micro exam four
39) The firm in the figure above is ________ that is equal to ________. 39) A) making an economic profit; $5.14 × 7 B) making an economic profit; $3.00 × 7 C) making an economic profit; ($5.14 - $3.00) × 7 D) incurring an economic loss; ($5.14 - $3.00) × 7 E) incurring an economic loss; $5.14 × 7
D
40) The firm in the figure above has a total cost equal to 40) A) ($8.00 - $5.10) × 10. B) ($5.10 - $8.00) × 10. C) $8.00 × 10. D) $5.10 × 10. E) None of the above answers is correct because more information is needed.
D
5) In which of the following market types do all firms sell products so identical that buyers do not care from which firm they buy? 5) A) perfect competition B) monopoly C) monopolistic competition D) oligopoly E) perfect competition and monopolistic competition
A
75) The table above gives the demand for a monopolist's output. What is the marginal revenue when output is increased from 5 to 6 units? 75) A) -$2 B) $3 C) $18 D) $4
A
9) A firm that is a price taker faces 9) A) a perfectly elastic demand curve. B) an elastic supply curve. C) a perfectly inelastic demand curve. D) an inelastic supply curve. E) an elastic but not perfectly elastic demand curve.
A
24) Use the figure above to answer this question. Figure ________ shows a short-run equilibrium in good times because the firm makes a(n) ________. 24) A) A; normal profit B) A; economic profit C) C; normal profit D) B; economic loss E) B; normal profit
B
35) In the long run, a firm in a perfectly competitive market will 35) A) remove all competitors and become a monopoly. B) make zero economic profit, so that its owners earn a normal profit. C) make zero normal profit but its owners will make an economic profit. D) remove all competitors and become a monopolistically competitive firm. E) incur an economic normal loss but not earn a positive economic profit.
B
42) Based on the figure above, what is the price of a can? 42) A) $0 B) $3.00 per can C) $5.15 per can D) None of the above prices is correct. E) More information is needed to determine the price of a can.
B
47) The above figure shows three possible average total cost curves. If all firms in a perfectly competitive industry each have an average total cost curve identical to ATC2, each produces 40 units, and the market price of the good is $20 per unit, then 47) A) the firms incur an economic loss of $12 per unit. B) firms will enter the industry and the number of firms increases. C) the firms' ATC curves will eventually shift to become the same as ATC1. D) firms will exit the industry and the number of firms decreases. E) Both answers A and D are correct.
B
49) If firms in a perfectly competitive industry are earning an economic profit and new firms enter the industry, then 49) A) the new firms must incur an economic loss. B) the existing firms' economic profit decreases. C) consumer surplus decreases. D) there must be external benefits to consumption of the good. E) Both answers A and B are correct.
B
55) Mylan Pharmaceuticals holds a patent on the EpiPen - designed to inject epinephrine into shock victims. In 2016, Mylan received criticism for charging $600 for this life-saving drug. The market for EpiPens is considered ________ which means that the price of an Epipen ________ its marginal cost. 55) A) an oligopoly; equals B) a monopoly; is greater than C) monopolistic competition; is greater than D) perfect competition; equals E) a monopoly; equals
B
59) Which of the following is a legal barrier to entry? i. public franchise ii. government license iii. patent 59) A) ii and iii B) i, ii, and iii C) iii only D) i and ii E) i and iii
B
63) A natural monopoly is one that arises from 63) A) patent law. B) economies of scale. C) ownership of a natural resource. D) a firm buying all of a natural resource. E) copyright law.
B
65) If a monopoly wants to sell a greater quantity of output, it must 65) A) change its fixed costs. B) lower its price. C) tell consumers to buy more because it's a monopolist. D) raise its marginal cost. E) raise its price.
B
71) A single-price monopoly can sell 10 units of its product at a price of $45 each but to sell 11 units, the monopoly must cut the price to $44. What is the marginal revenue of the extra unit sold? 71) A) -$1 B) $34 C) $44 D) $484 E) $450
B
83) Which of the following is ALWAYS true when a single-price monopolist maximizes its profit? 83) A) MC=ATC B) MR=MC C) P=MR D) P > ATC E) P=MC
B
89) Suppose the grocery store market in Kansas City is perfectly competitive. Then one store buys all the others and becomes a single-price monopoly. The figure above shows the relevant demand and cost curves. When the market is perfectly competitive, the price of a pound of steak is 89) A) $20. B) $8. C) $12. D) $4. E) $2.
