Question 1

Which of the following is true under monopolistic competition in the short run?

Accepted Answer

A) profits are always zero. 
B) P > MC. 
C) P = MR. 
D) all of the choices are true in monopolistic competition. 
A) profits are always zero. 
B) P > MC. 
C) P = MR. 
D) all of the choices are true in monopolistic competition.

Question 2

The second-order condition for a firm maximizing its profits operating in a perfectly competitive market is

Accepted Answer

A) (d2$\pi$ / dQ2) 2C(Q) / dQ2) < 0. 
C) - (dMC / dQ) < 0. 
D) All of the statements associated with this question are correct. 
A) (d2$\pi$ / dQ2) 2C(Q) / dQ2) < 0. 
C) - (dMC / dQ) < 0. 
D) All of the statements associated with this question are correct.

Question 3

You are the manager of a monopoly firm with (inverse) demand given by P = 50 - 0.5Q.Your firm's cost function is C = 40 + 5Q2.Your firm's marginal revenue is

Accepted Answer

A) P = 50 - 0.5Q. 
B) P = 100 - Q. 
C) P = 50 - Q. 
D) There is insufficient information to determine the firm's marginal revenue. 
A) P = 50 - 0.5Q. 
B) P = 100 - Q. 
C) P = 50 - Q. 
D) There is insufficient information to determine the firm's marginal revenue.

Question 4

SeaSide Industries currently spends 5 percent of its sales on advertising.Suppose that the elasticity of advertising for Seaside is 0.2.Determine the optimal profit margin over price (P - MC) / P.

Accepted Answer

A) 4 percent. 
B) 10 percent. 
C) 25 percent. 
D) none of the computations associated with this question are correct. 
A) 4 percent. 
B) 10 percent. 
C) 25 percent. 
D) none of the computations associated with this question are correct.

Question 5

Which of the following statements concerning monopoly is NOT true?

Accepted Answer

A) A market may be monopolistic because there are some legal barriers. 
B) A monopoly has market power. 
C) A monopoly is always undesirable. 
D) There is some deadweight loss in a monopolistic market. 
A) A market may be monopolistic because there are some legal barriers. 
B) A monopoly has market power. 
C) A monopoly is always undesirable. 
D) There is some deadweight loss in a monopolistic market.

Question 6

The first-order conditions for a monopoly to maximize profits are

Accepted Answer

A) dR(Q) / dQ = dC(Q) / dQ. 
B) MR(Q) = MC(Q). 
C) d$\pi$(Q) / dQ = 0. 
D) All of the statements associated with this question are correct. 
A) dR(Q) / dQ = dC(Q) / dQ. 
B) MR(Q) = MC(Q). 
C) d$\pi$(Q) / dQ = 0. 
D) All of the statements associated with this question are correct.

Question 7

Consider a monopoly where the inverse demand for its product is given by P = 50 - 2Q.Total costs for this monopolist are estimated to be C(Q) = 100 + 2Q + Q2.At the profit-maximizing combination of output and price, monopoly profit is

Accepted Answer

A) $32. 
B) $64. 
C) $92. 
D) $128. 
A) $32. 
B) $64. 
C) $92. 
D) $128.

Question 8

A firm has a total cost function of C(Q) = 50 + 10Q1/2.The firm experiences

Accepted Answer

A) economies of scale. 
B) constant returns to scale. 
C) diseconomies of scale. 
D) all of the statements associated with this question are correct depending on the quantity. 
A) economies of scale. 
B) constant returns to scale. 
C) diseconomies of scale. 
D) all of the statements associated with this question are correct depending on the quantity.

Question 9

In 1994 Pentium users around the world learned that their $4.00 pocket calculator could perform some operations more accurately than their $5,000 desktop computers.It took several months before Intel - the maker of the chip - agreed to offer its customers replacement chips.In contrast, Wal-Mart guarantees satisfaction to all customers, with a "no questions asked" return policy on nearly all of the products it sells.Why do you think these firms employ such different consumer relations policies?

