question
A firm in a perfectly competitive market faces a market price of $44. If the firm faces marginal cost represented by the equation MC=8+4q, and q* is
A. 9 units
B. 13 units
C. 6 units
D. 5 units
E. "Thats why her hair is so big--its full of secrets"
A. 9 units
B. 13 units
C. 6 units
D. 5 units
E. "Thats why her hair is so big--its full of secrets"
answer
A
question
A monopolist can sell 15 units for $4.50 each or 16 units for $4.40 each. What is the marginal revenue earned from selling the 16th unit?
A. $67.50
B. $70.40
C. $2.90
D. $4.40
E. "That's why her hair is so big--it's full of secrets."
A. $67.50
B. $70.40
C. $2.90
D. $4.40
E. "That's why her hair is so big--it's full of secrets."
answer
C
question
Which of the following statements about monopoly is TRUE?
A. Monopolists create a contrived scarcity by selling at an output below the perfectly competitive equilibrium output
B. For a monopoly, long run profit is greater than short run profit
C. Firms in a perfectly competitive markets can create more technological advances and thus faster economic growth than a monopolistic market
D. A and C only
E. all of the above
A. Monopolists create a contrived scarcity by selling at an output below the perfectly competitive equilibrium output
B. For a monopoly, long run profit is greater than short run profit
C. Firms in a perfectly competitive markets can create more technological advances and thus faster economic growth than a monopolistic market
D. A and C only
E. all of the above
answer
A
question
Which of the following statements about monopolistic competition is TRUE?
A. Monopolistically competitive markets have no barriers to entry.
B. Excess capacity occurs when a monopolistically competitive firm sets output above the output that minimizes average total cost.
C. Advertising decreases search and information costs.
D. A and B only
E. A and C only
A. Monopolistically competitive markets have no barriers to entry.
B. Excess capacity occurs when a monopolistically competitive firm sets output above the output that minimizes average total cost.
C. Advertising decreases search and information costs.
D. A and B only
E. A and C only
answer
E
question
Kalteen sells weight gain bars for $5.00 each and faces an average total cost of $3.00. If the firm sells 500 units, what is Kalteen's profit?
A. $500
B. $2
C. $2500
D. $1500
E. $1000
A. $500
B. $2
C. $2500
D. $1500
E. $1000
answer
E
question
(Kalteen sells weight gain bars for $5.00 each and faces an average total cost of $3.00. If the firm sells 500 units, what is Kalteen's profit?)
If Kalteen from the above question sells its output in a monopoly market structure, what will happen in the long run?
A. Firms will exit the market, D and MR will decrease, and profit=zero
B. Firms will exit the market, D and MR will increase, and profit=zero
C. Profit will not change in the LR due to high barriers to entry
D. Firms will enter the market, D and MR will decrease, and profit=zero
E. Firms will enter the market, D and MR will increase, and profit=zero
If Kalteen from the above question sells its output in a monopoly market structure, what will happen in the long run?
A. Firms will exit the market, D and MR will decrease, and profit=zero
B. Firms will exit the market, D and MR will increase, and profit=zero
C. Profit will not change in the LR due to high barriers to entry
D. Firms will enter the market, D and MR will decrease, and profit=zero
E. Firms will enter the market, D and MR will increase, and profit=zero
answer
C
question
Monopolistically competitive firms advertise in order to...
A. increase demand
B. increase price elasticity of demand
C. decrease price elasticity of demand
D. A and B only
E. A and C only
A. increase demand
B. increase price elasticity of demand
C. decrease price elasticity of demand
D. A and B only
E. A and C only
answer
E
question
When an industry exhibits allocative efficiency?
A. P = MC
B. opportunity cost of resources is minimized
C. P = minimum ATC
D. A and B only
E. B and C only
A. P = MC
B. opportunity cost of resources is minimized
C. P = minimum ATC
D. A and B only
E. B and C only
answer
A
question
Assume a perfectly competitive market is in competitive equilibrium. How would firms respond to an increase in costs?
