Question 1

The total revenue for a perfectly competitive firm is a(n)

Accepted Answer

A)  upward-sloping straight line 
B)  horizontal line 
C)  upward-sloping curve that increases at a decreasing rate 
D)  upward-sloping curve that increases at an increasing rate 
A)  upward-sloping straight line 
B)  horizontal line 
C)  upward-sloping curve that increases at a decreasing rate 
D)  upward-sloping curve that increases at an increasing rate A

Question 2

Figure 5.2 Cost and Demand Conditions of a Monopolist
  
-Refer to Figure 5.2. If the monopoly maximizes profit, total profit will equal

Accepted Answer

A)  $950 
B)  $1,150 
C)  $1,350 
D)  $1,550 
A)  $950 
B)  $1,150 
C)  $1,350 
D)  $1,550 C

Question 3

Figure 5.2 Cost and Demand Conditions of a Monopolist
  
-Refer to Figure 5.2. At the profit-maximizing output, the monopolist's total cost equals

Accepted Answer

A)  $1,800 
B)  $2,150 
C)  $2,400 
D)  $2,650 
A)  $1,800 
B)  $2,150 
C)  $2,400 
D)  $2,650 A

Question 4

A firm makes a normal profit whenever

Accepted Answer

A)  marginal cost equals marginal revenue 
B)  average total cost equals average variable cost 
C)  price equals average total cost 
D)  total revenue equals total variable cost 
A)  marginal cost equals marginal revenue 
B)  average total cost equals average variable cost 
C)  price equals average total cost 
D)  total revenue equals total variable cost

Question 5

Figure 5.2 Cost and Demand Conditions of a Monopolist
  
-Refer to Figure 5.2. The profit-maximizing price for the monopoly is

Accepted Answer

A)  $30 
B)  $40 
C)  $60 
D)  $70 
A)  $30 
B)  $40 
C)  $60 
D)  $70

Question 6

An auction of the U.S. Postal Service (USPS) to an owner who would operate it for profit would

Accepted Answer

A)  be a form of privatization 
B)  have no potential buyers 
C)  be supported by current USPS employees 
D)  reduce public demands for regulation 
A)  be a form of privatization 
B)  have no potential buyers 
C)  be supported by current USPS employees 
D)  reduce public demands for regulation

Question 7

Given identical cost conditions, a monopolist is likely to charge a

Accepted Answer

A)  higher price and earn higher profits than a competitive industry 
B)  higher price and earn lower profits than a competitive industry 
C)  lower price and earn higher profits than a competitive industry 
D)  lower price and earn lower profits than a competitive industry 
A)  higher price and earn higher profits than a competitive industry 
B)  higher price and earn lower profits than a competitive industry 
C)  lower price and earn higher profits than a competitive industry 
D)  lower price and earn lower profits than a competitive industry

Question 8

In a perfectly competitive market,

Accepted Answer

A)  advertising is widely used to influence demand and price 
B)  firms are price takers rather than price makers 
C)  firms produce a small number of differentiated products 
D)  buyers and sellers have only partial information about market opportunities 
A)  advertising is widely used to influence demand and price 
B)  firms are price takers rather than price makers 
C)  firms produce a small number of differentiated products 
D)  buyers and sellers have only partial information about market opportunities

Question 9

A firm that faces a horizontal demand curve for its product

Accepted Answer

A)  will always produce that output where average total cost is at a minimum 
B)  will always produce that output where average total cost is at a maximum 
C)  is a price maker rather than a price taker 
D)  is a price taker rather than a price maker 
A)  will always produce that output where average total cost is at a minimum 
B)  will always produce that output where average total cost is at a maximum 
C)  is a price maker rather than a price taker 
D)  is a price taker rather than a price maker

Question 10

Figure 5.1 Cost and Demand Conditions of a Perfectly Competitive Firm
  
-Refer to Figure 5.1. At the profit-maximizing output, the firm's total fixed costs are

