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Question;26. Suppose a competitive;market has a horizontal long-run supply curve and is in long-run equilibrium.;If;demand decreases, we can be;certain that in the short-run;a. at least some firms will shut;down.;b. price will fall below marginal;cost for some firms.;c. price will fall below average;total cost for some firms.;d. at least some firms will exit;the industry.;27. In the short run, a;market consists of 100 identical firms. The market price is $8, and the total;cost to each;firm of producing various levels;of output is given in the table below. What will total quantity supplied be in;the market?;Q TC;0 1;1 7;2 14;3 22;4 31;5 41;a. 200 units;b. 300 units;c. 400 units;d. 500 units;28. In the short-run, a;firm's supply curve is equal to;a. the marginal cost curve above;its average variable cost curve.;b. the marginal cost curve above;its average total cost curve.;c. the average variable cost;curve above its marginal cost curve.;d. the average total cost curve;above its marginal cost curve.;Name;ID: A;7;29. When market conditions;in a competitive industry are such that firms cannot cover their production;costs;then;a. the firms will suffer long-run;economic losses.;b. the firms will suffer;short-run economic losses that will be exactly offset by long-run;economic profits.;c. some firms will exit the;market, causing prices to rise until the remaining firms can cover;their production costs.;d. all firms will go out of;business, since consumers will not pay prices that enable firms to;cover their production costs.;30. Natural monopolies;differ from other forms of monopoly because they;a. are not subject to barriers to;entry.;b. are not regulated by government.;c. generally don't make a profit.;d. are generally not worried;about competition eroding their monopoly position in the;market.;31. Which of the following;statements is true about patents and copyrights?;(i) They both have benefits and;costs.;(ii) They lead to higher prices.;(iii) They enhance the ability of;monopolists to earn above-average profits.;a. (i) and (ii);b. (ii) and (iii);c. (ii) only;d. (i), (ii), and (iii);32. A firm that is a natural;monopoly;a. is not likely to be concerned;about new entrants eroding its monopoly power.;b. is taking advantage of;economies of scale.;c. would experience a higher;average total cost if more firms entered the market.;d. All of the above are correct.;33. Which of the following;items is a primary source of barriers to entry?;a. The costs of production make a;single firm more efficient than a large number of firms.;b. A single firm hires all the;people who have the management skills that are important in;the industry.;c. Contracts among firms prohibit;them from competing with one another in the production;and sale of certain products.;d. All of the above are correct.;34. Which of the following;isnot;a;reason for the existence of a monopoly?;a. Sole ownership of a key;resource;b. Patents;c. Copyrights;d. Diseconomies of scale;35. The market demand curve;for a monopolist is typically;a. unitary elastic at the point;of profit maximization.;b. downward sloping.;c. horizontal.;d. vertical.;Name;ID: A;8;36. A monopolist's average;revenue is always;a. equal to marginal revenue.;b. greater than the price of its;product.;c. equal to the price of its;product.;d. less than the price of its;product.;37. When a monopolist;increases the amount of output that it produces and sells, its average revenue;a. increases and its marginal;revenue increases.;b. increases and its marginal;revenue decreases.;c. decreases and its marginal;revenue increases.;d. decreases and its marginal;revenue decreases.;38. Which of the following;statements is true?;(i) When a competitive firm sells;an additional unit of output, its revenue increases by;an amount less than the price.;(ii) When a monopoly firm sells;an additional unit of output, its revenue increases by an;amount less than the price.;(iii) Average revenue is the same;as price for both competitive and monopoly firms.;a. (ii) only;b. (iii) only;c. (i) and (ii);d. (ii) and (iii);Name;ID: A;9;Figure;15-2;The figure below illustrates the;cost and revenue structure for a monopoly firm.;39.Refer to Figure;15-2.;The marginal revenue curve for a monopoly firm is depicted by curve;a. A.;b. B.;c. C.;d. D.;40.Refer to Figure;15-2.;The marginal cost curve for a monopoly firm is depicted by curve;a. A.;b. B.;c. C.;d. D.;Name;ID: A;10;Figure;15-3;The figure below illustrates the;cost and revenue structure for a monopoly firm.;41.Refer to Figure;15-3.;A profit-maximizing monopoly's profit is equal to;a. P3;?Q2.;b. P2;?Q4.;c. (P3;-;P0)?Q2.;d. (P3;-;P0)?Q4.;42. Suppose a firm has a;monopoly on the sale of widgets and faces a downward-sloping demand curve. When;selling the 100th;widget;the firm will always receive;a. less marginal revenue on the;100thwidget than it received on the 99thwidget.;b. more average revenue on the;100thwidget than it received on the 99thwidget.;c. more total revenue on the 100;widgets than it received on the first 99 widgets.;d. a lower average cost per unit;at 100 units output than at 99 units of output.;43. For a monopolist;a. average revenue is always;greater than the price of the good.;b. marginal revenue is always;less than the price of the good.;c. marginal cost is always;greater than average total cost.;d. marginal revenue equals;marginal cost at the point where total revenue is maximized.;44. A monopolist can sell;200 units of output for $36.00 per unit. Alternatively, it can sell 201 units;of output for;$35.80 per unit. The marginal;revenue of the 201stunit of output is;a. $-4.20.;b. $-0.20.;c. $4.20.;d. $35.80.;Name;ID: A;11;Scenario;15-2;A monopoly firm maximizes its;profit by producing Q = 500 units of output. At that level of output, its;marginal revenue is $30, its;average revenue is $60, and its average total cost is $34.;45.Refer to;Scenario 15-2. The firm's profit-maximizing price is;a. $30.;b. between $30 and $34.;c. between $34 and $60.;d. $60.;46.Refer to;Scenario 15-2.The firm's maximum profit is;a. $13,000.;b. $15,000.;c. $17,000.;d. $30,000.;47. A reduction in a;monopolist's fixed costs would;a. decrease the profit-maximizing;price and increase the profit-maximizing quantity;produced.;b. increase the profit-maximizing;price and decrease the profit-maximizing quantity;produced.;c. not effect the;profit-maximizing price or quantity.;d. possibly increase, decrease or;not effect profit-maximizing price and quantity, depending;on the elasticity of demand.;Table;15-2;Dreher's Designer Shirt Company;a monopolist, has the following cost and revenue information.;COSTS REVENUES;Quantit;Produced;Total;Cost;($);Marginal;Cost;Quantity;Demanded;Price;($/unit);Total;Revenue;Marginal;Revenue;0 100 -- 0 170 --;1 140 1 160;2 184 2 150;3 230 3 140;4 280 4 130;5 335 5 120;6 395 6 110;7 475 7 100;8 565 8 90;48.Refer to Table;15-2.;What is the marginal revenue from selling the 2nd shirt?;a. $140;b. $150;c. $160;d. $170;Name;ID: A;12;49.Refer to Table;15-2.;What is the marginal revenue from selling the 8th shirt?;a. $10;b. $20;c. $40;d. $90;50. Monopolies use their;market power to;a. charge prices that equal;minimum average total cost.;b. attain normal profits in the;long run.;c. charge a price that is higher;than marginal cost.;d. dump excess supplies of their product on the market.

 

Paper#57950 | Written in 18-Jul-2015

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