Question 31 For a competitive firm price is equal to marginal revenue. price is

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Question 31

For a competitive firm

price is equal to marginal revenue.

price is less than marginal revenue.

demand is less than marginal revenue.

demand is less than average revenue but equal to marginal revenue.

3 points   

Question 32

If marginal revenue exceeds marginal costs

production should be increased.

production should be increased and profits will grow.

production should be increased and losses will decrease.

all of these choices are possible.

3 points   

Question 33

In a monopoly,

marginal revenue is greater than price.

marginal revenue is less than price.

the demand curve is horizontal.

marginal revenue and price are equal

3 points   

Question 34

The MR=MC rule

applies to price-makers only.

does not vary by market structure.

is only true in competitive markets.

applies to price-makers that have MR=P.

3 points   

Question 35

Market prices contain

some information.

all information.

only past information.

a bias for old stocks.

3 points   

Question 36

Diminishing marginal returns to labor means

that each additional worker costs more.

that each additional worker produces less than the previous worker.

that each additional worker costs less.

that total product grows at a constant rate when workers are added to production.

3 points   

Question 37

Internal markets

can be useful suppliers of information.

suffer from some of the same problems that external markets suffer.

are becoming increasingly popular.

all of these choices.

3 points   

Question 38

Amazon.com claims that its average costs fall as it adds new product lines to its website. Amazon.com is experiencing

network externalities.

diseconomies of scale.

economies of scope

all of these choices.

3 points   

Question 39

The equity premium is the return

investors expect to equal a risk free investment.

covered by stockholder insurance.

on bonds.

investors expect above a risk free investment.

3 points   

Question 40

The objective of creating value is the same as

maximizing shareholder value.

maximizing profit.

maximizing added value.

all of these choices.

3 points   

Question 41

A movie theater can increase its profits through price discrimination by charging a higher price to adults and a lower price to children if

adults buy more popcorn than children.

the cost of showing a movie to children is less than the cost of showing a movie to adults.

it has some degree of monopoly-pricing power.

All of the above are correct.

3 points   

Question 42

Q = 60 and P = 30

Q = 30 and P = 60

Q = 30 and P = 30

Q = 45 and P = 45

3 points   

Question 43

If the demand for textbooks is inelastic, then a decrease in the price of textbooks will

not change total revenue of textbook sellers.

There is not enough information to answer this question.

decrease total revenue of textbook sellers.

increase total revenue of textbook sellers.

3 points   

Question 44

Other things equal, the demand for a good tends to be more inelastic, the

more the good is considered a luxury good.

more narrowly defined is the market for the good.

longer the time period considered.

fewer the available substitutes.

3 points   

Question 45

more units of output because its marginal revenue is less than its marginal cost.

fewer units of output because its marginal revenue is greater than its marginal cost.

more units of output because its marginal revenue is greater than its marginal cost.

fewer units of output because its marginal revenue is less than its marginal cost.

price is equal to marginal revenue.

price is less than marginal revenue.

demand is less than marginal revenue.

demand is less than average revenue but equal to marginal revenue.

Explanation / Answer

Question 31: - A) price is equal to marginal revenue.

Question 32: - D) all of these choices are possible.

Question 33: - B) marginal revenue is less than price.

Question 34: - B) does not vary by market structure.

Question 35: - B) all information.

Question 36: - B) that each additional worker produces less than the previous worker.

Question 37: - D) all of these choices.

Question 38: - C) economies of scope

Question 39: - D) investors expect above a risk free investment.

Question 40: - A) maximizing shareholder value.

Question 41: - C) it has some degree of monopoly-pricing power.

Question 42: - Image is not displayed. The profits will be maximized where Marginal Cost = Marginal revenue

Question 43: - C) decrease total revenue of textbook sellers.

Question 44: - D) fewer the available substitutes.

Question 45: - D) fewer units of output because its marginal revenue is less than its marginal cost.

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