Question 1 Suppose a monopolist is producing a level of output such that MR > MC

Question

Question 1














Suppose a monopolist is producing a level of output such that MR > MC. What should the firm do to maximize its profits?
Answer









The firm should hire less labor.







The firm should do nothing > it wants to maximize the difference between MR and MC in order to maximize its profits.







The firm should increase price.







The firm should increase output.


.

5 points


Question 2














Which of the following conditions holds for a profit-maximizing perfect competitor, but not for a monopolist, at the profit-maximizing level of output?
Answer









Price = marginal cost.







Price = average revenue.







Marginal revenue = marginal cost.







Total cost = average total cost × quantity.


.

5 points


Question 3














Which of the following statements is correct?
Answer









The monopolist's supply curve is that section of its MC curve that lies above its AVC curve.







The monopolist's supply curve is that section of its MC curve that lies above its MR curve.







The monopolist does not have a supply curve.







The monopolist's supply curve is its MC curve.


.

5 points


Question 4














In comparing monopoly to a perfectly competitive market, which of the following is correct?
Answer









Employment will be higher under monopoly.







Consumers will be better off with the monopoly.







Equilibrium quantity will be higher under perfect competition.







Market price will be higher under perfect competition.


.

5 points


Question 5














Viewed from the perspective of economic efficiency, which of the following barriers to entry is the best justification for monopoly?
Answer









Significant economies of scale.







Ownership of an essential raw material.







Unfair competition.







A patented production technique.


.

5 points


Question 6














If an industry is characterized by economies of scale:
Answer









the costs of entry into the market are likely to be substantial.







barriers to entry are usually not very large.







long-run average costs of production increase as the quantity the firm produces increases.







capital requirements are small due to the efficiency of the large-scale operations.


.

5 points


Question 7














The requirement that certain professionals possess a license in order to work in a particular market has the effect of reducing the supply of those services, which in turn causes:
Answer









price to increase and the profits of firms in the market to decrease.







price and the profits of firms in the market to decrease.







price and the profits of firms in the market to increase.







price to decrease and the profits of firms in the market to increase.


.

5 points


Question 8














Which of the following is the best example of a public good?
Answer









Local telephone service.







A car.







Information.







A new cancer-fighting drug.


.

5 points


Question 9














Which of the following is not a type of "lock-in" that acts as a barrier to entry into a particular market?
Answer









Loyalty programs.







Pricing at or below the average cost of production.







Purchases of durable goods.







Specialized suppliers.


.

5 points


Question 10














The barrier to entry that exists because the value of the product to a consumer depends on the number of consumers using the product is referred to as:
Answer









a pecuniary externality.







a technological externality.







a negative externality.







a network externality.


.

5 points


Question 11














Based upon recent changes that have occurred in the market for telecommunication services in California, in that market SBC would be classified as:
Answer









a perfectly competitive firm.







a monopolistic competitor.







a monopolist.







an oligopolist.


.

5 points


Question 12














The Lerner Index is a measure of market power that focuses on:
Answer









the share of the market controlled by the X largest firms in the market.







the difference between a firm's product price and its marginal costs of production.







the sum of the squares of the market share of each firm in an industry.







the ratio of the price of a firm's product to the price elasticity of demand for the product.


.

5 points


Question 13














Assume that for a particular firm's output price = $80, marginal cost = $30, average total cost = $25. This information suggests that the firm in question has:
Answer









absolute market power.







no market power.







a fair degree of market power.







very little market power.


.

5 points


Question 14














A concentration ratio is a measure of market power that focuses on:
Answer









the share of the market controlled by the X largest firms in the market.







the sum of the squares of the market share of each firm in an industry.







the ratio of the price of a firm's product to the price elasticity of demand for the product.







the difference between a firm's product price and its marginal costs of production.


.

5 points


Question 15














Assume the managers of the two major firms in an industry agree to set the price of their output at a fixed level so as to discourage new entrants into the market. This would be considered a violation of the:
Answer









Sherman Act of 1890.







Clayton Act of 1914.







Federal Trade Commission Act of 1914.







Celler-Kefauver Act of 1950.


.

5 points


Question 16














Which of the following is the best example of a monopolistically competitive market?
Answer









The restaurant market.







The market for automobiles.







The electricity market.







The wheat market.


.

5 points


Question 17














Assume it is announced that a large number of new competitors have entered the market for mountain bikes, each offering a different model. Based on this information, this industry is best characterized as:
Answer









an oligopoly.







a monopoly.







monopolistically competitive.







perfectly competitive.


.

5 points


Question 18














For which of the following reasons is the monopolistic competitor's demand curve downward sloping?
Answer









Homogenous output.







A monopolistic competitor can only use price as a decision variable in its attempts to maximize profits.







Ease of entry and exit.







Product differentiation.


.

5 points


Question 19














The monopolistically competitive seller's demand curve will tend to become more elastic the:
Answer









more significant the barriers to entering an industry.







greater the degree of product differentiation.







larger the number of close competitors.







smaller the number of sellers.


.

5 points


Question 20














Suppose the firms in a monopolistically competitive market are incurring economic losses. During the adjustment to long-run equilibrium, which of the following will occur?
Answer









The firms' demand curves will become more elastic.







More close substitutes will appear in the market.







The demand curves faced by firms that remain in the market will shift to the left.







Some firms will exit the market if they can't cover all of their fixed and variable costs

Explanation / Answer

http://www.bilkent.edu.tr/~akdeniz/courses/micro/solhw10.htm

Related Questions

Navigate

• Browse (All)
• Browse Q
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.