Question 1

What is the Degree of Operating Leverage?

Accepted Answer

It is an elasticity formula wh

Question 2

In the short run,which of the following would indicate that a perfectly competitive firm is producing an output for which it is receiving a normal profit?

Accepted Answer

A) P > AC B) AVC < P < AC C) P = AC D) P = AVC A) P > AC B) AVC < P < AC C) P = AC D) P = AVC

Question 3

Which of the following is true about a monopoly?

Accepted Answer

A) Its demand curve is generally less elastic than in more competitive markets. 
B) It will always earn economic profit. 
C) It will always produce the same as a perfectly competitive firm. 
D) It will always be subject to government regulation. 
E) None of the above is true. 
A) Its demand curve is generally less elastic than in more competitive markets. 
B) It will always earn economic profit. 
C) It will always produce the same as a perfectly competitive firm. 
D) It will always be subject to government regulation. 
E) None of the above is true.

Question 4

A perfectly competitive firm has the cost function TC = 1000 + 2Q + 0.1 Q2.What is the lowest price at which this firm can break even?

Accepted Answer

MC = 2 + 0.2Q AC = (1000/Q)+ 2

Question 5

In the short run a firm should shut down if it cannot

Accepted Answer

A) make normal profits. 
B) make economic profits. 
C) cover its variable costs. 
D) cover its fixed costs. 
A) make normal profits. 
B) make economic profits. 
C) cover its variable costs. 
D) cover its fixed costs.

Question 6

Suppose that a perfectly competitive industry is in long-run equilibrium,and demand increases.Explain the short- and long-run effects on the firm and the industry.

Accepted Answer

Short run: An increase in demand raises

Question 7

A monopolist has demand and cost curves given by:
QD = 10,000 - 20P
TC = 1,000 + 10Q + .05Q2
a.Find the monopolist's profit-maximizing quantity and price.
b.Find the monopolist's profit.

Accepted Answer

a.MR = 500 - 0.1 Q MC = 10 + 0

Question 8

Describe the process by which the competitive market establishes a price at which all firms are just earning normal profits.

Accepted Answer

Above normal profits will entice new fir

Question 9

Which of the following characteristics is most important in differentiating between perfect competition and all other types of markets?

Accepted Answer

A) whether or not the product is standardized 
B) whether or not there is complete market information about price 
C) whether or not firms are price takers 
D) All of the above are equally important. 
A) whether or not the product is standardized 
B) whether or not there is complete market information about price 
C) whether or not firms are price takers 
D) All of the above are equally important.

Question 10

What does it mean to say that a perfectly competitive firm is a price taker? Can't a firm set any price it chooses?

Accepted Answer

A firm can set any price it chooses,but

Question 11

According to the shutdown rule,a firm should produce no output in the short run if

Accepted Answer

A) price is below minimum average total cost. 
B) price is above minimum average total cost. 
C) total revenues are lower than total fixed costs. 
D) price is below minimum average variable costs. 
A) price is below minimum average total cost. 
B) price is above minimum average total cost. 
C) total revenues are lower than total fixed costs. 
D) price is below minimum average variable costs.

Question 12

The main difference between the price-quantity graph of a perfectly competitive firm and a monopoly is

Accepted Answer

A) that the competitive firm's demand curve is horizontal,while that of the monopoly is downward sloping. 
B) that a monopoly always earns an economic profit while a competitive company always earns only normal profit. 
C) that a monopoly maximizes its profit when marginal revenue is greater than marginal cost. 
D) that a monopoly does not incur increasing marginal cost. 
A) that the competitive firm's demand curve is horizontal,while that of the monopoly is downward sloping. 
B) that a monopoly always earns an economic profit while a competitive company always earns only normal profit. 
C) that a monopoly maximizes its profit when marginal revenue is greater than marginal cost. 
D) that a monopoly does not incur increasing marginal cost.

Question 13

Why would a firm choose to remain in an industry in which it makes an economic profit of zero?