B
10) If a firm in a perfectly competitive market faces an equilibrium price of $5, its marginal revenue 10) A) will be greater than $5. B) maybe either greater or less than $5. C) will also be $5. D) will be less than $5. E) will be any amount but $5.
C
11) Because perfectly competitive firms are price takers, each firm faces a demand that is 11) A) highly inelastic but never is it perfectly inelastic. B) unit elastic. C) perfectly elastic. D) highly elastic but never is it perfectly elastic. E) perfectly inelastic.
C
23) If a perfectly competitive firm is maximizing its profit and is making an economic profit, which of the following is correct? i. Price equals marginal revenue. ii. Marginal revenue equals marginal cost. iii. Price is greater than average total cost. 23) A) ii and iii only B) i only C) i, ii, and iii D) i and iii only E) i and ii only
C
37) Based on the figure above, if the firm produces 7 cans per day, the firm ________ maximizing its profit and is ________. 37) A) is not; making a normal profit B) is not; incurring an economic loss C) is; incurring an economic loss D) is; making a normal profit E) is; making an economic profit
C
4) The ________ market is an example of ________ type of market. 4) A) car insurance; an oligopoly B) airplane manufacturing; a monopolistically competitive C) corn; a perfectly competitive D) mattress; a monopoly E) cell phone; a perfectly competitive
C
74) The table above gives the demand for a monopolist's output. What is the total revenue in when 3 units of output are produced? 74) A) $20 B) $6 C) $18 D) $21
C
78) If Microsoft is a monopoly and currently charges prices where its demand is elastic, then Microsoft's marginal revenue is 78) A) negative. B) undefined. C) positive. D) zero. E) minimized.
C
99) A monopoly definitely incurs an economic loss if 99) A) it produces where its marginal revenue equals its marginal cost. B) it cannot perfectly price discriminate. C) its average total cost is greater than price. D) it price discriminates. E) The statement errs because a monopoly cannot incur an economic loss.
C
18) If the market price is $50 per unit for a good produced in a perfectly competitive market and the firm's average total cost is $52, then the firm 18) A) incurs an economic loss of $2 per unit. B) makes an economic profit of $2 per unit. C) makes zero economic profit. D) incurs a total economic loss of $52. E) More information is needed to determine the firm's economic profit or loss per unit.
A
32) The rutabaga market is perfectly competitive. Research is published claiming that eating rutabagas leads to gaining weight and so the demand for rutabagas permanently decreases. The permanent decrease in demand results in a 32) A) lower price, economic losses by rutabaga farmers, and exit from the market. B) lower price, economic profits for rutabaga farmers, and entry into the market. C) lower price, economic losses by rutabaga farmers, and entry into the market. D) higher price, economic profits for rutabaga farmers, and entry into the market. E) higher price, economic losses by rutabaga farmers, and exit from the market.
A
100) A difference between a perfectly competitive industry and a monopoly is that 100) A) only monopolies have an incentive to maximize profit. B) a barrier to entry protects perfectly competitive firms in the short run and protects a monopoly in the long run. C) perfectly competitive firms can have a public franchise. D) in the long run, firms in a perfectly competitive industry make zero economic profit and a monopoly can make an economic profit. E) a firm in a perfectly competitive industry can perfectly price discriminate but a monopoly cannot.
D
12) A firm's marginal revenue is 12) A) total revenue minus total cost. B) the change in total revenue minus the change in total cost. C) less than the market price for a perfectly competitive firm. D) the change in total revenue that results from a one-unit increase in the quantity sold. E) the change in total revenue that results from an increase in the demand for the good or service.
D
66) For a monopoly, marginal revenue is equal to 66) A) the price of the product. B) the amount people buy at a given price. C) the price multiplied by the quantity sold. D) the change in total revenue brought about by a one-unit increase in quantity sold. E) the amount people buy between two prices.
