Question 1

If a firm with monopoly pricing power in the market faces a demand curve of P = 2,000 - 2Q and marginal cost of MC = 1,100 + 2Q,then the firm will produce at a price of

Accepted Answer

A) $16. 
B) $1,400. 
C) $1,700. 
D) $1,600. 
A) $16. 
B) $1,400. 
C) $1,700. 
D) $1,600.

Question 2

Under what market structure do we have only one firm?

Accepted Answer

A) Perfect Competition 
B) Monopoly 
C) Monopolistic Competition 
D) Oligopoly 
A) Perfect Competition 
B) Monopoly 
C) Monopolistic Competition 
D) Oligopoly

Question 3

Always Round Tire is the only producer of tires for the new British import,the Maxi Copper.Demand for a set of four tires is P = 800 - 5Q while the cost incurred by the firm is MC = 15Q.What would be the monopoly price and quantity? What would happen to price and quantity if the market was perfectly competitive (assuming the same costs)?

Accepted Answer

A monopoly would maximize its profits by

Question 4

Under which market structure is a firm's MR curve horizontal?

Accepted Answer

A) Perfect Competition 
B) Monopoly 
C) Monopolistic Competition 
D) Oligopoly 
A) Perfect Competition 
B) Monopoly 
C) Monopolistic Competition 
D) Oligopoly

Question 5

In a monopolistically competitive market,the seller maximizes profits by

Accepted Answer

A) setting P = ATC. 
B) setting MC = ATC. 
C) setting price where MR = MC. 
D) setting price where P = MC. 
A) setting P = ATC. 
B) setting MC = ATC. 
C) setting price where MR = MC. 
D) setting price where P = MC.

Question 6

Firm A has been dealing in baby food products for the past 10 years and enjoys a good market share.Suppose a new firm enters the market to capitalize on the increasing demand for such products.However,the products of the new firm fail to attract customers.The failure of the new firm is due to

Accepted Answer

A) the pioneering brand advantage of the incumbent. 
B) the learning curve effect. 
C) scale economies. 
D) the specific assets owned by the incumbent. 
A) the pioneering brand advantage of the incumbent. 
B) the learning curve effect. 
C) scale economies. 
D) the specific assets owned by the incumbent.

Question 7

The problem of the cartel points out that

Accepted Answer

A) the interests of consumers and duopolists are the same. 
B) the interests of consumers and duopolists conflict. 
C) the interests of consumers and duopolists are the same in pricing,but conflict in output management. 
D) the interests of consumers and duopolists are the same in output management,but conflict in pricing. 
A) the interests of consumers and duopolists are the same. 
B) the interests of consumers and duopolists conflict. 
C) the interests of consumers and duopolists are the same in pricing,but conflict in output management. 
D) the interests of consumers and duopolists are the same in output management,but conflict in pricing.

Question 8

For any company operating in a marketplace,the firm attempts to maximize the value of the company's worth by setting the output where

Accepted Answer

A) costs are lowest. 
B) P < AVC. 
C) MR = MC. 
D) AR = MC. 
A) costs are lowest. 
B) P < AVC. 
C) MR = MC. 
D) AR = MC.

Question 9

Under monopoly we have "unexploited gains from trade" because

Accepted Answer

A) if the firm were competitive it would have increased output in the long run. 
B) if the firm were competitive it would have decreased output in the long run. 
C) if the firm were competitive it would have not changed output in the long run. 
D) the FCC is always trying to regulate it. 
A) if the firm were competitive it would have increased output in the long run. 
B) if the firm were competitive it would have decreased output in the long run. 
C) if the firm were competitive it would have not changed output in the long run. 
D) the FCC is always trying to regulate it.

Question 10

Under monopoly,there are

Accepted Answer

A) unexploited gains from trade. 
B) many competitors. 
C) advantages of heterogeneous products. 
D) problems of easy entry. 
A) unexploited gains from trade. 
B) many competitors. 
C) advantages of heterogeneous products. 
D) problems of easy entry.

Question 11

Refer to Figure 6.1.The area RSTU represents

Accepted Answer

A) economic surplus. 
B) the profit earned by the monopolist. 
C) the loss incurred by the monopolist. 
D) deadweight loss. 
A) economic surplus. 
B) the profit earned by the monopolist. 
C) the loss incurred by the monopolist. 
D) deadweight loss.

Question 12

For a perfectly or purely competitive firm,profit maximization occurs at an output level where

Accepted Answer

A) P = MC. 
B) MC = ATC. 
C) P = AVC. 
D) P < AVC. 
A) P = MC. 
B) MC = ATC. 
C) P = AVC. 
D) P < AVC.

Question 13

Economists tend to focus on one structural aspect of market organization that is more important than the others.It is

Accepted Answer

A) the number of buyers and sellers. 
B) product homogeneity or differentiation. 
C) the quality of market information. 
D) the entry and exit conditions. 
A) the number of buyers and sellers. 
B) product homogeneity or differentiation. 
C) the quality of market information. 
D) the entry and exit conditions.

Question 14

In this chapter,the discussion on competitive markets tells us that each firm's demand curve is horizontal.Is this not inconsistent with the industry's demand curve,which slopes downward?

