03 Jun Question Question 44 Suppose a monopolist is producing a level of output such that MR > MC
Question
Question 44
Suppose a monopolist is producing a level of output such that MR > MC. What should the firm do to maximize its profits?
The firm should do nothing ? it wants to maximize the difference between MR and MC in order to maximize its profits.
The firm should increase output.
The firm should increase price.
The firm should hire less labor.
Question 45
The law of diminishing returns begins first to affect a firm’s short-run cost structure when
average variable cost begins to increase.
marginal cost begins to increase.
average cost begins to increase.
average fixed cost begins to decrease.
Question 46
A firm that seeks to maximize its revenue is most likely to adhere to which of the following?
MR = MC
MR =0
MR < MC MR =P Question 47 Which of the following statements is true of a monopolist? The monopolist sets marginal revenue equal to marginal cost to maximize profits. The monopolist sets price equal to marginal cost to maximize profits. The monopolist will always earn positive economic profits. The marginal revenue curve is the same as the demand curve for the monopolist's output. Question 48 When the marginal dollar of product development expenditure brings in a dollar of additional revenue, the firm is spending the ________ on product development. profit-maximizing amount inefficient amount loss-maximizing amount profit-minimizing amount maximum amount it can Question 49 If MRP > MLC, it means that a firm should
use less labor.
use more labor.
increase its fixed capacity.
decrease its fixed capacity.
Question 50
Which of the following is not true when a monopoly market is in equilibrium?
Price > MR.
Price = Average Revenue.
Price > MC.
Consumer well being would be improved if less resources were allocated to the industry in which the monopoly operates.
Question 51
If a firm experiences constant returns to the variable input in the short run,
marginal product and average variable product will be equal over the range of output in question.
marginal product will be greater than average variable product, but the two will become more equal as output increases.
marginal product will be less than average variable product, but the two will become more equal as output increases.
marginal product will be greater than average variable product, and the difference between the two will become larger as output increases.
Question 52
Which of the following statements about the short-run production function is true?
MP always equals AP at the maximum point of MP.
MP always equals zero when TP is at its maximum point.
TP starts to decline at the point of diminishing returns.
When MP diminishes, AP is at its minimum point.
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