D
68) For a single-price monopolist, why is marginal revenue less than price? 68) A) Because the firm is a price taker. B) Demand is inelastic when another unit is sold. C) Demand is elastic when another unit is sold. D) To sell another unit, the price must be lowered. E) The question is false because marginal revenue is always equal to price.
D
13) A perfectly competitive firm will maximize profit when the quantity produced is such that the 13) A) firm's marginal revenue is equal to its marginal cost. B) firm's marginal revenue is equal to the price. C) price exceeds the firm's marginal cost by as much as possible. D) firm's total revenue is equal to total cost. E) firm's marginal revenue exceeds its marginal cost by the maximum amount possible.
A
29) The figure shows a perfectly competitive market that was in a long-run equilibrium on demand curve D0. Due to a permanent change in demand to D1, existing firms will begin to make an economic ________ which will result in ________ the market. 29) A) profit; new firms entering B) loss; all remaining firms exiting C) loss; new firms entering D) loss; some existing firms exiting E) profit; existing firms exiting
A
34) If firms in a perfectly competitive market are incurring economic losses, then as time passes firms ________ and the market ________. 34) A) exit; supply curve shifts leftward B) enter; demand curve shifts leftward C) exit; demand curve shifts leftward D) exit; supply curve shifts rightward E) enter; supply curve shifts rightward
A
45) Consider a short-run equilibrium in a perfectly competitive market. Suppose that the firms' average total cost and marginal cost schedules differ. In the short run, 45) A) some firms might incur an economic loss, but still produce output. B) all firms produce equal amounts of output. C) all firms in the market must be able to make either positive or zero economic profit. D) all firms in the market must be able to make an economic profit. E) some firms might make an economic profit and, as a result, shut down.
A
48) The above figure shows three possible average total cost curves. If all firms in a perfectly competitive industry each have an average total cost curve identical to ATC1, each produce 30 units, and the market price of the good is $16 per unit, then the firms 48) A) make zero economic profit and firms neither enter nor exit the industry. B) make an economic profit and new firms enter the industry. C) make zero economic profit and so some firms exit the industry. D) incur an economic loss and so some firms exit the industry. E) incur an economic loss and so new firms enter the industry.
A
52) We define a monopoly as a market with 52) A) one supplier with barriers to entry. B) one supplier and no barriers to entry. C) a few suppliers and barriers to entry. D) many suppliers with no barriers to entry. E) many suppliers with barriers to entry.
A
53) Which of the following firms is most likely to be a monopoly? 53) A) local distributor of natural gas B) clothing store C) local book store D) local bank E) local restaurant
A
6) One requirement for an industry to be perfectly competitive is that in the industry there 6) A) are many firms for whom the efficient scale of production is small. B) are a few firms who control the market. C) is one firm that sells a product with no close substitutes. D) are many firms selling different products. E) is a barrier to entry that makes the entry of new firms difficult.
A
60) A monopoly will arise if 60) A) the town council passes a law granting Nick's Pizza the exclusive right to operate in that town. B) two out of three of a town's pizzerias go out of business and only one new pizzeria opens. C) several big pizza chains force several small pizzerias out of business. D) Papa Joe's Pizza becomes the largest pizza producer in town and Nick's Pizza stays small in size. E) people decide they like pizza more than before so some pizzeria's gain new customers.
A
61) A single-price monopoly 61) A) sets a single price for all consumers. B) asks each consumer what single price they would be willing to pay. C) sets a single, different price for each of two different groups. D) sells each unit of its output for the single, highest price that the buyer of that unit is willing to pay. E) sets a single, different price for each consumer.
A
67) For a single-price monopoly, price is 67) A) greater than marginal revenue. B) equal to marginal revenue. C) less than marginal revenue because the firm must lower its price in order to sell another unit of output. D) less than marginal revenue because the firm cannot increase its total revenue when the demand curve is downward sloping. E) equal to zero because the firm is not a price taker.
