Question 1

In the long-run, perfectly competitive firms produce a level of output such that:

Accepted Answer

A)  P = MC.
B)  P = minimum of AC.
C)  P = MC and P = minimum of AC.
D)  None of the statements associated with this question are correct.E) None of the above
F) A) and D)

Question 2

Which of the following is (are)  basic feature(s)  of a perfectly competitive industry?

Accepted Answer

A)  Buyers and sellers have perfect information.
B)  There are no transaction costs.
C)  There is free entry and exit in the market.
D)  All of the statement associated with this question are correct.E) A) and B)
F) B) and D)

Question 3

You are the manager of a firm that sells its product in a competitive market with market (inverse)  demand given by P = 50 - 0.5Q.The market equilibrium price is $50.Your firm's cost function is C = 40 + 5Q2.Your firm's marginal revenue is

Accepted Answer

A)  $50.
B)  MR(Q)  = 10Q.
C)  MR(Q)  = 50 - Q.
D)  There is insufficient information to determine the firm's marginal revenue.E) All of the above
F) C) and D)

Question 4

A perfectly competitive firm faces a:

Accepted Answer

A)  perfectly elastic demand function.
B)  perfectly inelastic demand function.
C)  demand function with unitary elasticity.
D)  none of the statements associated with this question are correct.E) All of the above
F) A) and B)

Question 5

In the long-run, monopolistically competitive firms produce a level of output such that

Accepted Answer

A)  P > MC.
B)  P = ATC.
C)  ATC > minimum of average costs.
D)  all of the statements associated with this question are correct.E) B) and C)
F) A) and D)

Question 6

A monopoly has two production plants with cost functions C1 = 50 + 0.1 Q12 and C2 = 30 + 0.05 Q22.The demand it faces is Q = 500 - 10 P.What is the condition for profit maximization?

Accepted Answer

A)  MC1(Q1)  = MC2(Q2)  = P(Q1 + Q2) .
B)  MC1(Q1)  = MC2(Q2)  = MR(Q1 + Q2) .
C)  MC1(Q1 + Q2)  = MC2(Q1 + Q2)  = P (Q1 + Q2) .
D)  MC1(Q1 + Q2)  = MC2(Q1 + Q2)  = MR (Q1 + Q2) .E) A) and C)
F) None of the above

Question 7

You are the manager of a monopoly that faces a demand curve described by P = 85 - 5Q.Your costs are C = 20 + 5Q.The profit-maximizing price is

Accepted Answer

A)  45.
B)  55.
C)  60.
D)  50.E) None of the above
F) A) and B)

Question 8

The first-order condition for a monopoly maximizing its profit is

Accepted Answer

A)  P - (dC(Q)  / dQ)  = 0.
B)  (dR(Q)  / dQ)  - (dC(Q)  / dQ)  = 0.
C)  (dR(Q)  / dQ)  - (dC(Q)  / dQ)  
D)  (d2R (Q)  / dQ2)  - (d2C(Q)  / dQ2)  < 0.E) B) and D)
F) B) and C)

Question 9

Suppose that initially the price is $50 in a perfectly competitive market.Firms are making zero economic profits.Then the market demand shrinks permanently and some firms leave the industry and the industry returns back to a long-run equilibrium.What will be the new equilibrium price, assuming cost conditions in the industry remain constant?

Accepted Answer

A)  $50.
B)  $45.
C)  Lower than $50 but exact value cannot be known without more information.
D)  Larger than $45 but exact value cannot be known without more information.E) None of the above
F) B) and C)

Question 10

What will happen after the patent expires?

Accepted Answer

A)  The incumbent will leave the market.
B)  The incumbent will retain its status as a monopoly but produce at a lower price.
C)  Some firms will enter the industry.
D)  None of the statements associated with this question are correct.E) B) and C)
F) A) and C)

Question 11

Which of the following is true?

Accepted Answer

A)  A monopolist produces on the inelastic portion of its demand.
B)  A monopolist always earns an economic profit.
C)  The more inelastic the demand, the closer marginal revenue is to price.
D)  In the short run a monopoly will shutdown if P < AVC.E) B) and D)
F) A) and B)

Question 12

In the long-run, monopolistically competitive firms charge prices

Accepted Answer

A)  equal to marginal cost.
B)  below marginal cost.
C)  equal to the minimum of average total cost.
D)  above the minimum of average total cost.E) B) and C)
F) All of the above

Question 13

You are a manager in a perfectly competitive market.The price in your market is $14.Your total cost curve is C(Q)  = 10 + 4Q + 0.5 Q2.What will happen in the long-run if there is no change in the demand curve?

