MicroEconmics Final Test Bank.

(Exam Question) The total revenue of a purely competitive firm from 8 units of output is $48. Based on this information, total revenue for 9 units of output must be:

$54

(Exam Question) Refer to the above table. What will be the economic profit or loss for this monopolistically competitive firm at the profit-maximizing level of output?

+$20

(Exam Question) Which cannot be a characteristic of an oligopolistic industry?

A perfectly elastic firm demand curve

(Exam Question) Refer to the above graph for a profit-maximizing monopolist. The firm will set its price at:

A) 0J

Refer to the above graph. The profit-maximizing monopolist in it will set its output at

A) 0J

Refer to the above graph of D and MR for a monopolist. Which of the following statements is true?

A) Demand is elastic at a price of P1

Refer to the above graph showing the revenue curves for a monopolist. If it wants to sell quantity Q 1 , it must charge a price:

A) P1

Refer to the above graph. At which point is marginal product (MP) at its maximum?

A) Point A

Refer to the above graph of D and MR for a monopolist. Which of the following statements is true?

B) A price cut from P 1 to P 2 would lead to an increase in consumer spending on the product

(Exam Question) Refer to the graph above. What is the profit-maximizing level of output for this pure monopolist?

B) B

(Exam Question) Refer to the above graph. At which point is average product (AP) at its maximum?

B) Point B

Refer to the above graph. At which point does marginal product (MP) equal average product (AP) at a level of output

B) Point B

Refer to the above table and information. The average total cost of the firm when 3 units of output are being produced is:

C) $500

Refer to the above graph showing the revenue curves for a monopolist. The elastic portion of the demand curve ranges from quantity:

C) 0 to Q3

(Exam Question) Refer to the above graphs of D and MR for a monopolist. We know that to maximize profits the firm will set a price:

C) Above P2

(Exam Question) Refer to the above graph. The amount of profit is measured by the difference between:

C) D and E

Refer to the above graph showing the revenue curves for a monopolist. What price should be charged in order to maximize total revenue?

C) P3

(Exam Question) Refer to the above graph showing the revenue curves for a monopolist. Total revenue will be greatest at what output level?

C) Q3

Refer to the above graph. Which of the output levels is the profit-maximizing output level for this firm?

C) Q4

Refer to the above table and information. The marginal cost of the sixth unit of output is:

C)$1600

(Exam Question) Barriers to entry:

Can result from government regulation

(Exam Question) Normal profits are:

Considered an implicit cost by economists

(Exam Question) A firm sells a product in a purely competitive market. The marginal cost of the product at the current output of 1,000 units is $2.50. The minimum possible average variable cost is $2.00. The market price of the product is $2.50. To maximize profits or minimize losses, the firm should:

Continue producing 1,000 units

(Exam Question) Variable costs are

Costs that change with the level of production

Refer to the above graph showing the revenue curves for a monopolist. At what output level is demand inelastic?

D) Q4

(Exam Question) Refer to the above table and information. The average variable cost of the firm when 5 units of output are produced is:

D)$400

(Exam Question) If two inputs are complementary and employed in fixed proportions, an increase in the price of one input will:

Decrease the demand for the other input

(Exam Question) In an oligopolistic market there are:

Few Sellers

(Exam Question) Which is not true for a monopolistically competitive industry?

Firms operate at the lowest point of their ATC curves in the long run

(Exam Question) A firm operating in competitive input and output markets purchases new technology, which shifts the total product schedule from A to B, as shown in the data below. At the market wage rate of $30 and product price of $5 this firm will:

Increase the number of laborers hired from 4 to 5

(Exam Question) A purely competitive firm does not try to sell more of its product by lowering its price below the market price because

It can sell all it wants to at the market price

(Exam Question) A profit-maximizing firm should hire an input as long as the:

Marginal revenue product of the input is at least as much as the cost of hiring the input

(Exam Question) In which market model are the conditions of entry the most difficult?

Pure monopoly

(Exam Question) In which industry is monopolistic competition most likely to be found?

Retail Trade

(Exam Question) An increase in the demand for HDTV sets leads to an increase in demand for LCD and LED TV screens. This situation arises because:

The demand for LCD and LED screens is a derived demand

(Exam Question) A profit-maximizing firm will use additional units of resources for production until:

The marginal revenue product equals the marginal resource cost

(Exam Question) A firm with fixed costs produces at the lowest point on its U-shaped average variable cost curve. If it raises output by 1 unit, then average:

Total cost will decrease