Quiz Over Monopoly And Market!

11 Questions | Total Attempts: 120

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Quiz Over Monopoly And Market!

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Questions and Answers
  • 1. 
    Which of the following are barriers to entry?
    • A. 

      Economies of scale

    • B. 

      Patents and copyrights

    • C. 

      Control of resources

    • D. 

      All of the above

  • 2. 
    A major difference between a monopolist and a perfectly competitive firm is that 
    • A. 

      The monopolist is certain to earn economic profits

    • B. 

      The monopolist charges the highest possible price that he can

    • C. 

      The monopolist engages in marginal cost pricing

    • D. 

      The monopolist's marginal revenue curve lies below its demand curve

  • 3. 
    For a monopolist
    • A. 

      Marginal revenue equals price

    • B. 

      Marginal revenue equals average revenue

    • C. 

      Marginal revenue is less than the price

    • D. 

      Marginal revenue is greater than the price

  • 4. 
    Suppose a monopolist's costs and revenue are as follows: ATC=$50.00; MC= $35.00; MR=$45.00; P= $55.00. The firm should
    • A. 

      Not change output or price

    • B. 

      Decrease output and increase price

    • C. 

      Shut down

    • D. 

      Increase output and decrease price

  • 5. 
    A firm will shut down in the short run when
    • A. 

      Price is below average total costs at all possible rates of output

    • B. 

      Is it making a loss

    • C. 

      Price is below marginal cost at all possible rates of output

    • D. 

      Price is below average variable costs at all possible rates of output

  • 6. 
    A firm will continue to product in the short run even though economic profits are negative as long as
    • A. 

      It has fixed obligations to pay

    • B. 

      It earned positive economics profits last year

    • C. 

      The amount of the loss is no greater than the amount of fixed cost

    • D. 

      MC=MR

  • 7. 
    A perfectly competitive firm faces a market clearing price of $150 per unit. Average variable costs are at the minimum value of $200 per unit at an output rate of $100 units. Marginal cost equals $150 per unit at an output of 75 units. It can be conducted that the short run profit maximizing output rate is
    • A. 

      0 units because price is less than average variable costs

    • B. 

      75 units at which the firm earns zero economic profits per unit sold

    • C. 

      75 units at which the firm earns $50 in economic profits per unit sold

    • D. 

      100 units because marginal cost equals average variable costs

  • 8. 
    For a firm in a perfectly competitive industry, which of the following is true?
    • A. 

      MR=P

    • B. 

      AFC=ATC

    • C. 

      MR

    • D. 

      AVC=ATC

  • 9. 
    When price and marginal cost are equal for a perfectly competitive firm, the firm is
    • A. 

      Earning negative economic profit

    • B. 

      Minimizing average total cost

    • C. 

      Maximizing economic profit

    • D. 

      Maximizing total revenue

  • 10. 
    A firm is a competitive industry faces of the following short-run cost and revenue conditions. ATC=$8; AVC =$4 and MR=MC=$6. This firm should
    • A. 

      Shut down

    • B. 

      Continue to operate at the same price and output level in the short run

    • C. 

      Expand production and keep price constant

    • D. 

      Decrease production and raise its price

  • 11. 
    Suppose a perfectly competitive firm faces the following short-run cost and revenue conditions: ATC= $12.00, AVC= $8.00; MC= $12.00; MR=$10.00 The firm should
    • A. 

      Change nothing

    • B. 

      Decrease output

    • C. 

      Increase output

    • D. 

      Increase price