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Question;Multiple Choice;Identify the choice that best completes the statement or answers the question.;1. A profit-maximizing monopolistic competitor will expand output to the point where;a.;total revenue equals total cost.;b.;marginal revenue equals marginal cost.;c.;price equals average total cost.;d.;price equals marginal cost.;2. When a new firm enters a monopolistically competitive market, the demand curves faced by all existing firms in that market will;a.;shift to the left.;b.;shift to the right.;c.;shift in a direction that is unpredictable without further information.;d.;remain unchanged. It is the supply curve that will shift.;3. Which of the following is not a characteristic of a monopolistically competitive market?;a.;Each firm produces a differentiated product.;b.;The entry barriers are high.;c.;Each firm faces a downward-sloping demand curve.;d.;The number of firms in the market is large.;4. Suppose a monopolistically competitive firm faces the following demand curve data for its product.;Price;Quantity;$8;5;$7;6;$6;7;What is the firm's marginal revenue from selling the seventh unit?;a.;$0;b.;$2;c.;$7;d.;$42;5. If a monopolistically competitive firm is producing at a level of output such that its marginal cost is $5 and its marginal revenue is $3, the firm should;a.;increase output in order to reduce per-unit costs.;b.;decrease the price of its product and expand output.;c.;increase price and reduce its rate of output.;d.;reduce both price and output.;6. Tombstones are produced in a monopolistically competitive price-searcher market. One producer, Rolling Stones, sells 20 tombstones a week at a price of $500 each. Its average total cost is $600. From this information, we can conclude;a.;new tombstone firms will want to enter.;b.;this producer is losing $2,000 a week.;c.;this producer is making an economic profit of $400.;d.;this producer is setting MR = MC.;e.;this producer should increase production.;7. When economic losses are present in a market, firms will tend to;a.;exit from the market.;b.;raise their prices until the break-even point is reached.;c.;lower their prices, regardless of cost, so they can capture more of the market.;d.;increase output.;Use the figure to answer the following question(s).;Figure 10-4;8. What price should a monopolistically competitive price-searcher firm with the cost and demand conditions depicted in Figure 10-4 charge if it wants to maximize its profit?;a.;$10;b.;$15;c.;$20;d.;$24;9. What is the maximum economic profit this firm depicted in Figure 10-4 will be able to earn?;a.;$200 loss;b.;zero profit;c.;$250 profit;d.;$700 profit;10. If the cost and demand conditions of this monopolisticallycompetitive price-searcher firm depicted in Figure 10-4 are representative of the market, what will happen in the future?;a.;Some firms will go out of business, and the market price will rise.;b.;The current market price will tend to persist into the future.;c.;New firms will enter the market, and the market price will decline.;d.;The firms in this industry will probably collude in order to increase their profitability.


Paper#57925 | Written in 18-Jul-2015

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