Accepted Answer

A)  Some firms will leave the market eventually.
B)  Some firms will enter the market eventually.
C)  There will be neither entry nor leave.
D)  None of the statements associated with this question are correct.E) None of the above
F) B) and C)

Question 14

You are the manager of a firm that produces output in two plants.The demand for your firm's product is P = 120 - 6Q, where Q = Q1 + Q2.The marginal cost associated with producing in the two plants are MC1 = 2Q1 and MC2 = 4Q2.What price should be charged to maximize profits?

Accepted Answer

A)  60.
B)  66.
C)  70.
D)  76.E) A) and B)
F) B) and C)

Question 15

One of the sources of monopoly power for a monopoly may be

Accepted Answer

A)  diseconomies of scale.
B)  differentiated products.
C)  patents.
D)  free entry and exit.E) All of the above
F) A) and C)

Question 16

Would you expect the demand for a monopolistically competitive firm's product to be more or less elastic than that for a monopolist's product? Explain.

Accepted Answer

In general, the demand for a monopolisti...

Question 17

You are the general manager of TU modems Inc., and your accounting department has provided you with the following information about the total cost of producing three potential quantities of a commercial-grade modem:

Accepted Answer

<img  loading="lazy" src="/assets/images/blured-textbook.svg" class="d-inline m-1" alt="blured image" width="139" height="30"> The market is saturated with modems, an...

Question 18

Differentiated goods are not a feature of a

Accepted Answer

A)  perfectly competitive market.
B)  monopolistically competitive market.
C)  monopolistic market.
D)  perfectly competitive market and monopolistic market.E) None of the above
F) C) and D)

Question 19

You are the manager of a firm that has an exclusive license to produce your product.The inverse market demand curve is

Accepted Answer

.Your cost function is

.Determine the ...

Question 20

A firm has a total cost function of C(Q)  = 75 + 25Q1/2.The firm experiences

Accepted Answer

A)  economies of scale.
B)  diseconomies of scale.
C)  constant returns to scale.
D)  all of the statements associated with this question are correct.E) A) and C)
F) All of the above

Exam 8: Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

You are the manager of a monopoly that faces a demand curve described by P = 85 - 5Q.Your costs are C = 20 + 5Q.The profit-maximizing price is

Correct Answer
verified

The first-order condition for a monopoly maximizing its profit is

Correct Answer
verified

Correct Answer
verified

In the long-run, monopolistically competitive firms produce a level of output such that

Correct Answer
verified

What will happen after the patent expires?

Correct Answer
verified

Differentiated goods are not a feature of a

Correct Answer
verified

A firm has a total cost function of C(Q) = 75 + 25Q^1/2.The firm experiences

Correct Answer
verified

A perfectly competitive firm faces a:

Correct Answer
verified

Would you expect the demand for a monopolistically competitive firm's product to be more or less elastic than that for a monopolist's product? Explain.

Correct Answer
verified
In general, the demand for a monopolisti...
View Answer

You are a manager in a perfectly competitive market.The price in your market is $14.Your total cost curve is C(Q) = 10 + 4Q + 0.5 Q².What will happen in the long-run if there is no change in the demand curve?

Correct Answer
verified

One of the sources of monopoly power for a monopoly may be

Correct Answer
verified

In the long-run, perfectly competitive firms produce a level of output such that:

Correct Answer
verified

You are the manager of a firm that sells its product in a competitive market with market (inverse) demand given by P = 50 - 0.5Q.The market equilibrium price is $50.Your firm's cost function is C = 40 + 5Q².Your firm's marginal revenue is

Correct Answer
verified

A monopoly has two production plants with cost functions C₁ = 50 + 0.1 Q₁² and C₂ = 30 + 0.05 Q₂².The demand it faces is Q = 500 - 10 P.What is the condition for profit maximization?

Correct Answer
verified

You are the general manager of TU modems Inc., and your accounting department has provided you with the following information about the total cost of producing three potential quantities of a commercial-grade modem:

Correct Answer
verified
The market is saturated with modems, an...
View Answer

You are the manager of a firm that has an exclusive license to produce your product.The inverse market demand curve is

Correct Answer
verified
.Your cost function is .Determine the ...
View Answer

You are the manager of a firm that produces output in two plants.The demand for your firm's product is P = 120 - 6Q, where Q = Q₁ + Q₂.The marginal cost associated with producing in the two plants are MC₁ = 2Q₁ and MC₂ = 4Q₂.What price should be charged to maximize profits?