Accepted Answer

Making an economic profit of zero does n

Question 14

Which of the following is false?

Accepted Answer

A) A monopolist will sell less at a higher price. 
B) A monopolist has a marginal revenue that is less than the price. 
C) A monopolist will produce where MR = MC. 
D) A monopolist is a price taker. 
A) A monopolist will sell less at a higher price. 
B) A monopolist has a marginal revenue that is less than the price. 
C) A monopolist will produce where MR = MC. 
D) A monopolist is a price taker.

Question 15

How can break-even analysis be used to project the level of operation needed to achieve a targeted profit level?

Accepted Answer

The targeted level of profit can be fact

Question 16

A perfectly competitive firm has total revenue and total cost curves given by:
TR = 100Q
TC = 5,000 + 2Q + 0.2 Q2
a.Find the profit-maximizing output for this firm.
b.What profit does the firm make?

Accepted Answer

a.MR = 100 MC = 2 + .4Q 100 =

Question 17

For a demand curve that is horizontal,the marginal revenue curve

Accepted Answer

A) will be to the right of the demand curve and half as steep. 
B) will be to the left of the demand curve and half as steep. 
C) will be to the right of the demand curve and twice as steep. 
D) will be the same as the demand curve. 
A) will be to the right of the demand curve and half as steep. 
B) will be to the left of the demand curve and half as steep. 
C) will be to the right of the demand curve and twice as steep. 
D) will be the same as the demand curve.

Question 18

For a linear demand curve that is downward sloping,the marginal revenue curve

Accepted Answer

A) will be to the left of the demand curve and twice as steep. 
B) will be to the right of the demand curve and twice as steep. 
C) will be to the left of the demand curve and half as steep. 
D) will be the same as the demand curve. 
A) will be to the left of the demand curve and twice as steep. 
B) will be to the right of the demand curve and twice as steep. 
C) will be to the left of the demand curve and half as steep. 
D) will be the same as the demand curve.

Question 19

Which of the following correctly completes this statement? The monopolist's marginal revenue

Accepted Answer

A) will be greater than price. 
B) will be less than price. 
C) will be equal to price. 
D) will be greater than total revenues. 
A) will be greater than price. 
B) will be less than price. 
C) will be equal to price. 
D) will be greater than total revenues.

Question 20

Firms are "price makers" if they

Accepted Answer

A) have sufficient market power to set their product price. 
B) make the market price their product price. 
C) make their product price competitive. 
D) None of the above 
A) have sufficient market power to set their product price. 
B) make the market price their product price. 
C) make their product price competitive. 
D) None of the above

What is the Degree of Operating Leverage?

In the short run,which of the following would indicate that a perfectly competitive firm is producing an output for which it is receiving a normal profit?

Which of the following is true about a monopoly?

A perfectly competitive firm has the cost function TC = 1000 + 2Q + 0.1 Q².What is the lowest price at which this firm can break even?

In the short run a firm should shut down if it cannot

Suppose that a perfectly competitive industry is in long-run equilibrium,and demand increases.Explain the short- and long-run effects on the firm and the industry.

A monopolist has demand and cost curves given by: Q_D = 10,000 - 20P TC = 1,000 + 10Q + .05Q² a.Find the monopolist's profit-maximizing quantity and price. b.Find the monopolist's profit.

Describe the process by which the competitive market establishes a price at which all firms are just earning normal profits.

Which of the following characteristics is most important in differentiating between perfect competition and all other types of markets?

What does it mean to say that a perfectly competitive firm is a price taker? Can't a firm set any price it chooses?

According to the shutdown rule,a firm should produce no output in the short run if

The main difference between the price-quantity graph of a perfectly competitive firm and a monopoly is

Why would a firm choose to remain in an industry in which it makes an economic profit of zero?

Which of the following is false?

How can break-even analysis be used to project the level of operation needed to achieve a targeted profit level?

