of this demand function is: Q = 100 + 2P. P = 50 − 0.5Q. P = 50 + 0.5Q. None of the preceding answers is correct.

P = 10 − 0.2Q

Let the demand function for a product be Q = 50 − 5P. The inverse demand function of this demand function is: Q = 25 + P P = 10 − 0.2Q P = 10 + 0.2Q P = 50 − 0.2Q

67 percent

Olie's T-shirts has costs given by TC = 100 + 3Q, where Q is the number of shirts. If Joe charges 5Php each, the percentage markup for 100 shirts is:

perfectly competitive market.

There is a market supply curve in a: perfectly competitive market. monopolistically competitive market. monopolistic market. perfectly competitive market and monopolistically competitive market

Economies of scope and cost complementarity

What contributes to the existence of multiproduct firms? Economies of scale Economies of scope Cost complementarity Economies of scope and cost complementarity

must destroy some of the low-demand good

When a producer of joint goods refuses to sell all of one good, the producer: is not rational must destroy some of the high-demand good must destroy some of the low-demand good must give away some of the high-demand good

Cereal

Which of the following industries is best characterized as monopolistically competitive? Cereal Crude oil Wheat Local electricity service

10

You are a manager in a perfectly competitive market. The price is $14. Your total cost curve is C(Q) = 10 + 4Q + 0.5Q2. What level of output should you produce in the short run?

1

You are the manager of a firm that produces output in two plants. The demand for your firm's product is P = 78 − 15Q, where Q = Q1 + Q2. The marginal costs associated with producing in the two plants are MC1 = 3Q1 and MC2 = 2Q2. How much output should be produced in plant 1 in order to maximize profits?

495.

You are the manager of a monopoly that faces a demand curve described by P = 230 − 20Q. Your costs are C = 5 + 30Q. Your firm's maximum profits are: