Question 1

Which of the following is true under perfect competition?

Accepted Answer

A)  Profits are always positive. 
B)  P > MC. 
C)  P = MR. 
D)  All of the choices are true for perfect competition. 
A)  Profits are always positive. 
B)  P > MC. 
C)  P = MR. 
D)  All of the choices are true for perfect competition. C

Question 2

Which of the following industries is best characterized as monopolistically competitive?

Accepted Answer

A)  Cereal 
B)  Crude oil 
C)  Wheat 
D)  Local electricity service 
A)  Cereal 
B)  Crude oil 
C)  Wheat 
D)  Local electricity service A

Question 3

There is no market supply curve in:

Accepted Answer

A)  a perfectly competitive market. 
B)  a monopolistically competitive market. 
C)  a monopolistic market. 
D)  monopolistically competitive and monopolistic markets. 
A)  a perfectly competitive market. 
B)  a monopolistically competitive market. 
C)  a monopolistic market. 
D)  monopolistically competitive and monopolistic markets. D

Question 4

Which of the following statements concerning monopoly is NOT true?

Accepted Answer

A)  A market may be monopolistic because there are some legal barriers. 
B)  A monopoly has market power. 
C)  A monopoly is always undesirable. 
D)  There is some deadweight loss in a monopolistic market. 
A)  A market may be monopolistic because there are some legal barriers. 
B)  A monopoly has market power. 
C)  A monopoly is always undesirable. 
D)  There is some deadweight loss in a monopolistic market.

Question 5

You are the manager of a monopoly that faces a demand curve described by P = 63 − 5Q.Your costs are C = 10 + 3Q.The profit-maximizing output for your firm is:

Accepted Answer

A)  3. 
B)  4. 
C)  5. 
D)  6. 
A)  3. 
B)  4. 
C)  5. 
D)  6.

Question 6

Consider a monopoly where the inverse demand for its product is given by P = 50 − 2Q.Total costs for this monopolist are estimated to be C(Q)= 100 + 2Q + Q2.At the profit-maximizing combination of output and price,consumer surplus is:

Accepted Answer

A)  $32. 
B)  $64. 
C)  $128. 
D)  cannot be determined with the given information. 
A)  $32. 
B)  $64. 
C)  $128. 
D)  cannot be determined with the given information.

Question 7

You are a manager in a perfectly competitive market.The price in your market is $35.Your total cost curve is C(Q)= 10 + 2Q + .5Q2.
a.What level of output should you produce in the short run?
b.What price should you charge in the short run?
c.Will you make any profits in the short run?
d.What will happen in the long run?
e.How would your answer change if your costs were C(Q)= 80 + 5Q + 30Q2?

Accepted Answer

a.Setting price equal to marginal cost i

Question 8

What market can you think of,besides that for VCRs,that has shown short-run profits but,over time,has seen profits disappear due to entry?

Accepted Answer

The market

Question 9

The first-order conditions for profit maximization in a perfectly competitive market are:

Accepted Answer

A)  P − (dC(Q)/dQ) = 0. 
B)  (dR(Q)/dQ) − (d2C(Q)/dQ2) 2C(Q)/dQ2) = 0. 
D)  P > (dC(Q)/dQ). 
A)  P − (dC(Q)/dQ) = 0. 
B)  (dR(Q)/dQ) − (d2C(Q)/dQ2) 2C(Q)/dQ2) = 0. 
D)  P > (dC(Q)/dQ).

Question 10

You are the manager of a firm that sells its product in a competitive market with market (inverse)demand given by P = 50 − 0.5Q.The market equilibrium price is $50.Your firm's cost function is C = 40 + 5Q2.Your firm's marginal revenue is:

Accepted Answer

A)  $50. 
B)  MR(Q) = 10Q. 
C)  MR(Q) = 50 − Q. 
D)  There is insufficient information to determine the firm's marginal revenue. 
A)  $50. 
B)  MR(Q) = 10Q. 
C)  MR(Q) = 50 − Q. 
D)  There is insufficient information to determine the firm's marginal revenue.

Question 11

Suppose that a monopolistically competitive market is at the long-run equilibrium.Based on this information,which of the following conclusions is NOT true?

Accepted Answer

A)  P > MC. 
B)  Deadweight loss is zero. 
C)  P = ATC > minimum of ATC. 
D)  Firms' profits are zero. 
A)  P > MC. 
B)  Deadweight loss is zero. 
C)  P = ATC > minimum of ATC. 
D)  Firms' profits are zero.