A. firms increase q initially, firms exit, remaining firms decrease q
B. firms decrease q initially, firms exit, remaining firms increase q
C. firms increase q initially, new firms enter, original firms decrease q
D. firms decrease q initially, new firms enter, original firms increase q
A. firms increase q initially, firms exit, remaining firms decrease q
B. firms decrease q initially, firms exit, remaining firms increase q
C. firms increase q initially, new firms enter, original firms decrease q
D. firms decrease q initially, new firms enter, original firms increase q
answer
B
question
Assume a market in long run competitive equilibrium experiences a decrease in demand. After market adjustments occur, what is the net change in market price and quantity after the market returns to long run equilibrium?
A. price falls and quantity falls
B. price does not change and quantity rises
C. price falls and quantity does not change
D. price does not change and quantity falls
E. "FOUR for you, Glenn Coco! You go, Glenn Coco!"
A. price falls and quantity falls
B. price does not change and quantity rises
C. price falls and quantity does not change
D. price does not change and quantity falls
E. "FOUR for you, Glenn Coco! You go, Glenn Coco!"
answer
D
question
Which of the following is NOT an effect of an increase in costs on a market in long run competitive equilibrium?
A. firms decrease in q* initially
B. firms earn negative economic profit
C. firms exist (supply decreases)
D. equilibrium price falls
A. firms decrease in q* initially
B. firms earn negative economic profit
C. firms exist (supply decreases)
D. equilibrium price falls
answer
D
question
Which market characteristic implies that long run profits can be greater than zero?
A. no barriers to entry
B. high barriers to entry
C. differentiated products
D. perfect information
E. "Gretchen, stop trying to make 'fetch' happen. It's not going to happen."
A. no barriers to entry
B. high barriers to entry
C. differentiated products
D. perfect information
E. "Gretchen, stop trying to make 'fetch' happen. It's not going to happen."
answer
B
question
Which of the following conditions is necessary for price discrimination?
A. standardized products
B. two or more groups of buyers with different price elasticities of demand
C. some degree of market power
D. A and B only
E. B and C only
A. standardized products
B. two or more groups of buyers with different price elasticities of demand
C. some degree of market power
D. A and B only
E. B and C only
answer
E
question
Assume a perfectly competitive market is in long run competitive equilibrium. How would firms respond to an increase in cost?
A. firms decrease q initially, firms earn negative short run profit, new firms enter
B. firms decrease q initially, firms earn negative short run profit, some firms exit
C. firms increase q initially, firms earn positive short run profit, new firms enter
D. firms decrease q initially, firms earn positive short run profit, some firms exit
A. firms decrease q initially, firms earn negative short run profit, new firms enter
B. firms decrease q initially, firms earn negative short run profit, some firms exit
C. firms increase q initially, firms earn positive short run profit, new firms enter
D. firms decrease q initially, firms earn positive short run profit, some firms exit
answer
B
question
Which of the following is a characteristic of monopoly?
A. no close substitutes
B. high barriers to entry
C. no barriers to entry
D. A and B only
E. A and C only
A. no close substitutes
B. high barriers to entry
C. no barriers to entry
D. A and B only
E. A and C only
answer
D
question
A monopolist can sell 11 units for $5.50 each or 12 units for $5.25 each. What is the marginal revenue earned from selling the 12th unit?
A. "It's October 3rd."
B. $60.50
C. $5.25
D. $63.00
E. $2.50
A. "It's October 3rd."
B. $60.50
C. $5.25
D. $63.00
E. $2.50
answer
E
question
All firms find the profit-maximizing level of output where
A. MR = MC
B. P = MR
C. WDE>RTR
D. MC = ATC
E. "I'm voting for Regina George because she got hit by that bus."
A. MR = MC
B. P = MR
C. WDE>RTR
D. MC = ATC
E. "I'm voting for Regina George because she got hit by that bus."
answer
A
question
Which of the following is NOT a type of barrier to entry?
A. control of an essential resource
B. economies of scale
C. allocative efficiency
D. A and B only
E. all of the above ARE types of barriers to entry
A. control of an essential resource
B. economies of scale
C. allocative efficiency
D. A and B only
E. all of the above ARE types of barriers to entry
answer
C
question
Which of the following statements about monopolistic competition is FALSE?
A. Advertising increases search and information costs
B. Monopolistically competitive firms set price equal to marginal cost
C. Excess capacity occurs when a monopolistically competitive firm sets output below the output that minimizes average total cost.
D. A and B only
E. B and C only
A. Advertising increases search and information costs
B. Monopolistically competitive firms set price equal to marginal cost
C. Excess capacity occurs when a monopolistically competitive firm sets output below the output that minimizes average total cost.
D. A and B only
E. B and C only
answer
D
question
All firms find the profit-maximizing level of output where
A. P = MR
B. TR = TC
C. MR = MC
D. P = ATC
E."FOUR for you, Glenn Coco! You go, Glenn Coco."
A. P = MR
B. TR = TC
C. MR = MC
D. P = ATC
E."FOUR for you, Glenn Coco! You go, Glenn Coco."
answer
C
question
A firm in a perfectly competitive product market faces a market price of $60. If the firm faces marginal cost represented by the equation MC = 12 + 6q, then q* is
A. 10 units
B. 8 units
C. 12 units
D. 2 units
E. " One time she punched me in the face. It was awesome."
A. 10 units
B. 8 units
C. 12 units
D. 2 units
E. " One time she punched me in the face. It was awesome."
answer
B
question
In the price discrimination model, the group that gets charged a lower price
A. has a lower opportunity cost
B. has a relatively inelastic demand
C. has more options
D. A and B only
E. A and C only
A. has a lower opportunity cost
B. has a relatively inelastic demand
C. has more options
D. A and B only
E. A and C only
answer
E
question
When an industry exhibits allocative efficiency,
A. every consumer willing to pay at least the marginal cost will get the good
B. P = minimum ATC
C. P = maximum ATC
D. A and B only
E. A and C only
A. every consumer willing to pay at least the marginal cost will get the good
B. P = minimum ATC
C. P = maximum ATC
D. A and B only
E. A and C only
answer
A
question
Which of the following is NOT a type of barrier to entry?
A. economies of scale
B. control of an essential resource
C. differentiated products
D. A and B only
E. all of the above ARE barriers to entry
A. economies of scale
B. control of an essential resource
C. differentiated products
D. A and B only
E. all of the above ARE barriers to entry
answer
C
question
Which market characteristic implies that long run profit may be greater than zero?
A. no close substitutes
B. high barriers to entry
C. differentiated products
D. perfect information
E. " On Wednesdays we wear pink.
A. no close substitutes
B. high barriers to entry
C. differentiated products
D. perfect information
E. " On Wednesdays we wear pink.
answer
B
question
Kalteen sells 250 units for $12 each and the firm faces an average total cost of $4, what is Kalteen's profit?
A. $0
B. $1000
C. $3000
D. $8
E. $2000
A. $0
B. $1000
C. $3000
D. $8
E. $2000
answer
E
question
(Kalteen sells 250 units for $12 each and the firm faces an average total cost of $4, what is Kalteen's profit?)
If Kalteen from the above question sells its output in a monopolistically competitive market structure, what will happen in the long run?
A. profit will not change in the LR due to high barriers to entry
B. firms will exit the market, D and MR will decrease, and profit = zero
C. firms will exit the market, D and MR will increase, and profit = zero
D. firms will enter the market, D and MR will decrease, and profit = zero
E. firms will enter the market, D and MR will increase, and profit = zero
If Kalteen from the above question sells its output in a monopolistically competitive market structure, what will happen in the long run?
A. profit will not change in the LR due to high barriers to entry
B. firms will exit the market, D and MR will decrease, and profit = zero
C. firms will exit the market, D and MR will increase, and profit = zero
D. firms will enter the market, D and MR will decrease, and profit = zero
E. firms will enter the market, D and MR will increase, and profit = zero
answer
D
question
Assume a market in long run competitive equilibrium experiences an increase in demand. After market adjustments occur, what is the net change in market price and quantity after the market returns to long run equilibrium?
