Question 1

monopolist

Accepted Answer

A) can raise its price without losing any sales because it is the only supplier in the market. 
B) can earn a greater than normal rate of return in the long run. 
C) always charges a price that is higher than marginal revenue. 
D) both a and b 
E) both b and c 
A) can raise its price without losing any sales because it is the only supplier in the market. 
B) can earn a greater than normal rate of return in the long run. 
C) always charges a price that is higher than marginal revenue. 
D) both a and b 
E) both b and c E

Question 2

A monopolist is currently hiring 5,000 units of labor.At this level,the marginal revenue of output is $10,the fixed)wage rate is $300,and the marginal product of labor is 50.In order to maximize profit,the firm should

Accepted Answer

A) keep the level of employment the same because the firm is earning a profit of $100,000. 
B) hire more labor because the next unit of labor increases profit by $500. 
C) hire more labor because the next unit of labor increases profit by $200. 
D) hire less labor because the last unit of labor added more to total cost $300)than to total revenue $10). 
A) keep the level of employment the same because the firm is earning a profit of $100,000. 
B) hire more labor because the next unit of labor increases profit by $500. 
C) hire more labor because the next unit of labor increases profit by $200. 
D) hire less labor because the last unit of labor added more to total cost $300)than to total revenue $10). C

Question 3

A firm with market power faces the following estimated demand and average variable cost functions:     where   is quantity demanded,P is price,M is income,and   is the price of a related good.The firm expects income to be $40,000 and   to be $2.Total fixed cost is $100,000.What is the estimated marginal revenue function for the firm?

Accepted Answer

A) MR = 48 - 0.002Q 
B) MR = 78 - 0.002Q 
C) MR = 78 - 0.004Q 
D) MR = 48 - 0.004Q 
A) MR = 48 - 0.002Q 
B) MR = 78 - 0.002Q 
C) MR = 78 - 0.004Q 
D) MR = 48 - 0.004Q C

Question 4

A monopolistically competitive industry is in the process of moving toward long-run equilibrium.This period the product of a typical firm has more substitutes than last period.This means that

Accepted Answer

A) there was entry into the industry. 
B) a typical firm will produce more this period. 
C) a typical firm's profits will fall this period. 
D) both a and c 
E) all of the above 
A) there was entry into the industry. 
B) a typical firm will produce more this period. 
C) a typical firm's profits will fall this period. 
D) both a and c 
E) all of the above

Question 5

Refer to the following figure showing demand and marginal revenue for a monopoly.   If production costs are constant and equal to $10 i.e.,LAC = LMC = $10),what price will the monopoly charge?

Accepted Answer

A) $5 
B) $10 
C) $15 
D) $20 
E) $25 
A) $5 
B) $10 
C) $15 
D) $20 
E) $25

Question 6

The figure above shows the demand and cost curves facing a price-setting firm.The profit-maximizing or loss-minimizing)level of output is

Accepted Answer

A) 100 
B) 200 
C) 300 
D) 400 
E) 450 
A) 100 
B) 200 
C) 300 
D) 400 
E) 450

Question 7

In a monopolistically competitive market,

Accepted Answer

A) a firm has market power because it produces a differentiated product. 
B) a firm earns economic profits in the long run because it has market power. 
C) there are a large number of firms. 
D) both a and b 
E) both a and c 
A) a firm has market power because it produces a differentiated product. 
B) a firm earns economic profits in the long run because it has market power. 
C) there are a large number of firms. 
D) both a and b 
E) both a and c

Question 8

Refer to the following table showing a monopolist's demand schedule:   If price falls from $20 to $10,then

Accepted Answer

A) MR = -$10,and demand is inelastic. 
B) MR = $10,and demand is elastic. 
C) MR = $30,and demand is elastic. 
D) MR = -$30,and demand is inelastic. 
E) none of the above 
A) MR = -$10,and demand is inelastic. 
B) MR = $10,and demand is elastic. 
C) MR = $30,and demand is elastic. 
D) MR = -$30,and demand is inelastic. 
E) none of the above

Question 9

Refer to the following table that gives the demand facing a monopolist:   If a firm earns profits of $250 by producing 40 units of output,the firm charges a price of _____ and has total costs of ______.

Accepted Answer

A) $15,$250 
B) $15,$350 
C) $20,$150 
D) $600,$450 
E) none of the above 
A) $15,$250 
B) $15,$350 
C) $20,$150 
D) $600,$450 
E) none of the above

Question 10

Which of the following is true of a monopolist in the long run?

