15. In a perfectly competitive market, consumer surplus typically is A) undefine

Question

15. In a perfectly competitive market, consumer surplus typically is
A) undefined.
B) positive.
C) zero.
D) negative.

16. Which of the following statements is TRUE?
A) A monopolist always produces a higher level of output than would be produced if the market were competitive.
B) At the monopolist's equilibrium, resources are being efficiently allocated.
C) Monopolists raise the price and restrict production, compared to a competitive situation.
D) With a monopoly, the value to society of the last unit produced is less than it's production cost.

17. A monopolist is maximizing profit at an output rate of 1,000 units per month. At this output rate, the price that its customers are willing and able to pay is $8 per unit, average total cost is $5 per unit, and marginal cost is $6 per unit. It may be concluded that at this monthly output rate, marginal revenue is
A) $5 per unit, and the monopolist earns zero economic profits.
B) $6 per unit, and the monopolist earns economic profits of $3,000 per month.
C) $5 per unit, and the monopolist earns economic profits of $2,000 per month.
D) $6 per unit, and the monopolist earns economic losses of $1,000 per month.

18. Which of the following describes monopolistic competition?
A) P = MR = MC
B) There is only one seller in the industry
C) Advertising plays a key role
D) Homogenous products

19. Marginal cost pricing for an information product
A) would cause the firm to earn economic profits.
B) would allow the firm to break even.
C) would cause the firm to expand output to increase economic profits.
D) would cause the firm to experience economic losses.

20. If a firm produces an experience good, its mode of advertising will be
A) not to advertise.
B) direct advertising.
C) persuasive advertising.
D) none of the above.

Explanation / Answer

D,C,A,D,B,C

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