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If an eyeglass business produces 10 pairs of eyeglasses and incurs $35 in average total cost and $5 in average fixed cost, then average variable cost is: A) $30. B) $35. C) $50. D) $300

A) $30.

(Figure: A Profit-Maximizing Monopoly Firm) Look at the figure A Profit-Maximizing Monopoly Firm. This firm's price per unit is: A) $20. B) $26. C) $29. D) $35.

C) $29.

Kaile Cakes produces 10 cakes per day. The marginal cost of the tenth cake is $24, and average total cost of 10 cakes is $6. The average total cost of 9 cakes is: A) $4. B) $5. C) $6. D) $8.

A) $4.

(Table: Bonnie's Production Function for Good Z) Look at the table Bonnie's Production Function for good Z. Suppose Bonnie spends $300 per month to rent the building, $100 per month to pay for insurance for her business, and $100 per worker per month for every worker she hires. Given this information, Bonnie's fixed costs equal: A) $400. B) $300. C) $500. D) $100.

A) $400.

A monopoly's short-run supply curve is its marginal cost curve above the minimum average variable cost. A) True B) False

A) True

If ATC is equal to MC, then the firm is operating: A) at the minimum point of ATC. B) on the downward-sloping portion of ATC. C) on the upward-sloping portion of ATC. D) at an increasing returns to scale.

A) at the minimum point of ATC.

(Figure: Short-Run Costs) Look at the figure Short-Run Costs. B is the ______ cost curve. A) average total B) average variable C) marginal D) total

A) average total

The GoSports Company is a profit-maximizing firm with a monopoly in the production of school team pennants. The firm sells its pennants for $10 each. We can conclude that GoSports is producing a level of output at which: A) average total cost equals $10. B) average total cost is greater than $10. C) marginal revenue equals $10. D) marginal cost equals marginal revenue.

A) average total cost equals $10.

When a firm produces a small amount of output, the spreading effect: A) is stronger than the diminishing returns effect. B) is weaker than the diminishing returns effect. C) and diminishing returns effect are equal. D) will be zero.

A) is stronger than the diminishing returns effect.

Rebecca knows that Becca Furniture's marginal cost curve is above the average total cost curve. This means Becca Furniture's average total cost curve: A) must be rising. B) must be flat. C) must be falling. D) may be rising, falling, or flat depending on other things.

A) must be rising.

(Table: Workers and Output) After graduation you achieve your dream of opening your own art shop that specializes in selling mud statues. You pay $10 per day on a loan from your uncle, and you pay $10 per day to each of your workers (who make the mud statues). After careful study, you determine the production information in the table. The variable cost of producing 25 statues is A) $10 B) $20 C) $25 D) $35

B) $20

. (Table: Demand and Total Cost) Look at the table Demand and Total Cost. Lenoia runs a natural monopoly firm producing electricity for a small mountain village. The table shows Lenoia's demand and total cost of producing electricity. To maximize profits, Lenoia should charge a price of: A) $350. B) $400. C) $450. D) $500.

B) $400.

(Figure: Monopoly Model) Look at the figure Monopoly Model. When the firm is in equilibrium (that is, maximizing its economic profit), its total cost is the area of rectangle: A) 0PDJ. B) 0IHJ. C) IPDH. D) 0SBJ.

B) 0IHJ.

Which of the following statements concerning monopoly is true? A) Monopoly firms are automatically larger than perfectly competitive firms. B) A monopoly has no rivals. C) Barriers to entry do not prevent other firms from entering a monopolized industry. D) Monopolists produce more output than competitive firms.

B) A monopoly has no rivals.

A monopoly may continue to make economic profits in the long run due to barriers to entry. A) True B) False

B) False

Diminishing returns are one explanation for diseconomies of scale. A) True B) False

B) False

(Figure: Computing Monopoly Profit) Look at the figure Computing Monopoly Profit. The profit-maximizing price is ________ and will generate total economic profit of ________. A) P2; EF B) P3; the rectangle P1P2FG C) P3; the rectangle P2P3EF D) P3; EF

B) P3; the rectangle P1P2FG

Which of the following statements about the differences between monopoly and perfect competition is incorrect? A) A monopolist has market power, while a perfect competitor does not. B) Unlike a perfectly competitive firm, a monopoly can make positive economic profits in the long run. C) A monopoly will charge a higher price and produce a smaller quantity than a competitive market with the same demand and cost structure. D) Monopoly profits can continue to exist in the long run because the monopoly produces more and charges a higher price than a comparable perfectly competitive industry.

B) Unlike a perfectly competitive firm, a monopoly can make positive economic profits in the long run.

If marginal cost is less than average total cost, then: A) average total cost is increasing. B) average total cost is decreasing. C) marginal cost is necessarily increasing. D) marginal cost is necessarily decreasing.

B) average total cost is decreasing.

Tankao makes Bluetooth sets for mobile devices. When 50 Bluetooth sets are produced, the average variable cost is $30. Tankao's: A) average total cost is $30. B) average total cost is greater than $30. C) average total cost is less than $30. D) average fixed cost is $30.

