03 Jun Question 1. The demand curve facing the firm in _________ is the sa
Question
1. The demand curve facing the firm in _________ is the same as the whole market demand curve.
perfect competition
monopolistic competition
oligopoly
Monopoly
2. In the short-run for a perfectly competitive market, a manufacturer will stop production when:
the total revenue is less than total costs
the contribution cannot cover any fixed costs
the price is greater than AVC
operating at a negative economic profit
3. Economies of scale exist when
long-run average cost decreases as output increases.
total cost decreases as output increases.
marginal cost decreases as output increases.
fixed cost decreases as output increases.
4. Individual cartel producers may find it advantageous to cheat on the agreements by increasing production,
if the other producers obey the agreements.
if every member cheats.
when the punishment on cheating is severe.
when the market demand is inelastic.
5. In the perfectly competitive market, a firm’s marginal revenue (MR) is equal to:
its total cost
its marginal profit
the market price
its total revenue
6. The profit-maximizing monopolist facing a negative-sloping demand curve will always produce
at an output greater than the output where average total costs are minimized.
at an output short of that output where average total costs are minimized.
at an output equal to industry output under perfect competition.
at an output short of that output where the profits are maximized.
7. The Lerner index, (P-MC)/P, might be an inappropriate measure for market power among firms in IT industry because
there are too many firms in the industry.
most firms charge a high price for their products.
all firms’ marginal costs are very low.
no firm has market power.
8. In the long-run, a firm in a monopolistically competitive industry will
earn a positive economic profit
tend to just cover its total cost, maintaining a normal profit
charge a price equal to its marginal cost
become a monopoly
9. An average variable cost function is estimated as
AVC
= 96? 2Q + 0.05Q2
When Q=100, the average variable cost is _________.
rising
falling
unknown.
greater than $400
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