Microeconomics Chapters 8-10

A profit-maximizing monopolist that produces in the short run will: a. produce the level of output where marginal revenue exceeds marginal cost by the largest amount b. increase output as long as the marginal revenue exceeds the cost of producing that product c. produce the level of output where average total cost is at a minimum d. increase price as long as the average revenue exceeds the average total cost e. produce the level of output where average revenue exceeds average total cost by the largest amount

b

Average revenue for a perfectly competitive firm is equal to: a. price times output b. marginal revenue c. total revenue/ marginal revenue d. output/total revenue e. zero

b

Monopolistic competitors are: a. price takers b. price searchers c. price maximizers d. price ignorers e. collusive price fixers

b

Oligopolist industries consist of: a. a few independent firms b. a few interdependent firms c. many interdependent firms d. many independent firms e. a small monopoly

b

Which of the following characteristics does perfect competition share with monopolistic competition? a. price-taking firms b. zero long-run economic profit c. homogenous product d. some barriers to entry e. economies of scale in producton

b

Which of the following would not bar entry into a market: a. control by a single firm of an essential resource b. the necessity of taking risks when starting a firm c. patents d. economics of scale e. government regulations limiting the number of firms in an industry

b

The price charged by a perfectly competitive firm is determined by: a. each individual firm b. a group of firms acting together as a cartel c. market demand and market supply d. the firm's total cost alone e. the firm's average variable cost

c

Which of the following is not true of monopolies: a. the entry of new firms is not a major concern b. monopolist seek to maximize profits c. monopolist can charge any price they want to make a profit d. monopolist can choose any point on the market demand curve e. monopolist can raise price more than 10 percent

c

A monopolistic competitor's demand curve is: a. perfectly elastic b. less elastic than a monopolist's or oligopolist's but more than a perfect competitor's c. as elastic as an oligopolist's d. more elastic than a monopolist's or oligiploist's but less than a perfect competitor's e. perfectly inelastic

d

Gilligan runs the only dry-cleaning business on a desert isle. If the cost of cleaning fluid falls, he can increase profits by: a. raising price b. charging the highest price he can c. using less cleaning fluid d. lowering price e. charging a price equal to marginal cost

d

One likely result of monopoly power is: a. a wide variety of substitute products from which consumers may choose b. an elimination of barriers to industry entry c. a decline in the government regulation d. a higher price than would exist in the competitive industry e. an improvement in allocative efficiency

d

A monopolistically competitive firm can raise price somewhat due to: a. product differentiation b. barriers to entry c. product similarity d. its homogenous product e. high tariffs

a

Exhibit 0123 Quantity of Output Total Cost 0 $ 50 10 85 20 150 30 220 40 305 50 455 Consider Exhibit 0123. If the market price is $8.50, what is the profit-maximizing output and profit? a. output = 40; profit = $35 b. output = 40; profit = $0 c. ouput = 0 ; profit = - $50 d. output and profit cannot be determined because marginal revenue cannot be calculated e. output and profit cannot be determined because average variable cost cannot be calculated

a

In the market structure of monopoly, new firms: a. cannot profitably enter the industry, even in the long run b. may freely enter and leave the industry in both the long and short run c. may freely enter and leave the industry in the long run only d. may freely enter and leave the industry in the short run only e. have no incentive to enter the industry, even if economic profits are present

a

Which of the following is not necessary a characteristic of perfect competition: a. low prices b. a large number of buyers and sellers c. a homogenous product d. perfect information e. easy entry and exit in the long run

a

Because of easy entry, monopolistically competitive firms will: a. produce at the lowest average total cost b. charge a price equal to marginal cost c. earn no economic profit in the long run d. take advantage of all economies of scale e. earn no economic profit in the short run

c

Firms in perfect competition are price takers because: a. all small firms must take the price set by the largest firm in the market b. firms take the price that government determines is a "fair" price c. each firm is small and goods are perfect substitutes for one another d. free entry and exit in the short run creates a constant market price in the long run e. high barriers to entry force firms to compete by charging lower prices than other firms in the industry

c

Firms in perfect competition have no control over: a. all of the following b. where to operate on their average total cost curve c. what price to charge d. how many inputs to use e. how much to produce

c

Interdependent decision making on price, quality, or advertising is characteristic of: a. perfect competition b. monopolies c. oligopolies d. monopolistic competition e. both oligopolies and monopolistic competition

c

Marginal revenue is: a. total revenue minus total cost b. total revenue divided by quantity of output c. the change in total revenue divided by the change in ouput d. the change in total revenue divided by the change in the quantity of an input used e. economic profit

c

Perfectly competitive firms that earn an economic profit in the short run choose the output that: a. maximizes total revenue b. maximizes total cost c. maximizes the difference between total revenue and total cost d. maximizes the difference between total revenue and explicit cost e. maximizes the difference between total revenue and implicit cost

c

Suppose the equilibrium price in a perfectly competitive industry is $10 and a firm in the industry charges $9. Which of the following will happen? a. the firm will not sell any profit b. the firm will sell less output than its competitors c. the firm will make more profit than it could at the $10 price d. the firm will make less profit than it could at the $10 price e. the firm's revenue will increase and its costs may decrease

d

When firms differentiate their products they: a. provide information to consumers with no additional use of productive resources b. always increase their profits c. always create real differences among products d. frequently create artificial or superficial differences among products, thus raising production cost e. usually strain the physical capacity of their plans

d

A monopolist is: a. one of a large number of small firms producing is a homogenous good b. one of a small number of large firms producing a differentiated good c. a single seller of a product with many close substitutes d. one of small number of large firms producing a homogenous good e. a single seller of a product with no close substitutes

e

Exhibit 0138 Price Quantity Demanded $50 2 40 3 30 4 20 5 10 6 In exhibit 0138, the marginal revenue of the sixth unit is: a. $10 b. $60 c. $100 d. $40 e. $-40

e

For a monopolist, there is no supply curve because: a. the supply curve is the same as the marginal cost curve b. the monopolist does not maximize profit c. the quantity supplied is independent of marginal cost d. the quantity supplied is independent of demand e. there is no unique relationship between price and quantity supplied

e

If Harry's Blueberries, a perfectly competitive firm, shuts down in the short run, Harry must pay: a. variable costs but not fixed costs b. no costs at all c. variable cost and fixed cost d. only variable cost e. only fixed cost

e

The term monopolistic competition: a. is an alternate expression for monopoly b. is used to describe perfect competition with strong entry barriers c. denotes an industry with one seller of many differentiated products d. denotes an industry with many sellers of homogenous products e. denotes an industry with many sellers of differentiated products

e

The total revenue curve for a perfectly competitive firm: a. is horizontal b. is vertical c. has a diminishing slope as output increases d. has an increasing slope as output increases e. has a constant slope as output increases

e

Which of the following describes the market structure of monopoly: a. many firms with some control over price, and considerable product differentiation b. many firms with no control over price, producing identical products with no differentiation c. a few firms with some control over price, producing similar products which are close substitutes d. a few firms with no control over price, producing highly differentiated products e. a single firm producing all of the output for the industry

e