Question 44 1. In the short run, a monopolist will shut down when Answer a. aver

Question

Question 44
1.
In the short run, a monopolist will shut down when
Answer

a. average total cost is greater than price at all output levels

b. price is greater than average variable cost at all output levels

c. average variable cost is greater than price at all output levels

d. average fixed cost is greater than price at all output levels

e. average variable cost is greater than average fixed cost at all output levels

Question 46
1.
Which of the following is not a condition required for a monopolist to price discriminate?
Answer

a. the firm must be able to prevent reselling of the product

b. there must be different groups of buyers with different price elasticities of demand

c. the firm must exhibit strong economies of scale

d. the firm must have some market power

e. the demand curve facing the firm must be downward-sloping

Question 47
1.
Suppose that a price-discriminating monopolist divides its market into two segments. In each market segment, price is determined by finding the level of output where that market's
Answer

a. marginal revenue equals marginal cost

b. average revenue equals average variable cost

c. marginal revenue equals average total cost

d. marginal cost equals average total cost

e. average revenue equals average total cost

Question 48
1.
Which of the following is a major criticism of a monopoly as a cause of allocative inefficiency?
Answer

a. A monopolist fails to expand output to the level where the consumers' evaluation of an additional unit is just equal to its opportunity cost

b. A monopolist has an advantage because it can purchase the resources in a competitive market

c. Consumer surplus would no longer be equal to producer surplus

d. A monopolist has no incentive to produce efficiently, because even if it pays no attention to the costs of production, it will be guaranteed an economic profit

e. A monopolist will always make profits therefore providing an incentive to keep prices at the level that maximizes consumer surplus

Question 49
1.
Monopolistically competitive firms use product differentiation to increase the price elasticity of demand.
Answer

a. True

b. False

Question 51
1.
Exhibit 10-3
Q P TC
1 $27 $10
2 24 17
3 21 25
4 18 40
5 15 60



At the profit-maximizing output, the monopolistically competitive firm in Exhibit 10-3 is in
Answer

a. short-run equilibrium because there is an economic loss

b. short-run equilibrium because there is zero economic profit

c. short-run equilibrium because price is greater than average total cost

d. long-run equilibrium because price equals average total cost

e. long-run equilibrium because price is less than average total cost

Question 52
1.
Exhibit 10-6
P Q TC
$7 0 $10
6 4 20
5 8 32
4 12 48
3 16 66



In Exhibit 10-6, what is the maximum profit this monopolistic competitor can earn in the short run?
Answer

a. $4

b. $8

c. $48

d. $0

e. $40

Question 53
1.
Which of the following characteristics does perfect competition share with monopolistic competition?
Answer

a. price-taking firms

b. zero long-run economic profit

c. economies of scale in production

d. homogeneous product

e. some barriers to entry

Question 54
1.
For firms in an oligopoly to be interdependent,
Answer

a. goods must be differentiated

b. goods must be undifferentiated

c. firms must be small

d. goods can be either undifferentiated or differentiated

e. barriers to entry must be minimal

Question 55
1.
As the price of land decreases along its demand curve, the relative price of land
Answer

a. increases because the prices of other resources have also decreased

b. decreases because the prices of other resources are held constant

c. decreases because the prices of other resources have also decreased

d. remains constant because the prices of other resources also increase

e. increases because the prices of other resources have increased

Question 56
1.
The market demand curve for a resource is the
Answer

a. demand for that resource in its best use

b. horizontal sum of the demand curves for that resource in all its various uses

c. sum of the demand curves for that resource in its best two uses

d. vertical sum of the demand curve for that resource in all its various uses

e. difference among the demand curves for that resource in all its various uses

Question 57
1.
Consider two resource markets in which the demand curves slope downward. In market A, the supply curve is horizontal, equilibrium price is $6, and 100 units of the resource are hired. In market B, the supply curve is vertical, equilibrium price is $20, and 30 units of the resource are hired. Which of the following is true?
Answer

a. Total resource earnings are greater in market B.

b. There is derived demand in market A, but not in market B.

c. Total resource earnings are greater in market A.

d. There is more economic rent in market A.

e. Total resource earnings are the same in both markets.

Question 59
1.
If 14 workers produce a total of 25 cabinets and 15 workers produce a total of 30 cabinets,
Answer

a. the marginal product of the fifteenth worker is 2 cabinets

b. the marginal product of the fifteenth worker is 30 cabinets

c. diminishing returns begins with the fifteenth worker

d. the marginal product of the fifteenth worker is $5

e. the marginal product of the fifteenth worker is 5 cabinets

Question 60
1.
A resource owner will supply resources up to the point where marginal resource cost is equal to marginal revenue product.
Answer

a. True

b. False

Question 61
1.
A profit-maximizing firm will hire an additional unit of a resource as long as the
Answer

a. marginal revenue product of the resource is greater than the marginal resource cost

b. price of the resource is less than the marginal resource cost

c. marginal revenue product of the resource is less than the marginal resource cost

d. marginal product of the resource is greater than the marginal resource cost

e. marginal product of the resource is less than the marginal resource cost

Question 62
1.
An increase in the price of electronic cash registers will
Answer

a. reduce the demand for cashiers if electronic cash registers are a complementary resource