Question 12

You are the general manager of TU Modems Inc.,and your accounting department has provided you with the following information about the total cost of producing three potential quantities of a commercial-grade modem:
 $$\begin{array} { | l | c | c | r | } 
\hline & 100,000 \text { Units } & 150,000 U r i t s & 200,000 \text { Urits } \
\hline \text { Materials } & \$ 250,000 & \$ 375,000 & \$ 500,000 \
\hline \text { Depreciation } & 900,000 & 900,000 & 900,000 \
\hline \text { Labor } & 10,000 & 15,000 & 20,000 \
\hline \text { Total costs } & \$ 1,160,000 & \$ 1,290,000 & \$ 1,420,000 \
\hline
\end{array}$$ The market is saturated with modems,and your sales department has been able to identify only one potential buyer of your modems.This customer has numerous options and as a result is only willing to pay $300 per modem for an order of 100,000 modems.You must decide whether to sign a contract under these terms or simply shut down your operations.What is your optimal decision?

Accepted Answer

The only costs relevant for making this

Question 13

Consider a monopoly where the inverse demand for its product is given by P = 50 − 2Q.Total costs for this monopolist are estimated to be C(Q)= 100 + 2Q + Q2.At the profit-maximizing combination of output and price,monopoly profit is:

Accepted Answer

A)  $32. 
B)  $64. 
C)  $92. 
D)  $128. 
A)  $32. 
B)  $64. 
C)  $92. 
D)  $128.

Question 14

Why does the government grant patents to investors?
 Why does the government give monopoly power to utility companies?

Accepted Answer

The rationale behind granting monopoly p

Question 15

You are the manager of a firm that sells its product in a competitive market at a price of $48.Your firm's cost function is C = 60 + 2Q2.Your firm's maximum profits are:

Accepted Answer

A)  $192. 
B)  $228. 
C)  $348. 
D)  $576. 
A)  $192. 
B)  $228. 
C)  $348. 
D)  $576.

Question 16

Differentiated goods are NOT a feature of a:

Accepted Answer

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

Question 17

Which of the following industries is best characterized as monopolistically competitive?

Accepted Answer

A)  Toothpaste 
B)  Crude oil 
C)  Agriculture 
D)  Local telephone service 
A)  Toothpaste 
B)  Crude oil 
C)  Agriculture 
D)  Local telephone service

Question 18

Which of the following is true about where a profit-maximizing monopoly will produce on a linear demand curve when it has positive marginal costs?

Accepted Answer

A)  It will produce output on the inelastic portion of the demand curve. 
B)  It will produce output where MR < 0. 
C)  It will produce output where MR = 0. 
D)  It will produce output on the elastic portion of the demand curve. 
A)  It will produce output on the inelastic portion of the demand curve. 
B)  It will produce output where MR < 0. 
C)  It will produce output where MR = 0. 
D)  It will produce output on the elastic portion of the demand curve.

Question 19

You are the manager of a firm that produces output in two plants.The demand for your firm's product is P = 20 − Q,where Q = Q1 + Q2.The marginal costs associated with producing in the two plants are MC1 = 2 and MC2 = 2Q2.How much output should be produced in plant 1 in order to maximize profits?

Accepted Answer

A)  1 
B)  4 
C)  8 
D)  11 
A)  1 
B)  4 
C)  8 
D)  11

Question 20

A monopoly has two production plants with cost functions C1 = 50 + 0.1Q12 and C2 = 30 + 0.05Q22.The demand it faces is Q = 500 − 10P.What is the condition for profit maximization?

Accepted Answer

A)  MC1(Q1) = MC2(Q2) = P(Q1 + Q2). 
B)  MC1(Q1) = MC2(Q2) = MR(Q1 + Q2). 
C)  MC1(Q1 + Q2) = MC2(Q1 + Q2) = P (Q1 + Q2). 
D)  MC1(Q1 + Q2) = MC2(Q1 + Q2) = MR (Q1 + Q2). 
A)  MC1(Q1) = MC2(Q2) = P(Q1 + Q2). 
B)  MC1(Q1) = MC2(Q2) = MR(Q1 + Q2). 
C)  MC1(Q1 + Q2) = MC2(Q1 + Q2) = P (Q1 + Q2). 
D)  MC1(Q1 + Q2) = MC2(Q1 + Q2) = MR (Q1 + Q2).

Which of the following is true under perfect competition?

Which of the following industries is best characterized as monopolistically competitive?

There is no market supply curve in:

Which of the following statements concerning monopoly is NOT true?

You are the manager of a monopoly that faces a demand curve described by P = 63 − 5Q.Your costs are C = 10 + 3Q.The profit-maximizing output for your firm is:

Consider a monopoly where the inverse demand for its product is given by P = 50 − 2Q.Total costs for this monopolist are estimated to be C(Q)= 100 + 2Q + Q².At the profit-maximizing combination of output and price,consumer surplus is:

What market can you think of,besides that for VCRs,that has shown short-run profits but,over time,has seen profits disappear due to entry?

The first-order conditions for profit maximization in a perfectly competitive market are:

You are the manager of a firm that sells its product in a competitive market with market (inverse)demand given by P = 50 − 0.5Q.The market equilibrium price is $50.Your firm's cost function is C = 40 + 5Q².Your firm's marginal revenue is:

Suppose that a monopolistically competitive market is at the long-run equilibrium.Based on this information,which of the following conclusions is NOT true?