Accepted Answer

A)  $700 
B)  $900 
C)  $1,000 
D)  $1,200 
A)  $700 
B)  $900 
C)  $1,000 
D)  $1,200

Question 11

If marginal revenue exceeds marginal cost for a perfectly competitive firm, the firm will maximize total profits by

Accepted Answer

A)  increasing price 
B)  decreasing price 
C)  increasing output 
D)  decreasing output 
A)  increasing price 
B)  decreasing price 
C)  increasing output 
D)  decreasing output

Question 12

A firm that has monopoly power is a

Accepted Answer

A)  loss leader 
B)  price leader 
C)  price taker 
D)  price maker 
A)  loss leader 
B)  price leader 
C)  price taker 
D)  price maker

Question 13

A perfectly competitive firm is a price maker and a monopolist is a price taker.

Accepted Answer

A) True 
 B)False

Question 14

If a perfectly competitive firm produces that output level where average total cost equals price, the firm realizes

Accepted Answer

A)  economic losses 
B)  economic profits 
C)  monopoly profits 
D)  normal profits 
A)  economic losses 
B)  economic profits 
C)  monopoly profits 
D)  normal profits

Question 15

Perfect competition is not characterized by

Accepted Answer

A)  sizable barriers preventing new firms from entering the market 
B)  a large number of sellers and buyers in the market 
C)  all sellers and buyers being fully aware of market opportunities 
D)  firms producing a standardized product 
A)  sizable barriers preventing new firms from entering the market 
B)  a large number of sellers and buyers in the market 
C)  all sellers and buyers being fully aware of market opportunities 
D)  firms producing a standardized product

Question 16

Similar to a perfectly competitive firm, if a monopolist can charge a price that exceeds average variable cost, it will minimize short-run losses by producing where marginal revenue equals marginal cost rather than shutting down.

Accepted Answer

A) True 
 B)False

Question 17

Technological advances in health care, such as body scanners and new surgical techniques

Accepted Answer

A)  have made health care a capital-intensive industry 
B)  are replacing the need for skilled doctors 
C)  add to the cost of health care 
D)  induce more people to become doctors 
A)  have made health care a capital-intensive industry 
B)  are replacing the need for skilled doctors 
C)  add to the cost of health care 
D)  induce more people to become doctors

Question 18

Figure 5.2 Cost and Demand Conditions of a Monopolist
  
-Refer to Figure 5.2. The profit-maximizing level of output for the monopoly is

Accepted Answer

A)  zero units-the firm should shut down 
B)  40 units 
C)  45 units 
D)  65 units 
A)  zero units-the firm should shut down 
B)  40 units 
C)  45 units 
D)  65 units

Question 19

Monopolistic competition is closer to perfect competition than it is to monopoly.

Accepted Answer

A) True 
 B)False

Question 20

If economic losses are being earned in a perfectly competitive industry, some firms will exit the market in the long run. Therefore, the market demand curve will shift rightward and the market price will increase.

Accepted Answer

A) True 
 B)False

The total revenue for a perfectly competitive firm is a(n)

Figure 5.2 Cost and Demand Conditions of a Monopolist -Refer to Figure 5.2. If the monopoly maximizes profit, total profit will equal

Figure 5.2 Cost and Demand Conditions of a Monopolist -Refer to Figure 5.2. At the profit-maximizing output, the monopolist's total cost equals

A firm makes a normal profit whenever

Figure 5.2 Cost and Demand Conditions of a Monopolist -Refer to Figure 5.2. The profit-maximizing price for the monopoly is

An auction of the U.S. Postal Service (USPS) to an owner who would operate it for profit would

Given identical cost conditions, a monopolist is likely to charge a

In a perfectly competitive market,

A firm that faces a horizontal demand curve for its product

Figure 5.1 Cost and Demand Conditions of a Perfectly Competitive Firm -Refer to Figure 5.1. At the profit-maximizing output, the firm's total fixed costs are

If marginal revenue exceeds marginal cost for a perfectly competitive firm, the firm will maximize total profits by

A firm that has monopoly power is a

A perfectly competitive firm is a price maker and a monopolist is a price taker.