A. price does not change and quantity rises
B. price does not change and quantity falls
C. price rises and quantity rises
D. price rises and quantity does not change
E. "I'm voting for Regina George because she got hit by that bus."
A. price does not change and quantity rises
B. price does not change and quantity falls
C. price rises and quantity rises
D. price rises and quantity does not change
E. "I'm voting for Regina George because she got hit by that bus."
answer
A
question
Which of the following statements about monopoly is TRUE?
A. For a monopoly, long run profit is usually equal to short run profit.
B. Firms in a perfectly competitive market can create more technological advances and thus faster economic growth than monopolies.
C. Monopolists create a contrived scarcity by selling at an output below the perfectly competitive equilibrium output.
D. A and C only
E. all of the above
A. For a monopoly, long run profit is usually equal to short run profit.
B. Firms in a perfectly competitive market can create more technological advances and thus faster economic growth than monopolies.
C. Monopolists create a contrived scarcity by selling at an output below the perfectly competitive equilibrium output.
D. A and C only
E. all of the above
answer
D
question
Which of the following conditions is NOT necessary for price discrimination?
A. suspicion of free snails
B. some degree of market power
C. two or more groups of buyers with different elasticities
D. all of the above
E. B and C only
A. suspicion of free snails
B. some degree of market power
C. two or more groups of buyers with different elasticities
D. all of the above
E. B and C only
answer
A
question
Which of the following is an effect of an increase in demand on a market in long run competitive equilibrium?
A. equilibrium output rises
B. firms decrease q* initially
C. firms earn negative economic profit
D. firms exit (supply decreases)
A. equilibrium output rises
B. firms decrease q* initially
C. firms earn negative economic profit
D. firms exit (supply decreases)
answer
A
question
Which of the following is a characteristic of perfect competition?
A. high barriers to entry
B. many small buyers and sellers C. differentiated products
D. all of the above
E. B and C only
A. high barriers to entry
B. many small buyers and sellers C. differentiated products
D. all of the above
E. B and C only
answer
B
question
Monopolistically competitive firms advertise in order to ...
A. increase demand
B. decrease demand
C. increase price elasticity of demand
D. A and C only
E. B and C only
A. increase demand
B. decrease demand
C. increase price elasticity of demand
D. A and C only
E. B and C only
answer
A
question
A monopolist can sell 8 units for $55 apiece or 9 units for $54 each. What is the marginal revenue earned from selling the 9th unit?
A. $486
B. $55
C. $46
D. $54
E. $9
A. $486
B. $55
C. $46
D. $54
E. $9
answer
C
question
(If Dr. Stu's Dentistry sells 35 false teeth for $56 each and the firm faces an ATC of $48, what is Dr. Stu's profit?)
If Dr. Stu's from the above question sells its output in a monopoly market structure, what will happen in the long run?
A. firms will enter the market, P and Q will rise, and profit will go to zero
B. firms will enter the market, P and Q will fall, and profit will go to zero
C. firms will exit the market, P and Q will rise, and profit will go to zero
D. firms will exit the market, P and Q will fall, and profit will go to zero
E. profit will not change in the LR due to high barriers to entry
If Dr. Stu's from the above question sells its output in a monopoly market structure, what will happen in the long run?
A. firms will enter the market, P and Q will rise, and profit will go to zero
B. firms will enter the market, P and Q will fall, and profit will go to zero
C. firms will exit the market, P and Q will rise, and profit will go to zero
D. firms will exit the market, P and Q will fall, and profit will go to zero
E. profit will not change in the LR due to high barriers to entry
answer
E
question
A firm in a perfectly competitive product market faces a market price of $18. If the firm faces marginal cost represented by the equation MC = 2+4q, then q* is
A. 4 units
B. 5 units
C. 12 units
D. 7 units
A. 4 units
B. 5 units
C. 12 units
D. 7 units
answer
A
question
Assume a perfectly competitive market is in competitive equilibrium. How would firms respond to a decrease in costs?