A
76) The table above gives the demand for a monopolist's output. What is the marginal revenue when output is increased from 2 to 3 units? 76) A) $4 B) $6 C) $18 D) $7
A
79) When marginal revenue is positive, total revenue ________ when output increases and demand is ________. 79) A) increases; elastic B) decreases; inelastic C) decreases; elastic D) does not change; unit elastic E) increases; inelastic
A
8) A perfectly competitive firm can 8) A) sell all of its output at the prevailing market price. B) sell additional output only by lowering its price. C) set a higher price to customers who are willing to pay more. D) raise its price in order to increase its total revenue. E) usually not sell all the output it produces, but still "over-produces" because there are some periods when it can sell the extra output at very profitable prices.
A
84) ´ Suppose the Busy Bee Cafe is the monopoly producer of hamburgers in Nebraska City, NE. The above figure represents the demand, marginal revenue, and marginal cost curves for this establishment. What price will the Busy Bee charge to maximize its profit? 84) A) $3.00 for a hamburger B) $2.00 for a hamburger C) $5.00 for a hamburger D) $4.00 for a hamburger E) $1.00 for a hamburger
A
2) A perfectly competitive firm 2) A) has a perfectly inelastic demand. B) has a perfectly elastic supply. C) sells a product that has perfect substitutes. D) Answers A and B are correct. E) Answers A and C are correct.
C
92) Use the figure above to answer this question. If a monopoly maximized profit, 92) A) 800 units will be produced and a deadweight loss equal to area ABC will occur. B) 1,000 units will be produced and a deadweight loss equal to area ABC will occur. C) 1,000 units will be produced and there is no deadweight loss. D) 1,000 units will be produced and a deadweight loss equal to area FBGA occurs. E) 800 units will be produced and a deadweight loss equal to area EFB will occur.
A
94) Using the figure above, which of the following statements is (are) correct? i. MR = MC when 3 haircuts are produced. ii. If the firm charges each customer the same price for a haircut, the price of a haircut is $42. iii. The firm's MC equals $30. 94) A) i only B) ii only C) i and ii D) i and iii E) None of the above is correct.
A
97) A monopoly can arise when 97) A) there are barriers to entry and no close substitutes for the good being produced. B) a firm must set MR equal to MC in order to maximize its profit. C) firms engage in rent seeking. D) there are diseconomies of scale. E) a firm cannot price discriminate.
A
98) A monopoly can arise when 98) A) there are barriers to entry and no close substitutes for the good being produced. B) firms engage in rent seeking. C) there are diseconomies of scale. D) a firm must set MR equal to MC in order to maximize its profit. E) a firm cannot price discriminate.
A
1) What is the difference between perfect competition and monopolistic competition? 1) A) Perfect competition has barriers to entry while monopolistic competition does not. B) In perfect competition, firms produce identical goods, while in monopolistic competition, firms produce slightly different goods. C) In monopolistic competition, firms produce identical goods, while in perfect competition, firms produce slightly different goods. D) Perfect competition has a large number of small firms while monopolistic competition does not. E) Perfect competition has no barriers to entry, while monopolistic competition does.
B
16) For a perfectly competitive corn grower in Nebraska, the marginal revenue curve is 16) A) upward sloping. B) the same as its demand curve. C) downward sloping. D) U-shaped. E) vertical at the profit maximizing quantity of production.
B
19) Suppose that marginal revenue for a perfectly competitive firm is $20 . When the firm produces 10 units, its marginal cost is $20, its average total cost is $22, and its average variable cost is $17. Then to maximize its profit in the short run, the firm 19) A) must increase its output to increase its profit. B) should stay open and incur an economic loss of $20. C) must decrease its output to increase its profit. D) should not change its production because it is already maximizing its profit and is making an economic profit. E) should shut down.
B
22) The above figure shows a perfectly competitive firm. If the market price is $15, the firm 22) A) will immediately shut down. B) is making an economic profit. C) is making zero economic profit. D) is incurring an economic loss. E) might shut down but more information is needed about the AVC.
B
25) Suppose a perfectly competitive firm is incurring an economic loss. Consequently, the i. firm's average total cost exceeds the price. ii. firm's economic loss equals its total fixed cost. iii. firm cannot maximize profit. 25) A) i and ii only B) i only C) iii only D) ii and iii E) i, ii and iii
B
28) When firms in a perfectly competitive market are earning an economic profit, in the long run 28) A) the initial firms continue to earn an economic profit. B) new firms will enter the market. C) the long-run average cost curve shifts downward. D) firms will exit the market. E) no new firms will enter the market.