Accepted Answer

Intel has much more monopoly p

Question 10

The first-order conditions for profit maximization in a perfectly competitive market are

Accepted Answer

A) P - (dC(Q) / dQ) = 0. 
B) (dR(Q) / dQ) - (d2C(Q) / dQ2) 2C(Q) / dQ2) = 0. 
D) P > (dC(Q) / dQ). 
A) P - (dC(Q) / dQ) = 0. 
B) (dR(Q) / dQ) - (d2C(Q) / dQ2) 2C(Q) / dQ2) = 0. 
D) P > (dC(Q) / dQ).

Question 11

Suppose you are a monopolist operating two plants at different locations.Both plants produce the same product;

Accepted Answer

@#IMG-DLM& is the quantity produced at plant 1, an

Question 12

If a monopolistically competitive firm's marginal cost increases, then in order to maximize profits the firm will

Accepted Answer

A) reduce output and increase price. 
B) increase output and decrease price. 
C) increase both output and price. 
D) reduce both output and price. 
A) reduce output and increase price. 
B) increase output and decrease price. 
C) increase both output and price. 
D) reduce both output and price.

Question 13

You are a manager for a monopolistically competitive firm.From experience, the profit-maximizing level of output of your firm is 100 units.However, it is expected that prices of other close substitutes will fall in the near futurHow should you adjust your level of production in response to this change?

Accepted Answer

A) Produce more than 100 units. 
B) Produce less than 100 units. 
C) Produce 100 units. 
D) Insufficient information to decide. 
A) Produce more than 100 units. 
B) Produce less than 100 units. 
C) Produce 100 units. 
D) Insufficient information to decide.

Question 14

In a competitive industry with identical firms, long run equilibrium is characterized by

Accepted Answer

A) P = AC. 
B) P = MC. 
C) MR = MC. 
D) All of the statements associated with this question are correct. 
A) P = AC. 
B) P = MC. 
C) MR = MC. 
D) All of the statements associated with this question are correct.

Question 15

Compute the marginal revenue when the price elasticity of demand is -0.25.

Accepted Answer

A) -3P, meaning marginal revenue is negative and 3 times less than price. 
B) 3P, meaning marginal revenue is positive and 3 times greater than price. 
C) -0.33P, meaning that marginal revenue is negative and one-third of the price. 
D) -0.25P, meaning that marginal revenue is negative and one-fourth of the price. 
A) -3P, meaning marginal revenue is negative and 3 times less than price. 
B) 3P, meaning marginal revenue is positive and 3 times greater than price. 
C) -0.33P, meaning that marginal revenue is negative and one-third of the price. 
D) -0.25P, meaning that marginal revenue is negative and one-fourth of the price.

Question 16

What contributes to the existence of multiproduct firms?

Accepted Answer

A) Economies of scale. 
B) Economies of scope. 
C) Cost complementarity. 
D) Economies of scope and cost complementarity. 
A) Economies of scale. 
B) Economies of scope. 
C) Cost complementarity. 
D) Economies of scope and cost complementarity.

Question 17

A linear demand function exhibits:

Accepted Answer

A) constant demand elasticity. 
B) more elastic demand as output increases. 
C) less elastic demand as output increases. 
D) insufficient information to determine. 
A) constant demand elasticity. 
B) more elastic demand as output increases. 
C) less elastic demand as output increases. 
D) insufficient information to determine.

Question 18

You are the manager of a monopoly that faces a demand curve described by P = 230 - 20Q.Your costs are C = 5 + 30Q.The profit-maximizing output for your firm is

Accepted Answer

A) 4. 
B) 5. 
C) 6. 
D) 7. 
A) 4. 
B) 5. 
C) 6. 
D) 7.

Which of the following is true under monopolistic competition in the short run?

The second-order condition for a firm maximizing its profits operating in a perfectly competitive market is

You are the manager of a monopoly firm with (inverse) demand given by P = 50 - 0.5Q.Your firm's cost function is C = 40 + 5Q².Your firm's marginal revenue is

SeaSide Industries currently spends 5 percent of its sales on advertising.Suppose that the elasticity of advertising for Seaside is 0.2.Determine the optimal profit margin over price (P - MC) / P.

