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Homework 4 - Principles of Microeconomics - Due 11/17/
Instructor: Ryan Herzog
Name___________________________________
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
- In an imperfectly competitive industry
A) a single firm has some control over the price of its output.
B) the government will always regulate the output price.
C) a single firm has no control over the price of its output.
D) a single firm will charge whatever price it wants to charge.
- Market power refers to a firm's ability to
A) raise price without losing all demand for its product.
B) sell any amount of output it desires at the market-determined price.
C) charge any price it likes.
D) monopolize a market completely.
- When __________ substitutes exist, a monopolist has __________ power to raise price.
A) more; more B) more; less C) no; infinite D) fewer; less
- Which type of barrier to entry allows the electric company to maintain a monopoly over the production of
electricity?
A) a patent B) ownership of a scarce factor of production
C) diseconomies of scale D) economies of scale
- In a monopoly, the market demand curve is
A) the summation of all the individual firm's demand curves.
B) the same as the demand curve facing the firm.
C) the marginal cost curve above minimum average variable cost.
D) nonexistent.
- For a monopolist, price
A) is less than marginal revenue.
B) equals marginal revenue.
C) is greater than marginal revenue.
D) can be greater than or less than marginal revenue.
- A monopolist will not produce
A) if price is less than average total cost but greater than average variable cost.
B) if marginal revenue is declining.
C) if price is greater than average total cost.
D) in the inelastic portion of its demand curve, where marginal revenue is negative.
Refer to the information provided in Figure 1 below to answer the questions that follow.
Figure 1
- Refer to Figure 1. The profit
maximizing level of output for this monopolist is __________ units of output.
A) 26 B) 20 C) 24 D) 22
- Refer to Figure 1. The profit-maximizing price for this firm is
A) $7. B) $5. C) $9. D) $11.
- Refer to Figure 1. If this firm is producing the profit-maximizing quantity and selling it at the
profit-maximizing price, the firm's profit will be
A) $132. B) $80. C) $84. D) $88.
- A monopolist sets both price and quantity, and the amount of output that it supplies depends
A) only on the demand curve.
B) on both its marginal cost curve and the demand curve that it faces.
C) on both its average cost curve and the demand curve that it faces.
D) only on the marginal cost curve.
- Which of the following is NOT an example of price discrimination?
A) Student discounts at movie theaters
B) back-to-school sales
C) Discounted coffee for senior citizens at restaurants
D) Airlines charging lower prices to travelers who stay over a Saturday night
- An industry that realizes such large economies of scale in producing its product that single-firm production of
that good or service is most efficient is called a(n)
A) economies of scale monopoly. B) natural monopoly.
C) patent monopoly. D) fixed cost monopoly.
Refer to the information provided in Figure 3 below to answer the question that follows.
GR:micro1c:H
Figure 3
- Refer to Figure 3. The profit-maximizing level of output for the Memory Company is __________ high school
yearbooks.
A) 300 B) 200 C) 0 D) 350
- Refer to Figure 3. The profit
maximizing price for the Memory Company's high school yearbook is
A) $20. B) $16. C) $9. D) $0.
- Refer to Figure 3. The profit-maximizing level of profit for the Memory Company is
A) - $800. B) - $1,800. C) - $1,200. D) $0.
- Refer to Figure 3. The Memory Company's operating profit is
A) $800. B) $1,000. C) - $800. D) - $1,000.
- When a monopolist incurs a loss it will
A) produce as long as total revenue is sufficient to cover fixed costs.
B) always produce where marginal cost equals marginal revenue.
C) produce as long as total revenue is sufficient to cover variable costs.
D) always shut down.
- From society's point of view, a monopolist produces too little because price
A) is less than average cost. B) exceeds average cost.
C) is less than marginal cost. D) exceeds marginal cost.