Accepted Answer

A) The firm will charge a price that is higher than long-run marginal cost. 
B) The firm will charge a price that is equal to or greater than long-run average cost. 
C) The firm will produce that level of output at which long-run average cost is minimum. 
D) both a and b 
E) both b and c 
A) The firm will charge a price that is higher than long-run marginal cost. 
B) The firm will charge a price that is equal to or greater than long-run average cost. 
C) The firm will produce that level of output at which long-run average cost is minimum. 
D) both a and b 
E) both b and c

Question 11

Using time-series data,the demand function for a profit-maximizing monopolist has been estimated as   where   is the amount sold,P is price,M is income,and   is the price of a related good.The estimated values for M and   in 2014 are $25,000 and $200,respectively.The short-run marginal cost curve for this firm has been estimated as:   Total fixed cost is forecast to be $500,000 in 2016.What is the average variable cost function?

Accepted Answer

A) AVC = 200 -0.012Q + 0.000002Q2 
B) AVC = 200 - 0.048Q + 0.000012Q2 
C) AVC = 200 - 0.048Q + 0.000036Q2 
D) AVC = 200 -0.012Q + 0.000018Q2 
A) AVC = 200 -0.012Q + 0.000002Q2 
B) AVC = 200 - 0.048Q + 0.000012Q2 
C) AVC = 200 - 0.048Q + 0.000036Q2 
D) AVC = 200 -0.012Q + 0.000018Q2

Question 12

In order to maximize profit,a firm that produces its output in two plants will allocate total output between the two plants so that

Accepted Answer

A) marginal cost is equal for the two plants. 
B) marginal cost for the firm is equal to the sum of the plants' marginal costs. 
C) marginal revenue for the firm is equal to the sum of the plants' marginal costs. 
D) all of the above 
A) marginal cost is equal for the two plants. 
B) marginal cost for the firm is equal to the sum of the plants' marginal costs. 
C) marginal revenue for the firm is equal to the sum of the plants' marginal costs. 
D) all of the above

Question 13

A monopolist which suffers losses in the short run will

Accepted Answer

A) continue to operate as long as total revenue covers fixed cost. 
B) raise price in order to eliminate losses. 
C) exit in the long run if there is no plant size that will result in economic profit that is greater than or equal to zero. 
D) both a and b 
E) both a and c 
A) continue to operate as long as total revenue covers fixed cost. 
B) raise price in order to eliminate losses. 
C) exit in the long run if there is no plant size that will result in economic profit that is greater than or equal to zero. 
D) both a and b 
E) both a and c

Question 14

Monopolistic competition is similar to perfect competition in that:

Accepted Answer

A) there are a large number of firms 
B) firms earn economic profits in the long run 
C) firms face downward-sloping demand curves 
D) both a and b 
E) all of the above 
A) there are a large number of firms 
B) firms earn economic profits in the long run 
C) firms face downward-sloping demand curves 
D) both a and b 
E) all of the above

Question 15

A manager of a firm with market power faces the marginal revenue product and average revenue product curves shown below.The firm incurs weekly fixed costs of $1,800.The firm employs a single variable input,labor,which costs $600 per worker each week.   Given the above,the 14th worker hired adds $_______ to the firm's total revenue each week.

Accepted Answer

A) $200 per week 
B) $400 per week 
C) $500 per week 
D) $700 per week 
E) $900 per week 
A) $200 per week 
B) $400 per week 
C) $500 per week 
D) $700 per week 
E) $900 per week

Question 16

A price-setting firm faces the following estimated demand and average variable cost functions:     where   is the quantity demanded,P is price,M is income,and   is the price of a related good.The firm expects income to be $40,000 and   to be $53.Total fixed cost is $2,600,000.What is the estimated demand function for the firm?

Accepted Answer

A)    = 1,040,000 -2,000P 
B)    = 800,000 -4,000P 
C)    = 800,000-500P 
D)    = 1,600,000 - 2,000P 
A)    = 1,040,000 -2,000P 
B)    = 800,000 -4,000P 
C)    = 800,000-500P 
D)    = 1,600,000 - 2,000P

Question 17

All of the following could be a barrier to entry EXCEPT:

Accepted Answer

A) a government franchise. 
B) decreasing long-run average cost. 
C) patents. 
D) switching costs. 
E) rising LMC. 
A) a government franchise. 
B) decreasing long-run average cost. 
C) patents. 
D) switching costs. 
E) rising LMC.

Question 18

The following figure shows the demand and cost curves facing a firm with market power in the short run.   The firm will sell its output at a price of

Accepted Answer

A) $2. 
B) $3. 
C) $3.75. 
D) $5. 
E) $6. 
A) $2. 
B) $3. 
C) $3.75. 
D) $5. 
E) $6.

Question 19

A firm with market power faces the following estimated demand and average variable cost functions:     where   is quantity demanded,P is price,M is income,and   is the price of a related good.The firm expects income to be $40,000 and   to be $2.Total fixed cost is $100,000.The firm should ______________ because _______________.

