05 Jun Question Question 1 The profit-maximizing monopolist
Question
Question 1
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.
Question 2
In the perfectly competitive market, a firms marginal revenue (MR) is equal to:
its total cost
its marginal
profit
the market
price
its total
revenue
Question 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.
Question 4
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
Question 5
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.
Question 6
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
Question 7
An average variable cost function is estimated as
AVC
= 96 2Q + 0.05Q2
Which of the following cost functions is associated with this estimate?
MC = 2Q
+ 0.1Q2
TVC = 96Q 2Q2 +
0.1Q3
TVC = 96Q 4Q2 +
0.15Q3
MC = 96 4Q
+ 0.15Q2
Question 8
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.
Question 9
The demand curve facing the firm in _________ is the same as the whole market demand curve.
perfect competition
monopolistic
competition
oligopoly
monopoly
Question 10
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