ECON 102 - HW 8
A cartel is a form of a. collusion b. vertical merger c. horizontal merger d. producer surplus
A
Advertising by monopolistically competitive firms can do all of the following EXCEPT... a. lower the price of the good b. help differentiate a firm's product c. give the consumer information about the firm's products d. result in increased profits for the advertising firm
A
In a long-run monopolistically competitive equilibrium, a. P = ATC, and ATC is not at its minimum value b. P = ATC, and ATC is at its minimum value c. P > ATC, and ATC is at its minimum value d. P > ATC, and ATC is not at its minimum value
A
A single-price monopolist can sell 7 units at price of $30 per unit and 8 units at a price of $25 per unit. The marginal revenue of the 8th unit is $______.
-10
Suppose a perfectly competitive firm has the marginal cost function of MC = 3Q. The market price is given by P = $45. How many units of output will the firm produce?
15
Suppose that at this same firm's profit-maximizing level of output, average costs are ATC = $39. What are the firm's total profits earned?
90
In the long run equilibrium, a monopolistic competitor will produce to the point at which a. actual average total costs are at the minimum of possible ATC b. actual average total costs are higher than the minimum of possible ATC c. resources are used at the lowest possible cost d. at the lowest possible price
B
A horizontal merger involves... a. the joining of two firms at different stages of the production process b. the separation of management from ownership c. the joining of two firms selling similar products d. the exchange of debt for stock e. a decision by a firm to become a publicly traded company
C
One problem associated with a monopoly firm is that it... a. produces too little output but also charges a low price b. produces too much output and charges too low a price c. restricts output and charges a relatively higher price than a purely competitive industry d. is just as good as a purely competitive firm in terms of output and price but leaves consumers with fewer choices
C
For a perfectly competitive firm, the short-run break-even point occurs at the level of output where... a. P > MR = MC b. MR = P > MC c. MR < P = MC d. P = MC = ATC
D
Suppose the (inverse) demand function for a single-price monopoly is P = 280 - 2Q. This means that the marginal revenue function for the monopolist is MR = 280 - 4Q. Assume the marginal cost function is given by MC = 3Q. Find the price that the monopolist will charge. Hint: You'll first have to find the quantity and then plug this into the demand function to find the price.
My Answer: 200
All of the following are characteristics of an oligopoly EXCEPT a. diseconomies of scale over all ranges of output b. small number of firms c. high barriers to entry d. interdependence
My Answer: D
The demand curve for the product of a monopolistically competitive firm a. is perfectly inelastic b. is downward sloping and relatively inelastic c. is downward sloping and relatively elastic d. is perfectly elastic
C
When comparing perfect competition and monopoly, a major assumption made is that... a. the monopolist has the same supply curve as the competitive industry b. consumers don't know whether the industry is competitive or monopolized c. the marginal costs of production are the same under monopoly as under perfect competition
C
When considering perfect competition, the absence of entry barriers implies that... a. no firm can enter the industry b. it costs $0 to start a new business in perfectly competitive markets c. all firms will earn economic profit d. firms can enter and leave the industry without serious impediments
D
Which of the following conditions hold true for both the perfectly competitive firm and the monopoly at the profit-maximizing output level? a. MR = P b. MC = ATC c. MC = P d. MR = MC
D
Which of the following is NOT a characteristic of monopolistic competition? a. Large number of sellers b. Differentiated products c. Advertising done by individual firms d. Barriers to entry
D
For a monopolistically competitive firm, a. price equals marginal revenue at all levels of output b. price is less than marginal revenue at all levels of output c. price is greater than marginal revenue at all levels of output d. the demand curve is perfectly inelastic and marginal revenue is zero
My Answer: C
Which of the following statements about the perfect competitor is INCORRECT? a. The perfectly competitive firm is always a price taker b. The perfect competitor sells a homogeneous commodity c. If an individual firm raises price, it will lose business d. The products made by a perfectly competitive firm have no close substitutes
My Answer: D