BE 401, Chapter 8: Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

You are the manager of a firm that sells its product in a competitive market at a price of $60. Your firm's cost function is C = 50 + 3Q2. Your firm's maximum profits are:

250.

You are the manager of a monopoly that faces a demand curve described by P = 63 - 5Q. Your costs are C = 10 + 3Q. The revenue-maximizing output is:

6.3.

The source(s) of monopoly power for a monopoly may be:

economies of scale, economies of scope, patents. D. All of the statements associated with this question are correct.

In the long run, monopolistically competitive firms:

have excess capacity.

You are the manager of a monopoly that faces a demand curve described by P = 230 - 20Q. Your costs are C = 5 + 30Q. The profit-maximizing price is:

130.

You are the manager of a monopoly that faces a demand curve described by P = 63 - 5Q. Your costs are C = 10 + 3Q. Your firm's maximum profits are:

170.

Which of the following is an example of monopoly?

Local utility industry in a small town

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. What price should be charged in order to maximize revenues?

$39

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. What price should be charged to maximize profits?

$40.5

Suppose that initially the price is $50 in a perfectly competitive market. Firms are making zero economic profits. Then the market demand shrinks permanently, some firms leave the industry, and the industry returns to a long-run equilibrium. What will be the new equilibrium price, assuming cost conditions in the industry remain constant?

$50

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?

1

You are the manager of a firm that sells its product in a competitive market at a price of $60. Your firm's cost function is C = 50 + 3Q2. The profit-maximizing output for your firm is:

10.

You are the manager of a monopoly that faces a demand curve described by P = 63 - 5Q. Your costs are C = 10 + 3Q. The profit-maximizing price is:

33

You are the manager of a firm that sells its product in a competitive market at a price of $40. Your firm's cost function is C = 60 + 4Q2. Your firm's maximum profits are:

40

You are the manager of a monopoly that faces a demand curve described by P = 85 - 5Q. Your costs are C = 20 + 5Q. The profit-maximizing price is:

45.

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:

495.

You are the manager of a firm that sells its product in a competitive market at a price of $40. Your firm's cost function is C = 60 + 4Q2. The profit-maximizing output for your firm is:

5

You are the manager of a monopoly that faces a demand curve described by P = 230 - 20Q. Your costs are C = 5 + 30Q. The profit-maximizing output for your firm is:

5

You are the manager of a firm that sells its product in a competitive market at a price of $50. Your firm's cost function is C = 40 + 5Q2. The profit-maximizing output for your firm is:

5.

You are the manager of a firm that produces output in two plants. The demand for your firm's product is P = 120 - 6Q, where Q = Q1 + Q2. The marginal costs associated with producing in the two plants are MC1 = 2Q1 and MC2 = 4Q2. How much output should be produced in plant 1 in order to maximize profits?

6

You are the manager of a monopoly that faces a demand curve described by P = 63 - 5Q. Your costs are C = 10 + 3Q. The profit-maximizing output for your firm is:

6.

You are the manager of a firm that produces output in two plants. The demand for your firm's product is P = 120 - 6Q, where Q = Q1 + Q2. The marginal costs associated with producing in the two plants are MC1 = 2Q1 and MC2 = 4Q2. What price should be charged in order to maximize revenues?

60

You are the manager of a firm that produces output in two plants. The demand for your firm's product is P = 120 - 6Q, where Q = Q1 + Q2. The marginal costs associated with producing in the two plants are MC1 = 2Q1 and MC2 = 4Q2. What price should be charged to maximize profits?

66

You are the manager of a monopoly that faces a demand curve described by P = 85 - 5Q. Your costs are C = 20 + 5Q. The profit-maximizing output for your firm is:

8.

You are the manager of a firm that sells its product in a competitive market at a price of $50. Your firm's cost function is C = 40 + 5Q2. Your firm's maximum profits are:

85

Which of the following statements concerning monopoly is NOT true?

A monopoly is always undesirable

Which of the following is true under monopoly?

A. Profits are always positive. B. P > minimum of ATC. C. P = MR. D. None of the answers is correct.

The primary difference between monopolistic competition and perfect competition is:

A. the ease of entry and exit into the industry. B. the number of firms in the market. C. Both the ease of entry and exit into the industry and the number of firms in the market are correct. D. None of the answers is correct.

Firms have market power in:

D. monopolistically competitive markets and monopolistic markets.

Which of the following is true?

In the short run, a monopoly will shut down if P < AVC

Which of the following market structures would you expect to yield the greatest product variety?

Monopolistic competition

You are the manager of a monopoly that faces a demand curve described by P = 85 - 5Q. Your costs are C = 20 + 5Q. The revenue-maximizing output is:

None of the answers is correct.

In a competitive industry with identical firms, long-run equilibrium is characterized by:

P = AC, P = MC, MR = MC. D. All of the statements associated with this question are correct.

Which of the following is true under monopoly?

P > MC.

Which of the following features is common to both perfectly competitive markets and monopolistically competitive markets?

There is free entry and long-run profits are zero.

Which of the following industries is best characterized as monopolistically competitive?

Toothpaste

Economies of scale exist whenever:

average total costs decline as output increases.

There is no market supply curve in:

monopolistically competitive and monopolistic markets.

Differentiated goods are a feature of a:

monopolistically competitive market.

If a monopolistically competitive firm's marginal cost increases, then in order to maximize profits, the firm will:

reduce output and increase price.