B
44) The firm in the figure above has a total cost equal to 44) A) ($3.00 - $5.14) × 7. B) $5.14 × 7. C) $3.00 × 7. D) ($5.14 - $3.00) × 7. E) None of the above answers is correct because more information is needed.
B
95) The figure above shows that monopoly is ________ because it produces a level of output at which ________. 95) A) efficient; marginal benefit equals marginal cost B) inefficient; marginal benefit exceeds marginal cost C) efficient; producer surplus is maximized D) inefficient; marginal benefit equals marginal cost E) efficient; marginal benefit exceeds marginal cost
B
46) The above figure shows three possible average total cost curves. If all firms in a perfectly competitive industry each have an average total cost curve identical to ATC0, each produces 20 units, and the market price of the good is $16 per unit, then 46) A) the firms make an economic profit of $8 per unit. B) firms will enter the industry and the number of firms increases. C) firms will exit the industry and the number of firms decreases. D) the firms' ATC curves will eventually shift to become the same as ATC1. E) Both answers A and B are correct.
C
50) Suppose that each of 10,000 perfectly competitive firm in an industry produces 1,000 units of a good and earns an economic profit when the price of the good is $10. In the long run, definitely 50) A) the number of firms is less than 10,000. B) consumer surplus decreases. C) the number of firms is more than 10,000. D) each firm increases its production above 1,000 units. E) producer surplus increases.
C
56) The graph shows the the LRAC facing a ________ where ________ of scale exist when 5 million units are produced. 56) A) oligopoly; economies B) oligopoly; diseconomies C) natural monopoly; economies D) natural monopoly; diseconomies E) monopoly; diseconomies
C
69) A monopoly will never operate on the ________ portion of its demand curve because there an increase in price ________ total revenue and ________ total cost thereby increasing the firm's total profit. 69) A) elastic; decreases; increases B) unit elastic; does not change; increases C) inelastic; increases; decreases D) inelastic; increases; increases E) inelastic; decreases; decreases
C
7) A perfectly competitive market arises when 7) A) each of the many firms produces a slightly different product. B) a firm has control over a unique resource. C) the market demand is very large relative to the output of one seller. D) there are many buyers but few sellers. E) the market demand is small relative to the output of a firm.
C
73) Suppose a single-price monopoly sells 3 units of a good at $20 per unit. If the monopoly sells 4 units, the total revenue increases to $72. What price is being charged for 4 units? 73) A) $60 each B) $12 each C) $18 each D) $52 each E) $20 each
C
82) To maximize its profit, a perfectly competitive firm produces so that ________ and a single-price monopoly produces so that ________. 82) A) P = ATC; P = ATC B) MR = MC; MR > MC C) MR = MC; MR = MC D) MR > MC; MR > MC E) MR > MC; MR = MC
C
86) Assume someone organizes all farms in the nation into a single-price monopoly. What is the monopoly's marginal revenue curve? 86) A) It is identical to the demand curve for the monopolist's output. B) It is a line that lies above the new monopoly's demand curve. C) It is a line that lies below the new monopoly's demand curve. D) It is a horizontal line at the competitive industry's price. E) It is a vertical line at the monopoly's chosen output level.
C
87) Compared to a perfectly competitive market, a single-price monopoly sets 87) A) a lower price. B) the same price. C) a higher price. D) a price that might be higher, lower, or the same depending on whether the monopoly's marginal revenue curve lies above, below, or on its demand curve. E) a price that might be higher, lower, or the same depending on whether the monopoly's marginal cost curve lies above, below, or on its marginal revenue curve.
C
96) If the market in the figure above is perfectly competitive, consumer surplus is the area 96) A) ABH. B) BFGH. C) ACG. D) BCD. E) ACE.
C
15) Suppose a perfectly competitive firm's minimum average variable cost is $3 when it produces 50. If the price is $2 and the firm's marginal cost is $2, the firm should 15) A) continue to produce 50. B) continue to produce, but produce less than 50. C) continue to produce, but produce more than 50. D) shut down. E) continue to operate, but to determine the amount of production needs more information than is given.