Consider a monopoly where the inverse demand for its product is given by P = 50 − 2Q.Total costs for this monopolist are estimated to be C(Q)= 100 + 2Q + Q².At the profit-maximizing combination of output and price,monopoly profit is:

Why does the government grant patents to investors? Why does the government give monopoly power to utility companies?

You are the manager of a firm that sells its product in a competitive market at a price of $48.Your firm's cost function is C = 60 + 2Q².Your firm's maximum profits are:

Differentiated goods are NOT a feature of a:

Which of the following industries is best characterized as monopolistically competitive?

Which of the following is true about where a profit-maximizing monopoly will produce on a linear demand curve when it has positive marginal costs?

A monopoly has two production plants with cost functions C₁ = 50 + 0.1Q₁² and C₂ = 30 + 0.05Q₂².The demand it faces is Q = 500 − 10P.What is the condition for profit maximization?

The Fundamentals of Managerial Economics

Market Forces: Demand and Supply

Quantitative Demand Analysis

The Theory of Individual Behavior

The Production Process and Costs

The Organization of the Firm

The Nature of Industry

Basic Oligopoly Models

Game Theory: Inside Oligopoly

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

A Managers Guide to Government in the Marketplace

Filters

Exam 8: Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

Which of the following is true under perfect competition?

Which of the following industries is best characterized as monopolistically competitive?

There is no market supply curve in:

Which of the following statements concerning monopoly is NOT true?

You are the manager of a monopoly that faces a demand curve described by P = 63 − 5Q.Your costs are C = 10 + 3Q.The profit-maximizing output for your firm is:

Consider a monopoly where the inverse demand for its product is given by P = 50 − 2Q.Total costs for this monopolist are estimated to be C(Q)= 100 + 2Q + Q2.At the profit-maximizing combination of output and price,consumer surplus is:

What market can you think of,besides that for VCRs,that has shown short-run profits but,over time,has seen profits disappear due to entry?

The first-order conditions for profit maximization in a perfectly competitive market are:

You are the manager of a firm that sells its product in a competitive market with market (inverse)demand given by P = 50 − 0.5Q.The market equilibrium price is $50.Your firm's cost function is C = 40 + 5Q2.Your firm's marginal revenue is:

Suppose that a monopolistically competitive market is at the long-run equilibrium.Based on this information,which of the following conclusions is NOT true?

Consider a monopoly where the inverse demand for its product is given by P = 50 − 2Q.Total costs for this monopolist are estimated to be C(Q)= 100 + 2Q + Q2.At the profit-maximizing combination of output and price,monopoly profit is:

Why does the government grant patents to investors? Why does the government give monopoly power to utility companies?

You are the manager of a firm that sells its product in a competitive market at a price of $48.Your firm's cost function is C = 60 + 2Q2.Your firm's maximum profits are:

Differentiated goods are NOT a feature of a:

Which of the following industries is best characterized as monopolistically competitive?

Which of the following is true about where a profit-maximizing monopoly will produce on a linear demand curve when it has positive marginal costs?

You are the manager of a firm that produces output in two plants.The demand for your firm's product is P = 20 − Q,where Q = Q1 + Q2.The marginal costs associated with producing in the two plants are MC1 = 2 and MC2 = 2Q2.How much output should be produced in plant 1 in order to maximize profits?

A monopoly has two production plants with cost functions C1 = 50 + 0.1Q12 and C2 = 30 + 0.05Q22.The demand it faces is Q = 500 − 10P.What is the condition for profit maximization?

The Fundamentals of Managerial Economics

Market Forces: Demand and Supply

Quantitative Demand Analysis

The Theory of Individual Behavior

The Production Process and Costs

The Organization of the Firm

The Nature of Industry

Basic Oligopoly Models

Game Theory: Inside Oligopoly

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

A Managers Guide to Government in the Marketplace

Filters

Consider a monopoly where the inverse demand for its product is given by P = 50 − 2Q.Total costs for this monopolist are estimated to be C(Q)= 100 + 2Q + Q².At the profit-maximizing combination of output and price,consumer surplus is:

You are the manager of a firm that sells its product in a competitive market with market (inverse)demand given by P = 50 − 0.5Q.The market equilibrium price is $50.Your firm's cost function is C = 40 + 5Q².Your firm's marginal revenue is:

Consider a monopoly where the inverse demand for its product is given by P = 50 − 2Q.Total costs for this monopolist are estimated to be C(Q)= 100 + 2Q + Q².At the profit-maximizing combination of output and price,monopoly profit is:

You are the manager of a firm that sells its product in a competitive market at a price of $48.Your firm's cost function is C = 60 + 2Q².Your firm's maximum profits are:

A monopoly has two production plants with cost functions C₁ = 50 + 0.1Q₁² and C₂ = 30 + 0.05Q₂².The demand it faces is Q = 500 − 10P.What is the condition for profit maximization?