question
Adam's Apples, a small firm supplying apples in a perfectly competitive market, decides to cut its production in half this year. As a result, the
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market price will not be affected
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A monopolist has market power because it
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Faces a downward-sloping demand curve for its own output.
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A horizontal long run industry supply curve occurs under conditions of
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constant costs
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McDonald's makes its unique McRib sandwich "available for a limited time only," usually in the fall. Such a strategy is likely to:
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increase its marginal value to the consumer
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Which of the following markets best approximates the perfectly competitive market structure?
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Foreign Exchange Markets
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Which of the following represents the relationship between marginal cost and marginal productivity?
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When marginal product increases, marginal cost decreases.
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As a monopolist increases the quantity of output produced, _____.
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both price and marginal revenue decrease, but marginal revenue falls faster than price
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A price-discriminating monopolist divides its customers into two segments based on price elasticity of demand. If it sells its product for a price of $42 in the market segment where demand is relatively less price elastic, the price in the market segment where demand is more price elastic will be:
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less than$42
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The figure below shows the cost and revenue curves for a monopolist. The output level that maximizes profit for the non-price discriminating monopolist is _____
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700 units
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A firm enters into a consent decree to avoid an even greater legal setback. If the terms of the consent decree effectively double the firm's fixed costs, then
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marginal cost remains unchanged
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Unlike implicit costs, explicit costs
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are actual cash payments
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The figure below shows the cost and revenue curves faced by a profit-maximizing monopolist. If the monopolist engages in perfect price discrimination, the price of the monopolist's good will:
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Vary between $212 and $120
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Which of the following is true for a monopolist that engages in perfect price discrimination?
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Perfect price discrimination allows the monopolist to reap the entire gains from production.
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The figure given below depicts the cost and demand conditions facing a profit-maximizing monopolist that does not discriminate among its customers. The deadweight loss of monopoly equals _____.
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$125
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Which of the following are implicit costs for a typical firm?
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opportunity costs of capital owned and used by the firm
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The Hound Dog Bus Company contemplates expanding its Virginia operations by offering service from Fairfax to Arlington. The total cost of the trip would be $120, of which $50 is fixed cost, which it has already paid. The firm expects to earn $60 in revenue from the trip. The Hound Dog Bus Company should
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not offer this service because the marginal revenue is less than the marginal cost
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Table 7.2 shows labor and the quantity of shoes produced by a firm. Given the information in the table below, at which of the following points do negative marginal returns set in?
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Between the fourth and fifth units of labor
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In a perfectly competitive industry, we are likely to find that _____.
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Firms do not advertise
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. The table given below shows the output supplied by a firm and its total cost of production. If the
market price is $8.50, the profit-maximizing output and profit are _____.
market price is $8.50, the profit-maximizing output and profit are _____.
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40 units and $35, respectively
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Perfectly competitive firms and monopolistic firms determine their respective profit-maximizing output levels where:
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marginal cost equals marginal revenue.
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Suppose a perfectly competitive, increasing-cost industry is in long-run equilibrium when market demand increases. What is likely to happen to a typical firm in the long run?
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The equilibrium price will be higher in the long run
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If a perfectly competitive industry is monopolized, consumer surplus:
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can be expected to decrease
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16. Figure 7.1 shows the U-shaped cost curves for a producer. In the figure below, A is the marginal cost curve (MC), B is the average variable cost curve (AVC), and C is the average total cost curve (ATC). When output is 10, then:
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total cost equals $80.
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Consider the following figure that shows the demand and the cost curves of a perfectly competitive firm. At a market price of P1, the profit-maximizing quantity for the firm is _____.
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d units of output
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For a monopolist that does not price discriminate, economic profit is maximized in the short run at a price of $140. Marginal revenue at that output level is:
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less than $140
question
Which economic concept explains why a large drugstore chain can produce at a
lower average cost than Whoville Pharmacy, an individually owned drugstore?
lower average cost than Whoville Pharmacy, an individually owned drugstore?
answer
economies of scale
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