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economics mcq homework with A+ answers- For a price-taking firm, marginal revenue




Question;1 For a price-taking firm, marginal revenuea. is the addition to total revenue from producing one more unit of output.b. decreases as the firm produces more output.c. is equal to price at any level of output.d. both a and be. both a and c2 In a perfectly competitive industry the market price is $25. A firm is currently producing 10,000 units of output, average total cost is $28, marginal cost is $20, and average variable cost is $20. The firm shoulda. raise price because the firm is losing money.b. keep output the same because the firm is producing at minimum average variable cost.c. produce more because the next unit of output increases profit by $5.d. produce less because the next unit of output decreased profit by $3.e. shut down because the firm is losing money.The next three questions refer to the following:The graph on the left shows the short-run marginal cost curve for a typical firm selling in a perfectly competitive industry. The graph on the right shows current industry demand and supply.3 If the firm?s demand and marginal revenue curves were drawn in the left-hand graph, what would be the elasticity of demand?a. zerob. ?6c. ?0.6d. infinitely elastice. unitary4 What is the marginal revenue for the FIRM from selling the 250th unit of output?a. $10b. $8c. $6d. $4e. zero5 What output should the firm produce?a. 200b. 250c. 150d. 300The next two questions refer to the following figure:The graph shows demand and marginal cost for a perfectly competitive firm.6 If the firm is producing 100 units of output, increasing output by one unit would ______ the firm?s profit by $______.a. increase, $3b. increase, $2c. decrease, $1d. increase, $1e. decrease, $27 If the firm is producing 300 units of output, decreasing output by one unit would ______ the firm?s profit by $______.a. decrease, $2b. increase, $2c. increase, $3d. decrease, $5e. increase, $5The next five questions refer to the following figure:These are the cost curves for a perfectly competitive firm.If market price is $5, how much output will the firm produce?0 units200 units500 units.600 units9 If market price is $5, how much profit will the firm earn?a $600b. $900c. $3,000d. ?$60010 If market price is $3, how much profit will the firm earn?a. $200b. ?$200c. $400d. ?$40011 If market price is $2, how much profit will the firm earn?a. $600b. ?$600c. zerod. $40012 The firm will break even if price is:a. $2b. $3.80c. $5d. $613 Which of the following is a characteristic of a monopoly market?a. one firm is the only supplier of a product for which there are no close substitutesb. entry into the market is blockedc. the firm can influence market priced. all of the above14 A firm with market powera. can increase price without losing all sales.b. faces a downward-sloping demand curve.c. is the only seller in a market.d. both a and be. all of the above15 In a monopolistically competitive market,a. firms are small relative to the total market.b. no firm has any market power.c. there is easy entry and exit in the market.d. a and be. a and c16 Which of the following would indicate a relatively large amount of market power?a. Highly price elasticity demandb. Low cross-price elasticity with other productsc. Low Lerner indexd. all of the abovee. none of the aboveUse the following figure to answer the next 3 questions.The figure shows the demand and cost curves facing a firm with market power in the short run.17 The profit-maximizing level of output isa. 60 units.b. 70 unitsc. 80 units Graph (MC=MR)d. 90 units.e. 100 units.18 The firm will sell its output at a price ofa. $2.b. $3.c. $3.75. Q up to Demand = P$d. $5. e. $6.19 The firm earns profits ofa. $ 75.b. $120.c. $150.d. $180. $5-$3 = $2 x 60 units = $120$300.The next 6 questions refer to the following figure:The figure above shows the demand and cost curves facing a price-setting firm.20 What is marginal revenue when output is 100 units?a. $10b. $20c. $25d. $30e. $3521 At what output is marginal revenue $20?a. 100 unitsb. 200 unitsc. 300 unitsd. 400 unitse. 500 units22 The profit-maximizing (or loss-minimizing) level of output isa. 100b. 200c. 300d. 400e. 45023 In profit-maximizing (or loss-minimizing) equilibrium, the price-setting firm earns $______ in total revenue, which is ___________ the maximum possible total revenue of $________.a. $7,500, equal to, $7,500b. $8,000, more than, $7,500c. $7,650, less than, $8,000d. $8,000, equal to, $8,000e. $7,500, less than, $8,00024 The maximum profit the firm can earn is $________.a. ?$4,500b. ?$1,500c. $7,500d. $7,650e. $8,00025 Oligopolists face interdependent profits becausea. there are few firms in the market.b. the product is differentiated.c. industry sales are large.d. all of the above26 Actions taken by oligopolists to plan for and react to actions of rival firms representa. strategic behavior.b. interdependence.c. cooperative behavior.d. game theory.e. all of the above.27 In game theory, a dominant strategy isa. a strategy used by a large firm to compete against smaller firms.b. a strategy followed by the price leader.c. a strategy involving a high risk but also a high return.d. a strategy that leads to the best outcome no matter what a rival does.e. none of the above28 Which of the following is not an implication of oligopoly interdependence:a. strategic behaviorb. the need to get into the heads of rival managersc. making decisions that result in the equating of marginal revenue and marginal costd. thinking ahead in sequential decisions to anticipate rivals? future actions29 A conditional strategic move, such as a threat or promise, can be credible only ifa. rivals believe the manager making the threat or promise can be trusted to follow through on any commitment, threat, or