Correct Answer
verified

Which of the following is (are) basic feature(s) of a perfectly competitive industry?

Correct Answer
verified

In the long-run, monopolistically competitive firms charge prices

Correct Answer
verified

Which of the following is true?

Correct Answer
verified

Exam 8: Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

You are the manager of a monopoly that faces a demand curve described by P = 85 - 5Q.Your costs are C = 20 + 5Q.The profit-maximizing price is

Correct AnswerverifiedShow Answer

The first-order condition for a monopoly maximizing its profit is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In the long-run, monopolistically competitive firms produce a level of output such that

Correct AnswerverifiedShow Answer

What will happen after the patent expires?

Correct AnswerverifiedShow Answer

Differentiated goods are not a feature of a

Correct AnswerverifiedShow Answer

A firm has a total cost function of C(Q) = 75 + 25Q1/2.The firm experiences

Correct AnswerverifiedShow Answer

A perfectly competitive firm faces a:

Correct AnswerverifiedShow Answer

Would you expect the demand for a monopolistically competitive firm's product to be more or less elastic than that for a monopolist's product? Explain.

Correct AnswerverifiedIn general, the demand for a monopolisti...View AnswerShow Answer

You are a manager in a perfectly competitive market.The price in your market is $14.Your total cost curve is C(Q) = 10 + 4Q + 0.5 Q2.What will happen in the long-run if there is no change in the demand curve?

Correct AnswerverifiedShow Answer

One of the sources of monopoly power for a monopoly may be

Correct AnswerverifiedShow Answer

In the long-run, perfectly competitive firms produce a level of output such that:

Correct AnswerverifiedShow Answer

You are the manager of a firm that sells its product in a competitive market with market (inverse) demand given by P = 50 - 0.5Q.The market equilibrium price is $50.Your firm's cost function is C = 40 + 5Q2.Your firm's marginal revenue is

Correct AnswerverifiedShow Answer

A monopoly has two production plants with cost functions C1 = 50 + 0.1 Q12 and C2 = 30 + 0.05 Q22.The demand it faces is Q = 500 - 10 P.What is the condition for profit maximization?

Correct AnswerverifiedShow Answer

You are the general manager of TU modems Inc., and your accounting department has provided you with the following information about the total cost of producing three potential quantities of a commercial-grade modem:

Correct Answerverified The market is saturated with modems, an...View AnswerShow Answer

You are the manager of a firm that has an exclusive license to produce your product.The inverse market demand curve is

Correct Answerverified .Your cost function is .Determine the ...View AnswerShow Answer

You are the manager of a firm that produces output in two plants.The demand for your firm's product is P = 120 - 6Q, where Q = Q1 + Q2.The marginal cost associated with producing in the two plants are MC1 = 2Q1 and MC2 = 4Q2.What price should be charged to maximize profits?

Correct AnswerverifiedShow Answer

Which of the following is (are) basic feature(s) of a perfectly competitive industry?

Correct AnswerverifiedShow Answer

In the long-run, monopolistically competitive firms charge prices

Correct AnswerverifiedShow Answer

Which of the following is true?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

A firm has a total cost function of C(Q) = 75 + 25Q^1/2.The firm experiences

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
In general, the demand for a monopolisti...
View Answer

You are a manager in a perfectly competitive market.The price in your market is $14.Your total cost curve is C(Q) = 10 + 4Q + 0.5 Q².What will happen in the long-run if there is no change in the demand curve?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

You are the manager of a firm that sells its product in a competitive market with market (inverse) demand given by P = 50 - 0.5Q.The market equilibrium price is $50.Your firm's cost function is C = 40 + 5Q².Your firm's marginal revenue is

Correct Answer
verified

A monopoly has two production plants with cost functions C₁ = 50 + 0.1 Q₁² and C₂ = 30 + 0.05 Q₂².The demand it faces is Q = 500 - 10 P.What is the condition for profit maximization?

Correct Answer
verified

Correct Answer
verified
The market is saturated with modems, an...
View Answer

Correct Answer
verified
.Your cost function is .Determine the ...
View Answer

You are the manager of a firm that produces output in two plants.The demand for your firm's product is P = 120 - 6Q, where Q = Q₁ + Q₂.The marginal cost associated with producing in the two plants are MC₁ = 2Q₁ and MC₂ = 4Q₂.What price should be charged to maximize profits?

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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