Accepted Answer

No,this is not inconsistent.The industry

Question 15

Under what market structure do we have products like toothpaste,airlines,fast food,and shampoos?

Accepted Answer

A) Perfect competition 
B) Monopoly 
C) Monopolistic competition 
D) Oligopoly 
A) Perfect competition 
B) Monopoly 
C) Monopolistic competition 
D) Oligopoly

Question 16

In a purely competitive market,a company views its demand curve as

Accepted Answer

A) completely price insensitive. 
B) horizontal (flat). 
C) vertical. 
D) convex. 
A) completely price insensitive. 
B) horizontal (flat). 
C) vertical. 
D) convex.

Question 17

If a firm operating in a fairly competitive market earns a large economic profit,then,over time,

Accepted Answer

A) old firms will exit and prices will rise. 
B) old firms will exit and prices will fall. 
C) new firms will enter and prices will rise. 
D) new firms will enter and prices will fall. 
A) old firms will exit and prices will rise. 
B) old firms will exit and prices will fall. 
C) new firms will enter and prices will rise. 
D) new firms will enter and prices will fall.

Question 18

Currently,a monopolist's MR = $10 and its MC = $5 and it serves 10 consumers.An 11th consumer walks in.Should the company provide service to the additional customer?

Accepted Answer

A) Yes,MR > MC,so it should provide service to the additional customer. 
B) Yes,MR is equal to the number of customers,so it should provide service to the additional customer. 
C) No,MR > MC,so it should not provide service to the additional customer. 
D) No,MC is less than the number of customers,so it should not provide service to the additional customer. 
A) Yes,MR > MC,so it should provide service to the additional customer. 
B) Yes,MR is equal to the number of customers,so it should provide service to the additional customer. 
C) No,MR > MC,so it should not provide service to the additional customer. 
D) No,MC is less than the number of customers,so it should not provide service to the additional customer.

Question 19

The importance of the marginal cost curve of a company is that it is also the

Accepted Answer

A) supply curve for its product. 
B) demand curve for its product. 
C) average cost curve for its product. 
D) marginal revenue curve for its product. 
A) supply curve for its product. 
B) demand curve for its product. 
C) average cost curve for its product. 
D) marginal revenue curve for its product.

Question 20

A market where a few firms produce most of the output is called a(n)

Accepted Answer

A) oligopolistic market. 
B) monopolistically competitive market. 
C) perfectly competitive market. 
D) monopolistic market. 
A) oligopolistic market. 
B) monopolistically competitive market. 
C) perfectly competitive market. 
D) monopolistic market.

Exam 6: Market Structure

If a firm with monopoly pricing power in the market faces a demand curve of P = 2,000 - 2Q and marginal cost of MC = 1,100 + 2Q,then the firm will produce at a price of

Under what market structure do we have only one firm?

Under which market structure is a firm's MR curve horizontal?

In a monopolistically competitive market,the seller maximizes profits by

Firm A has been dealing in baby food products for the past 10 years and enjoys a good market share.Suppose a new firm enters the market to capitalize on the increasing demand for such products.However,the products of the new firm fail to attract customers.The failure of the new firm is due to

The problem of the cartel points out that

For any company operating in a marketplace,the firm attempts to maximize the value of the company's worth by setting the output where

Under monopoly we have "unexploited gains from trade" because

Under monopoly,there are

Refer to Figure 6.1.The area RSTU represents

For a perfectly or purely competitive firm,profit maximization occurs at an output level where

Economists tend to focus on one structural aspect of market organization that is more important than the others.It is

In this chapter,the discussion on competitive markets tells us that each firm's demand curve is horizontal.Is this not inconsistent with the industry's demand curve,which slopes downward?

Under what market structure do we have products like toothpaste,airlines,fast food,and shampoos?

In a purely competitive market,a company views its demand curve as

If a firm operating in a fairly competitive market earns a large economic profit,then,over time,

Currently,a monopolist's MR = $10 and its MC = $5 and it serves 10 consumers.An 11th consumer walks in.Should the company provide service to the additional customer?

The importance of the marginal cost curve of a company is that it is also the

A market where a few firms produce most of the output is called a(n)

Introduction

Economists View of Behavior

Exchange and Markets

Demand

Production and Cost

Pricing With Market Power

Economics of Strategy: Creating and Capturing Value

Economics of Strategy: Game Theory

Incentive Conflicts and Contracts

Organizational Architecture

Decision Rights: the Level of Empowerment

Decision Rights: Bundling Tasks Into Jobs and Subunits

Attracting and Retaining Qualified Employees

Incentive Compensation

Individual Performance Evaluation

Divisional Performance Evaluation

Corporate Governance

Vertical Integration and Outsourcing

Leadership: Motivating Change Within Organizations

Understanding the Business Environment: the Economics of Regulation

Ethics and Organizational Architecture

Organizational Architecture and the Process of Management Innovation

Filters

Currently,a monopolist's MR = $10 and its MC = $5 and it serves 10 consumers.An 11^th consumer walks in.Should the company provide service to the additional customer?