B) average total cost is greater than $30.

The U-shape of the long-run average total cost curve is primarily due to: A) technological change. B) economies and diseconomies of scale. C) increasing and then diminishing returns. D) diminishing returns.

B) economies and diseconomies of scale.

A firm that is a natural monopoly will: A) attempt to break even, not profit-maximize. B) maximize profit by producing where MR = MC. C) face increasing costs of production. D) face greater market instability than a regular monopoly.

B) maximize profit by producing where MR = MC.

A firm that faces a downward-sloping demand curve is a: A) price-setter. B) quantity-minimizer. C) quantity-taker. D) price-taker.

B) quantity-minimizer.

The average total cost curve has a U-shape because the ___________ effect is dominant at low levels of output, and the __________ effect is dominant at high levels of output. A) diminishing returns; spreading B) spreading; diminishing returns C) comparative advantage; absolute advantage D) absolute advantage; comparative advantage

B) spreading; diminishing returns

Austin's total fixed cost is $3,600 a month at his cupcake bakery. Austin employs 20 workers and pays each worker $600 a month. If labor is his only variable cost, what is Austin's total cost? A) $3,600 B) $1,200 C) $15,600 D) $12,000

C) $15,600

(Table: Costs of Birthday Cakes) Annie has a bakery that specializes in birthday cakes, and her variable costs of producing cakes are shown in the table Costs of Birthday Cakes. Assume that her fixed costs are $10.What is the average total cost of 2 cakes? A) $35 B) $25 C) $17.50 D) $12.50

C) $17.50

(Table: Cost Data) Look at the table Cost Data, which shows data for a designer purse factory. The marginal cost of producing the fourth purse is: A) $60 B) $50 C) $40 D) $20

C) $40

Which of the following statements about monopoly equilibrium and perfectly competitive equilibrium is incorrect? A) Price is greater than marginal cost in monopoly, and price equals marginal cost in perfect competition. B) When a monopoly exists, the consumer surplus is less than if the market were perfectly competitive. C) Monopoly output will be less than the output of a comparable perfectly competitive industry. D) In the long run, economic profits are driven to zero in both a monopoly and a perfectly competitive market.

C) Monopoly output will be less than the output of a comparable perfectly competitive industry.

(Figure: The Monopolist) Look at the figure The Monopolist. If this monopolist were forced to act like a perfect competitor, it would produce: A) Q1 units and sell at P1. B) Q2 units and sell at P2. C) Q3 units and sell at P3. D) Q2 units and sell at P4.

C) Q3 units and sell at P3.

. (Figure: Short-Run Costs) Look at the figure Short-Run Costs. The vertical difference between curve B and curve C at any quantity of output is: A) marginal cost. B) fixed cost. C) average fixed cost. D) average variable cost.

C) average fixed cost.

If marginal cost is greater than average total cost, then: A) average total cost is at its maximum. B) average total cost is at its minimum. C) average total cost is increasing. D) average total cost is decreasing.

C) average total cost is increasing.

For a monopolist with a downward-sloping demand curve, the quantity effect dominates the price effect at: A) lower levels of production. B) all levels of production. C) higher levels of production. D) only at those levels at which elasticity is unit-elastic

C) higher levels of production.

(Table: Costs of Producing Bagels) Look at the table Cost of Producing Bagels. The total cost of producing six bagels is: A) $0.10. B) $0.20. C) $0.80. D) $0.90.

D) $0.90.

A downward-sloping demand curve will ensure that: A) P = MR. B) P > MR. C) P < MR. D) P = MC.

D) P = MC.

In 1999, a judge declared that Microsoft was a monopolist. Assuming that it is maximizing its profits at its current level of output, we may conclude that if Microsoft were to increase its price, its total revenue would: A) rise. B) fall. C) remain unchanged. D) There is insufficient information to make a determination.

D) There is insufficient information to make a determination.

In the long run: A) all inputs are fixed. B) inputs are neither variable nor fixed. C) at least one input is variable and one input is fixed. D) all inputs are variable.

D) all inputs are variable.

When marginal cost is rising: A) average variable cost must be rising. B) average total cost must be rising. C) average variable cost and average total cost must be falling. D) both average variable cost and average total cost may be rising or falling.

D) both average variable cost and average total cost may be rising or falling.

A monopoly responds to a decrease in marginal cost by ________ price and ________ output. A) increasing; decreasing B) increasing; increasing C) decreasing; increasing D) decreasing; decreasing

D) decreasing; decreasing

When marginal cost is above average variable cost, average variable cost must be: A) at its minimum. B) at its maximum. C) greater than average total cost. D) greater than average fixed cost.

D) greater than average fixed cost

If a change in fixed cost raises average total cost above the demand curve: A) price and output will remain unchanged. B) more monopolies will enter. C) the monopoly will go out of business. D) marginal cost will be greater than marginal revenue.

D) marginal cost will be greater than marginal revenue.

The change in total output resulting from a one-unit increase in the quantity of an input used, holding the quantities of all other inputs constant, is: A) average cost. B) average product. C) marginal cost. D) marginal product.

D) marginal product.