If a perfectly competitive firm produces that output level where average total cost equals price, the firm realizes

Perfect competition is not characterized by

Similar to a perfectly competitive firm, if a monopolist can charge a price that exceeds average variable cost, it will minimize short-run losses by producing where marginal revenue equals marginal cost rather than shutting down.

Technological advances in health care, such as body scanners and new surgical techniques

Figure 5.2 Cost and Demand Conditions of a Monopolist -Refer to Figure 5.2. The profit-maximizing level of output for the monopoly is

Monopolistic competition is closer to perfect competition than it is to monopoly.

If economic losses are being earned in a perfectly competitive industry, some firms will exit the market in the long run. Therefore, the market demand curve will shift rightward and the market price will increase.

Scarcity and Choice

Market Transactions: Demand and Supply Analysis

Demand and Supply Applications

Production and the Costs of Production

Imperfect Competition

Labor Markets

Government and Markets

The Mixed Economy of the United States

Gross Domestic Product and Economic Growth

The Business Cycle, Unemployment, and Inflation

Macroeconomic Instability: Aggregate Demand and Aggregate Supply

Fiscal Policy and the Federal Budget

Money and the Banking System

The Federal Reserve and Monetary Policy

The United States and the Global Economy

International Finance

Economic Systems and Developing Countries

Filters

Exam 5: Competition and Monopoly: Virtues and Vices

The total revenue for a perfectly competitive firm is a(n)

Figure 5.2 Cost and Demand Conditions of a Monopolist -Refer to Figure 5.2. If the monopoly maximizes profit, total profit will equal

Figure 5.2 Cost and Demand Conditions of a Monopolist -Refer to Figure 5.2. At the profit-maximizing output, the monopolist's total cost equals

A firm makes a normal profit whenever

Figure 5.2 Cost and Demand Conditions of a Monopolist -Refer to Figure 5.2. The profit-maximizing price for the monopoly is

An auction of the U.S. Postal Service (USPS) to an owner who would operate it for profit would

Given identical cost conditions, a monopolist is likely to charge a

In a perfectly competitive market,

A firm that faces a horizontal demand curve for its product

Figure 5.1 Cost and Demand Conditions of a Perfectly Competitive Firm -Refer to Figure 5.1. At the profit-maximizing output, the firm's total fixed costs are

If marginal revenue exceeds marginal cost for a perfectly competitive firm, the firm will maximize total profits by

A firm that has monopoly power is a

A perfectly competitive firm is a price maker and a monopolist is a price taker.

If a perfectly competitive firm produces that output level where average total cost equals price, the firm realizes

Perfect competition is not characterized by

Similar to a perfectly competitive firm, if a monopolist can charge a price that exceeds average variable cost, it will minimize short-run losses by producing where marginal revenue equals marginal cost rather than shutting down.

Technological advances in health care, such as body scanners and new surgical techniques

Figure 5.2 Cost and Demand Conditions of a Monopolist -Refer to Figure 5.2. The profit-maximizing level of output for the monopoly is

Monopolistic competition is closer to perfect competition than it is to monopoly.

If economic losses are being earned in a perfectly competitive industry, some firms will exit the market in the long run. Therefore, the market demand curve will shift rightward and the market price will increase.

Scarcity and Choice

Market Transactions: Demand and Supply Analysis

Demand and Supply Applications

Production and the Costs of Production

Imperfect Competition

Labor Markets

Government and Markets

The Mixed Economy of the United States

Gross Domestic Product and Economic Growth

The Business Cycle, Unemployment, and Inflation

Macroeconomic Instability: Aggregate Demand and Aggregate Supply

Fiscal Policy and the Federal Budget

Money and the Banking System

The Federal Reserve and Monetary Policy

The United States and the Global Economy

International Finance

Economic Systems and Developing Countries

Filters