15. The level of competition in a given market tends to decrease if: a. minimum

Question

15. The level of competition in a given market tends to decrease if:
a. minimum efficient scale of firms decreases.
b. the number of substitutes increase.
c. barriers to exit are lifted.
d. the number of potential entrants decreases.

16. Which of the following is true under monopoly?
a. profits are always positive.
b. P = MR.
c. P > MC.
d. all of the above are true for monopoly.

17. Assume that the monopoly firm demand and marginal revenue curves are
P = $80 - $0.0008Q
MR = $40 - $0.0016Q
The monopolist has constant average cost (that is AC = MC) of $20. The monopoly profit-maximizing price-output combination would be:
a. P = $70, Q = 12,500
b. P = $30, Q = 38,500
c. P = $50, Q = 37,500
d. P = $40, Q = 37,500

18. The government gives monopoly power to utility companies because they
a. they spend considerable sums of money on inventions.
b. they are assumed to be a natural monopoly.
c. they achieve considerable diseconomies of scale.
d. they can produce homogeneous goods.

Explanation / Answer

15. The level of competition in a given market tends to decrease if: a. minimum

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