D
17) If a perfectly competitive seller is maximizing profit and is making zero economic profit, which of the following will this seller do? 17) A) remain open but decrease production in order to make an economic profit B) go to work in the next-best earning opportunity C) increase production in order to make an economic profit D) continue at the current output, making zero economic profit E) shut down, with a loss equal to total fixed cost
D
21) For a perfectly competitive rancher in Nebraska, if the price does not change, an economic profit could turn into an economic loss if the 21) A) average fixed cost decreases. B) average total cost curve shifts downward. C) marginal cost curve shifts downward. D) average total cost curve shifts upward. E) average total cost curve does not change.
D
26) If perfectly competitive firms are entering or exiting a market, it must be true that the market 26) A) is in the long run only if the firms' economic profits are positive. B) is in the long run. C) is in the short run only if the firms' economic profits equal $0. D) is in the short run. E) is in a long-run equilibrium because average variable costs are no longer relevant.
D
3) In which market structure do firms exist in very large numbers, each firm produces an identical product, and there is freedom of entry and exit? 3) A) only monopolistic competition B) monopoly C) oligopoly D) only perfect competition E) both perfect competition and monopolistic competition
D
30) When firms in a perfectly competitive market incur economic losses, exit by some firms means the market supply will 30) A) not change. B) increase. C) become the same as the individual producers' supplies. D) decrease. E) become vertical.
D
36) In a perfectly competitive market, a(n) ________ occurs because ________. 36) A) deadweight loss; total surplus is minimized B) efficient outcome; the fair rules condition is met C) deadweight loss; firms minimize average minimum cost D) efficient outcome; total surplus is maximized E) deadweight loss; firms must be price takers
D
43) Based on the figure above, if the firm produces 7 cans per day, the firm ________ maximizing its profit and is ________. 43) A) is not; incurring an economic loss B) is; making zero economic profit C) is; making an economic profit D) is; incurring an economic loss E) is not; making zero economic profit
D
51) The good produced by a monopoly 51) A) has perfect substitutes. B) can be easily duplicated. C) has no substitutes at all. D) has no close substitutes. E) must be unable to be resold.
D
54) Which of the following describes a barrier to entry? 54) A) a government regulation that bars a monopoly from earning an economic profit B) something that establishes a barrier to expanding output C) Firms are legally prohibited from exiting the market in order to enter another market. D) anything that protects a firm from the arrival of new competitors E) firms already in the market incurring economic losses so that no new firm wants to enter the market
D
57) Natural barriers to entry arise when, over the relevant range of output, there 57) A) is one firm that owns a key natural resource. B) are constant returns to scale. C) are several firms who produce at the lowest average cost. D) are economies of scale. E) are diseconomies of scale.
D
64) The demand curve for a monopoly is 64) A) upward sloping. B) vertical because the demand is perfectly inelastic. C) horizontal because the demand is perfectly elastic. D) downward sloping. E) undefined because it is the only supplier in the market.
D
72) Suppose a single-price monopoly sells 3 units of a good at $20 per unit. If the monopoly sells 4 units, the total revenue increases to $72. What is the marginal revenue of the fourth unit? 72) A) $60 B) $20 C) $52 D) $12 E) $18
D
81) If the single restaurant in an Nebraska town is currently charging a price for its ham and eggs where the demand is unit elastic, its marginal revenue for ham and eggs is 81) A) undefined. B) negative. C) maximized. D) zero. E) positive.
D
91) A monopoly creates a deadweight loss because the monopoly 91) A) sets a price that is too low. B) produces more than the efficient quantity. C) does not maximize profit. D) produces less than the efficient quantity. E) makes a normal profit.
D
14) The above figure illustrates a perfectly competitive firm. Curve B represents the 14) A) ATC curve. B) AFC curve. C) AVC curve. D) MR curve. E) MC curve.