promise that he or she makes.b. the strategic move harms rivals.c. it can increase each firm?s payoff.d. when the time comes to carry out the threat or promise, fulfilling the threat or promise is in the best interest of the firm making the threat or promise.e. none of the above.30 In a repeated decision for which the present value of the benefits of cheating is less than the present value of the costs of cheating,a. deciding not to cheat is a value-maximizing decision.b. deciding to cooperate is a value-maximizing decision.c. deciding to cheat is a value-maximizing decision.d. both a and b31 In the U.S., firms that engage in cooperative efforts to coordinate pricingare always in violation of antitrust laws.may face federal charges of illegal collusion if they cannot provide evidence that the coordination of prices was in the best interest of consumers.are simply trying to reach a Nash equilibrium and are not viewed by courts as necessarily breaking any laws.both b and c.32 In a repeated prisoners? dilemma decision, both managers can make credible threats to punish cheating becausea. if either manager cheats, the other manager can increase its profit by also cheating.b. both of the cheating cells in the payoff table are strategically stable cells.c. when both firms cheat, they both avoid the Nash equilibrium cell.d. both a and c.33 Price matching is a strategic move thatseeks to make cheating unprofitable.must generally be announced publicly in order to have the desired effect.has no usefulness to managers if a simultaneous pricing decision is going to be made only one time.both a and ball of the above34 Price matchingis a strategic a flexible pledge to match any lower prices offered by rivals.must be irreversible in order to have the desired effect.both a and c.both b and c35 Price leadershipis rather uncommon a pricing arrangement in which one firm in an oligopoly agrees to act as a cartel manager and set a price that will maximize the profits of all the firms in the oligopoly market.would not be useful to a dominant firm if it could eliminate all its rivals through a price war.none of the above36 Tacit collusion in a market represents a method fora. collusion to discourage entry into the market.b. a price-fixing agreement when such agreements are legal.c. agreeing on price without explicit communication among firms.d. cheating on a cartel price.e. none of the above37 To successfully practice price discriminationa. the firm must be a pure monopolyb. the firm must possess market powerc. it must be difficult for consumers in one market to sell to consumers in the other marketd. both a and ce. both b and c38 A probability distributiona. is a way of dealing with uncertainty.b. lists all possible outcomes and the corresponding probabilities of occurrence.c. shows only the most likely outcome in an uncertain situation.d. both a and be. both a and c39 The variance of a probability distribution is used to measure risk because a higher variance is associated witha. a wider spread of values around the mean.b. a more compact distribution.c. a lower expected value.d. both a and be. all of the above40 Risk exists whena. all possible outcomes are known but probabilities can't be assigned to the outcomes.b. all possible outcomes are known and probabilities can be assigned to each.c. all possible outcomes are known but only objective probabilities can be assigned to each.d. future events can influence the payoffs but the decision maker has some control over their probabilities.e. c and d41 In making decisions under riska. maximizing expected value is always the best rule.b. mean variance analysis is always the best rule.c. the coefficient of variation rule is always best.d. maximizing expected value is most reliable for making repeated decisions with identical probabilities.e. none of the aboveThe next 5 questions refer to the following:A firm is considering two projects, A and B, with the following probability distributions for profit.42 The expected value of project A (in $1,000s) isa. $60b. $65c. $70d. $75e. $8043 The variance of project A isa. 7.07b. 50c. 440d. 4,000e. 38044 What is the expected value of project B (in $1,000s)?a. $60b. $65c. $70d. $75$8045 What is the variance of project B?a. 10b. 21c. 165d. 440e. 515A decision maker using the analysis of variance rule woulda. choose project A.b. choose project A only if risk averse.c. choose project B.d. choose project B only if risk loving.e. not be able to make a decision using that rule.47 When we say that market prices allocate goods to the highest-valued users, we mean thata. only consumers with higher incomes will get any of the good, while lower income consumers get none of the good.b. only consumers who value the good more than the market price of the good will choose to buy the good.c. government allocation of the good is warranted because government can make sure that the good gets consumed by deserving individuals.d. there is no shortage.48 Private provision of public goods fails to achieve economic efficiency becausea. the free rider problem causes overproduction of the good.b. the free rider problem prevents collection of sufficient revenue.c. the price of the privately supplied public good must exceed zero in order to be allocatively efficient.d. both a and ce. both b and c49 Social economic efficiency means that the market is achievingproductive efficiency.allocative efficiency.maximum possible consumer surplus.both a and ball of the above50 ___________ is/are example(s) of market failure that could justify government intervention in the market.Imperfect informationPublic goodsA perfectly competitive bagel marketA dominant firm that undertakes pricing strategies aimed at maintaining high entry barriersonly a, b, and d


Paper#55788 | Written in 18-Jul-2015

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