A. firms decrease q initially, firms exit, remaining firms increase q
B. firms decrease q initially, new firms enter, original firms decrease q
C. firms increase q initially, new firms enter, original firms decrease q
D. firms increase q initially, firms exit, remaining firms increase q
E. "You mean the drug dealer in the liquor store wasn't a good guy?"
A. firms decrease q initially, firms exit, remaining firms increase q
B. firms decrease q initially, new firms enter, original firms decrease q
C. firms increase q initially, new firms enter, original firms decrease q
D. firms increase q initially, firms exit, remaining firms increase q
E. "You mean the drug dealer in the liquor store wasn't a good guy?"
answer
C
question
Which of the following is a characteristic of perfect competition?
A. high barriers to entry
B. standardized products
C. few small buyers and sellers
D. A and B only
E. B and C only
A. high barriers to entry
B. standardized products
C. few small buyers and sellers
D. A and B only
E. B and C only
answer
B
question
Firms find the profit-maximizing level of output where
A. P = ATC
B. MR = MC
C. TR = TC
D. P = MR
A. P = ATC
B. MR = MC
C. TR = TC
D. P = MR
answer
B
question
When an industry exhibits allocative efficiency,
A. P = minATC
B. production of all other goods is maximized
C. P = MC
D. A and B only
E. B and C only
A. P = minATC
B. production of all other goods is maximized
C. P = MC
D. A and B only
E. B and C only
answer
C
question
In the price discrimination model, the group with the flat demand curve...
A. faces a lower opportunity cost
B. is charged a higher price
C. has a relatively inelastic demand
D. has fewer options available
A. faces a lower opportunity cost
B. is charged a higher price
C. has a relatively inelastic demand
D. has fewer options available
answer
A
question
Assume a marker in long run competitive equilibrium experiences an increase in demand. After market adjustments occur, what is the NET change in market price and quantity after the market returns to long run equilibrium?
A. price rises and quantity rises
B. price does not change and quantity rises
C. price rises and quantity does not change
D. price does not change and quantity falls
A. price rises and quantity rises
B. price does not change and quantity rises
C. price rises and quantity does not change
D. price does not change and quantity falls
answer
B
question
Monopolistically competitive firms advertise in order to ...
A. increase demand
B. decrease price elasticity of demand
C. increase price elasticity of demand
D. A and B only
E. A and C only
A. increase demand
B. decrease price elasticity of demand
C. increase price elasticity of demand
D. A and B only
E. A and C only
answer
D
question
Which of the following is an effect of an increase in costs on a market in long run competitive equilibrium?
A. firms increase q* initially
B. firms earn negative economic profit
C. firms enter (supply increases)
D. equilibrium (market) quantity rises
E. equilibrium price falls
A. firms increase q* initially
B. firms earn negative economic profit
C. firms enter (supply increases)
D. equilibrium (market) quantity rises
E. equilibrium price falls
answer
B
question
Which of the following conditions is necessary for price discrimination?
A. prevention of resale
B. some degree of market/monopoly power
C. two or more groups of buyers with different elasticities
D. all of the above
E. A and B only
A. prevention of resale
B. some degree of market/monopoly power
C. two or more groups of buyers with different elasticities
D. all of the above
E. A and B only
answer
D
question
A firm in a perfectly competitive market faces a market price of $48. If the firm faces marginal cost represented by the equation MC=8+4q, then q* is
A. "Baba ganoosh!"
B. 12 units
C. 5 units
D. 14 units
E. 10 units
A. "Baba ganoosh!"
B. 12 units
C. 5 units
D. 14 units
E. 10 units
answer
E
question
Which of the following is a characteristic of perfect competition?
A. no barriers to entry
B. perfect information
C. few small buyers and sellers
D. all of the above
E. A and B only
A. no barriers to entry
B. perfect information
C. few small buyers and sellers
D. all of the above
E. A and B only
answer
E
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