E
20) A perfectly competitive firm is producing 50 units of output, which it sells at the market price of $23 per unit. The firm's average total cost is $20. What is the firm's total revenue? 20) A) $1,000 B) $20 C) $23 D) $150 E) $1,150
E
27) Alice, Bud, and Celia can produce rubber bands in a perfectly competitive market. If they enter the market, the minimum average total cost for a bundle of rubber bands, for the three of them is $2, $3, and $4, respectively. If the market price is $2.10 per bundle, then 27) A) all three of them will enter the market. B) Alice and Celia will enter the market. C) Alice and Bud will enter the market. D) Bud and Celia will enter the market. E) only Alice will enter the market.
E
31) When firms in a perfectly competitive market incur economic losses, exit by some firms means the market supply will 31) A) become the same as the individual producers' supplies. B) become vertical. C) not change. D) increase. E) decrease.
E
33) In a market undergoing technological change, firms that 33) A) adopt the new technology temporarily incur an economic loss. B) do not adopt the new technology temporarily make an economic profit. C) do not adopt the new technology increase their market share. D) do not adopt the new technology continue to make a normal profit. E) adopt the new technology temporarily make an economic profit.
E
38) Suppose the price of a can was $5.14. In this case, to maximize its profit, the firm illustrated in the figure above would 38) A) not change its production and would make a normal profit. B) not change its production and would make an economic profit. C) not change its production and would incur an economic loss. D) increase its production and would incur an economic loss. E) increase its production and would make an economic profit.
E
41) The firm in the figure above is ________ that is equal to ________. 41) A) making an economic profit; $8.00 × 10 B) incurring an economic loss; $5.10 × 10 C) incurring an economic loss; ($8.00 - $5.10) × 10 D) making an economic profit; $5.10 × 10 E) making an economic profit; ($8.00 - $5.10) × 10
E
58) Which of the following is the best example of a natural monopoly? 58) A) the United States Postal Service B) owning the only licensed taxicab in town C) ownership of the only ferry across Puget Sound for twenty miles D) producing a patented drug E) the cable television company in your hometown
E
62) A ________ monopoly sells different units of its good or service for ________. 62) A) price-discriminating; different prices B) single-price; different prices C) single-price; the same price D) price-discriminating; the same price E) Both Answers A and C are correct.
E
70) A single-price monopoly can sell 2 units for $8.50 per unit. In order to sell 3 units, the price must be $8.00 per unit. The marginal revenue from selling the third unit is 70) A) $6.50. B) $24.00. C) $8.50. D) $17.00. E) $7.00.
E
77) A single-price monopoly has a marginal revenue curve that is 77) A) downward sloping and lies above the demand curve. B) horizontal and equal to price. C) upward sloping and is the same as its supply curve. D) vertical at the profit-maximizing quantity. E) downward sloping and lies below the demand curve.
E
80) Allegiant Air holds a natural monopoly on most of the routes it serves in the United States. Allegiant Air's marginal revenue will ________ when its total revenue ________. 80) A) be negative; is maximized B) inelastic; is increasing C) be positive; is maximized D) elastic; is increasing E) equal $0; is maximized
E
85) ´ Suppose the Busy Bee Cafe is the monopoly producer of hamburgers in Hugo, Oklahoma. The above figure represents the demand, marginal revenue, and marginal cost curves for this establishment. If the Busy Bee produces 40 hamburgers per hour, then 85) A) marginal revenue will be maximized. B) both the marginal revenue and the price will be negative. C) marginal revenue will exceed marginal cost. D) profit will be maximized. E) marginal revenue will be negative.
E
88) When a perfectly competitive industry is taken over by a monopoly, some consumer surplus is transferred to the monopolist in the form of 88) A) marginal cost. B) taxes. C) average variable cost. D) deadweight loss. E) economic profit.
E
90) The figure above shows the demand, marginal revenue, and marginal cost curves for Paul's Parrot pillows, a monopoly producer of pillows stuffed with parrot feathers. When the pillow market is a monopoly, the price of a pillow is ________, and if the pillow market is perfectly competitive, the price of a pillow is ________. 90) A) $40; $20 B) $40; $60 C) $60; $40 D) $100; $40 E) $70; $60
E
93) In a monopoly, producers ________ and consumers ________. 93) A) lose; gain B) lose; lose C) gain; gain D) gain; do not gain or lose E) gain; lose
E