Accepted Answer

A) shut down,P = $62  AVC = $17.50 
C) operate,P = $62 > AVC = $22 
D) operate,P = $60.50 > AVC = $25.50 
A) shut down,P = $62  AVC = $17.50 
C) operate,P = $62 > AVC = $22 
D) operate,P = $60.50 > AVC = $25.50

Question 20

Refer to the following figure showing demand and marginal revenue for a monopoly.   At any price above $______ demand is elastic.

Accepted Answer

A) $5 
B) $10 
C) $15 
D) $20 
E) zero 
A) $5 
B) $10 
C) $15 
D) $20 
E) zero

monopolist

A monopolist is currently hiring 5,000 units of labor.At this level,the marginal revenue of output is $10,the fixed)wage rate is $300,and the marginal product of labor is 50.In order to maximize profit,the firm should

A monopolistically competitive industry is in the process of moving toward long-run equilibrium.This period the product of a typical firm has more substitutes than last period.This means that

Refer to the following figure showing demand and marginal revenue for a monopoly. If production costs are constant and equal to $10 i.e.,LAC = LMC = $10),what price will the monopoly charge?

The figure above shows the demand and cost curves facing a price-setting firm.The profit-maximizing or loss-minimizing)level of output is

In a monopolistically competitive market,

Refer to the following table showing a monopolist's demand schedule: If price falls from $20 to $10,then

Refer to the following table that gives the demand facing a monopolist: If a firm earns profits of $250 by producing 40 units of output,the firm charges a price of _ and has total costs of __.

Which of the following is true of a monopolist in the long run?

In order to maximize profit,a firm that produces its output in two plants will allocate total output between the two plants so that

A monopolist which suffers losses in the short run will

Monopolistic competition is similar to perfect competition in that:

All of the following could be a barrier to entry EXCEPT:

The following figure shows the demand and cost curves facing a firm with market power in the short run. The firm will sell its output at a price of

A firm with market power faces the following estimated demand and average variable cost functions: where is quantity demanded,P is price,M is income,and is the price of a related good.The firm expects income to be $40,000 and to be $2.Total fixed cost is $100,000.The firm should because _.

Refer to the following figure showing demand and marginal revenue for a monopoly. At any price above $______ demand is elastic.

Managers, profits, and Markets

Demand, supply, and Market Equilibrium

Marginal Analysis for Optimal Decision Making

Basic Estimation Techniques

Theory of Consumer Behavior

Elasticity and Demand

Demand Estimation and Forecasting

Production and Cost in the Short Run

Production and Cost in the Long Run

Production and Cost Estimation

Managerial Decisions in Competitive Markets

Strategic Decision Making in Oligopoly Markets

Advanced Pricing Techniques

Decisions Under Risk and Uncertainty

Government Regulation of Business

Filters

Exam 12: Managerial Decisions for Firms With Market Power

monopolist

A monopolist is currently hiring 5,000 units of labor.At this level,the marginal revenue of output is $10,the fixed)wage rate is $300,and the marginal product of labor is 50.In order to maximize profit,the firm should

A monopolistically competitive industry is in the process of moving toward long-run equilibrium.This period the product of a typical firm has more substitutes than last period.This means that

Refer to the following figure showing demand and marginal revenue for a monopoly. If production costs are constant and equal to $10 i.e.,LAC = LMC = $10),what price will the monopoly charge?

The figure above shows the demand and cost curves facing a price-setting firm.The profit-maximizing or loss-minimizing)level of output is

In a monopolistically competitive market,

Refer to the following table showing a monopolist's demand schedule: If price falls from $20 to $10,then

Refer to the following table that gives the demand facing a monopolist: If a firm earns profits of $250 by producing 40 units of output,the firm charges a price of _____ and has total costs of ______.

Which of the following is true of a monopolist in the long run?

In order to maximize profit,a firm that produces its output in two plants will allocate total output between the two plants so that

A monopolist which suffers losses in the short run will

Monopolistic competition is similar to perfect competition in that:

All of the following could be a barrier to entry EXCEPT:

The following figure shows the demand and cost curves facing a firm with market power in the short run. The firm will sell its output at a price of

Refer to the following figure showing demand and marginal revenue for a monopoly. At any price above $______ demand is elastic.

Managers, profits, and Markets

Demand, supply, and Market Equilibrium

Marginal Analysis for Optimal Decision Making

Basic Estimation Techniques

Theory of Consumer Behavior

Elasticity and Demand

Demand Estimation and Forecasting

Production and Cost in the Short Run

Production and Cost in the Long Run

Production and Cost Estimation

Managerial Decisions in Competitive Markets

Strategic Decision Making in Oligopoly Markets

Advanced Pricing Techniques

Decisions Under Risk and Uncertainty

Government Regulation of Business

Filters

Refer to the following table that gives the demand facing a monopolist: If a firm earns profits of $250 by producing 40 units of output,the firm charges a price of _ and has total costs of __.