08 Jun Question Quiz 10 1.Due to the ease of entry of new
Question
Quiz 10
1.Due to the ease of entry of new firms into monopolistically competitive markets in the long run, existing firms in these markets:
a. ?produce at the lowest average total cost.
b. ?earn no economic profit in the long run.
c. ?take advantage of economies of scope.
d. ?charge a price equal to marginal cost.
e. ?earn no economic profit in the short run.
2.
Table 10.1 shows the output, price, and total cost for a monopolistic competitor. At the profit-maximizing output, the monopolistically competitive firm is in:
?
Table 10.1.
? Q P TC
1 27 10
2 24 17
3 21 32
4 18 67
5 15 67
a. ?short-run equilibrium and there is zero economic profit.
b. ?long-run equilibrium and price equals average total cost.
c. ?short-run equilibrium and incurs an economic loss.
d. ?short-run equilibrium and price is greater than average total cost.
e. ?long-run equilibrium and price is less than average total cost.
3.Figure 10.1 shows the demand, marginal revenue, and cost curves for a monopolistic competitor. The monopolistic competitor’s total economic profit at the profit-maximizing level of output is:
figure 10.1 in attach.
a. ?$600.
b. ?$6.
c. ?$0.
d. ?$4.
e. ?$750.
4. Table 10.1 shows the output, price, and total cost for a monopolistic competitor. At the profit-maximizing output, the firm earns:
?
Table 10.1.
?
Q P TC
1 27 10
2 24 17
3 21 32
4 18 47
5 15 67
a. ?an economic profit of $31.
b. ?zero economic profit.
c. ?an economic loss.
d. ?an economic profit of $32.
e. ?an economic profit, but the amount cannot be determined.
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