b. reduce the average cost of retail stores

c. reduce the quantity of electronic cash registers supplied

d. increase the demand for cashiers if electronic cash registers are a complementary resource

e. reduce the demand for manual cash registers

Question 63
1.
The 2005 decrease in U.S. housing demand, set off a sequence of events. Which of the following was the last event in the sequence?
Answer

a. Lumber mills raced to reduce their quantity supplied

b. The demand curve for lumber shifted to the left

c. Lumber prices fell sharply

d. Lumber

Explanation / Answer

Question 44
1.
In the short run, a monopolist will shut down when
Answer


c. average variable cost is greater than price at all output levels


Question 46
1.
Which of the following is not a condition required for a monopolist to price discriminate?
Answer


c. the firm must exhibit strong economies of scale


Question 47
1.
Suppose that a price-discriminating monopolist divides its market into two segments. In each market segment, price is determined by finding the level of output where that market's
Answer

a. marginal revenue equals marginal cost


Question 48


d. A monopolist has no incentive to produce efficiently, because even if it pays no attention to the costs of production, it will be guaranteed an economic profit
Question 49

1.
Monopolistically competitive firms use product differentiation to increase the price elasticity of demand.
Answer

a. True


Question 51
1.
Exhibit 10-3
Q P TC
1 $27 $10
2 24 17
3 21 25
4 18 40
5 15 60

sorry no exhibit


At the profit-maximizing output, the monopolistically competitive firm in Exhibit 10-3 is in
Answer

a. short-run equilibrium because there is an economic loss

b. short-run equilibrium because there is zero economic profit

c. short-run equilibrium because price is greater than average total cost

d. long-run equilibrium because price equals average total cost

e. long-run equilibrium because price is less than average total cost

Question 52
1.
Exhibit 10-6
P Q TC
$7 0 $10
6 4 20
5 8 32
4 12 48
3 16 66

sorry no exhibit

In Exhibit 10-6, what is the maximum profit this monopolistic competitor can earn in the short run?
Answer

a. $4

b. $8

c. $48

d. $0

e. $40

Question 53
1.
Which of the following characteristics does perfect competition share with monopolistic competition?
Answer

a. price-taking firms


Question 54
1.
For firms in an oligopoly to be interdependent,
Answer

a. goods must be differentiated


Question 55
1.
As the price of land decreases along its demand curve, the relative price of land
Answer

a. increases because the prices of other resources have also decreased


Question 56
1.
The market demand curve for a resource is the
Answer


b. horizontal sum of the demand curves for that resource in all its various uses



Question 57
1.
Consider two resource markets in which the demand curves slope downward. In market A, the supply curve is horizontal, equilibrium price is $6, and 100 units of the resource are hired. In market B, the supply curve is vertical, equilibrium price is $20, and 30 units of the resource are hired. Which of the following is true?
Answer

a. Total resource earnings are greater in market B.

Question 59
1.
If 14 workers produce a total of 25 cabinets and 15 workers produce a total of 30 cabinets,
Answer


d. the marginal product of the fifteenth worker is $5
Question 60
1.
A resource owner will supply resources up to the point where marginal resource cost is equal to marginal revenue product.
Answer

a. True


Question 61
1.
A profit-maximizing firm will hire an additional unit of a resource as long as the
Answer

a. marginal revenue product of the resource is greater than the marginal resource cost


Question 62
1.
An increase in the price of electronic cash registers will
Answer


c. reduce the quantity of electronic cash registers supplied

Question 63
1.
The 2005 decrease in U.S. housing demand, set off a sequence of events. Which of the following was the last event in the sequence?
Answer


b. The demand curve for lumber shifted to the left


Question 64
1.
A consumer maximizes utility by allocating time so that the expected marginal utilities of the last unit of time spent in each activity are identical.
Answer

a. True


Question 66
1.
Who is likely to earn a higher income, dentists or dental hygienists, and why?
Answer



e. dentists because their education is more costly

Question 67
1.
If an electricians' union is successful in its attempts to restrict entry into that craft, it will shift
Answer


b. the demand curve for electricians to the right


Question 68
1.
Featherbedding ultimately results in greater worker efficiency and therefore greater productivity and higher wages.
Answer

a. False


Question 69
1.
When the marginal rate of return expected from a purchase of equipment is less than the market interest rate, then the firm should
Answer

equipment

d. purchase the equipment


Question 70
1.
Interest provides an incentive for households to defer current consumption
Answer

a. True


Question 71
1.
The procedure of determining the present value of payments to be received in the future is known as
Answer

a. discounting

Question 72
1.
Production through the firm is often more efficient than market exchange when
Answer


c. the cost of transacting business through market relations is less than the cost of undertaking the same activity within the firm



Question 74
1.
One reason a computer manufacturer may make its own microchips rather than buy them is that
Answer


b. the total cost of components is the same as the price of chips purchased from a chip manufacturer

Question 75
1.
If a firm that experiences economies of scope doubles its production of an item, its costs will less than double.
Answer

a. True

Hope this helps

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