A perfectly competitive firm has total revenue and total cost curves given by: TR = 100Q TC = 5,000 + 2Q + 0.2 Q² a.Find the profit-maximizing output for this firm. b.What profit does the firm make?

For a demand curve that is horizontal,the marginal revenue curve

For a linear demand curve that is downward sloping,the marginal revenue curve

Which of the following correctly completes this statement? The monopolist's marginal revenue

Firms are "price makers" if they

Introduction

The Firm and Its Goals

Supply and Demand

Demand Elasticity

Demand Estimation and Forecasting Appendices 5A and 5B

The Theory and Estimation of Production Appendices 6A,6B,and 6C

The Theory and Estimation of Cost Appendices 7A,7B,and 7C

Pricing and Output Decisions: Monopolistic Competition and Oligopoly

Special Pricing Practices

Game Theory and Asymmetric Information

Capital Budgeting and Risk

The Multinational Corporation in a Global Setting

Government and Industry: Challenges and Opportunities for Todays Manager

The Global Soft Drink Industry

Filters

Exam 8: Pricing and Output Decisions: Perfect Competition and Monopoly Appendices 8A and 8B

What is the Degree of Operating Leverage?

In the short run,which of the following would indicate that a perfectly competitive firm is producing an output for which it is receiving a normal profit?

Which of the following is true about a monopoly?

A perfectly competitive firm has the cost function TC = 1000 + 2Q + 0.1 Q2.What is the lowest price at which this firm can break even?

In the short run a firm should shut down if it cannot

Suppose that a perfectly competitive industry is in long-run equilibrium,and demand increases.Explain the short- and long-run effects on the firm and the industry.

A monopolist has demand and cost curves given by: QD = 10,000 - 20P TC = 1,000 + 10Q + .05Q2 a.Find the monopolist's profit-maximizing quantity and price. b.Find the monopolist's profit.

Describe the process by which the competitive market establishes a price at which all firms are just earning normal profits.

Which of the following characteristics is most important in differentiating between perfect competition and all other types of markets?

What does it mean to say that a perfectly competitive firm is a price taker? Can't a firm set any price it chooses?

According to the shutdown rule,a firm should produce no output in the short run if

The main difference between the price-quantity graph of a perfectly competitive firm and a monopoly is

Why would a firm choose to remain in an industry in which it makes an economic profit of zero?

Which of the following is false?

How can break-even analysis be used to project the level of operation needed to achieve a targeted profit level?

A perfectly competitive firm has total revenue and total cost curves given by: TR = 100Q TC = 5,000 + 2Q + 0.2 Q2 a.Find the profit-maximizing output for this firm. b.What profit does the firm make?

For a demand curve that is horizontal,the marginal revenue curve

For a linear demand curve that is downward sloping,the marginal revenue curve

Which of the following correctly completes this statement? The monopolist's marginal revenue

Firms are "price makers" if they

Introduction

The Firm and Its Goals

Supply and Demand

Demand Elasticity

Demand Estimation and Forecasting Appendices 5A and 5B

The Theory and Estimation of Production Appendices 6A,6B,and 6C

The Theory and Estimation of Cost Appendices 7A,7B,and 7C

Pricing and Output Decisions: Monopolistic Competition and Oligopoly

Special Pricing Practices

Game Theory and Asymmetric Information

Capital Budgeting and Risk

The Multinational Corporation in a Global Setting

Government and Industry: Challenges and Opportunities for Todays Manager

The Global Soft Drink Industry

Filters

A perfectly competitive firm has the cost function TC = 1000 + 2Q + 0.1 Q².What is the lowest price at which this firm can break even?

A monopolist has demand and cost curves given by: Q_D = 10,000 - 20P TC = 1,000 + 10Q + .05Q² a.Find the monopolist's profit-maximizing quantity and price. b.Find the monopolist's profit.

A perfectly competitive firm has total revenue and total cost curves given by: TR = 100Q TC = 5,000 + 2Q + 0.2 Q² a.Find the profit-maximizing output for this firm. b.What profit does the firm make?