Which of the following statements concerning monopoly is NOT true?

The first-order conditions for a monopoly to maximize profits are

Consider a monopoly where the inverse demand for its product is given by P = 50 - 2Q.Total costs for this monopolist are estimated to be C(Q) = 100 + 2Q + Q².At the profit-maximizing combination of output and price, monopoly profit is

A firm has a total cost function of C(Q) = 50 + 10Q^1/2.The firm experiences

The first-order conditions for profit maximization in a perfectly competitive market are

Suppose you are a monopolist operating two plants at different locations.Both plants produce the same product;

If a monopolistically competitive firm's marginal cost increases, then in order to maximize profits the firm will

In a competitive industry with identical firms, long run equilibrium is characterized by

Compute the marginal revenue when the price elasticity of demand is -0.25.

What contributes to the existence of multiproduct firms?

A linear demand function exhibits:

You are the manager of a monopoly that faces a demand curve described by P = 230 - 20Q.Your costs are C = 5 + 30Q.The profit-maximizing output for your firm is

The Fundamentals of Managerial Economics

Market Forces: Demand and Supply

Quantitative Demand Analysis

The Theory of Individual Behavior

The Production Process and Costs

The Organization of the Firm

The Nature of Industry

Basic Oligopoly Models

Game Theory: Inside Oligopoly

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

A Managers Guide to Government in the Marketplace

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

Which of the following is true under monopolistic competition in the short run?

The second-order condition for a firm maximizing its profits operating in a perfectly competitive market is

You are the manager of a monopoly firm with (inverse) demand given by P = 50 - 0.5Q.Your firm's cost function is C = 40 + 5Q2.Your firm's marginal revenue is

SeaSide Industries currently spends 5 percent of its sales on advertising.Suppose that the elasticity of advertising for Seaside is 0.2.Determine the optimal profit margin over price (P - MC) / P.

Which of the following statements concerning monopoly is NOT true?

The first-order conditions for a monopoly to maximize profits are

Consider a monopoly where the inverse demand for its product is given by P = 50 - 2Q.Total costs for this monopolist are estimated to be C(Q) = 100 + 2Q + Q2.At the profit-maximizing combination of output and price, monopoly profit is

A firm has a total cost function of C(Q) = 50 + 10Q1/2.The firm experiences

The first-order conditions for profit maximization in a perfectly competitive market are

Suppose you are a monopolist operating two plants at different locations.Both plants produce the same product;

If a monopolistically competitive firm's marginal cost increases, then in order to maximize profits the firm will

In a competitive industry with identical firms, long run equilibrium is characterized by

Compute the marginal revenue when the price elasticity of demand is -0.25.

What contributes to the existence of multiproduct firms?

A linear demand function exhibits:

You are the manager of a monopoly that faces a demand curve described by P = 230 - 20Q.Your costs are C = 5 + 30Q.The profit-maximizing output for your firm is

The Fundamentals of Managerial Economics

Market Forces: Demand and Supply

Quantitative Demand Analysis

The Theory of Individual Behavior

The Production Process and Costs

The Organization of the Firm

The Nature of Industry

Basic Oligopoly Models

Game Theory: Inside Oligopoly

Pricing Strategies for Firms With Market Power

The Economics of Information

Advanced Topics in Business Strategy

A Managers Guide to Government in the Marketplace

Filters

You are the manager of a monopoly firm with (inverse) demand given by P = 50 - 0.5Q.Your firm's cost function is C = 40 + 5Q².Your firm's marginal revenue is

Consider a monopoly where the inverse demand for its product is given by P = 50 - 2Q.Total costs for this monopolist are estimated to be C(Q) = 100 + 2Q + Q².At the profit-maximizing combination of output and price, monopoly profit is

A firm has a total cost function of C(Q) = 50 + 10Q^1/2.The firm experiences