Question 1

For any company operating in a marketplace,the firm attempts to maximize the value of the company's worth by setting the output where

Accepted Answer

A)  costs are lowest.
B)  P 
C)  MR = MC.
D)  AR = MC.E) A) and C)
F) A) and D)

Question 2

Economists tend to focus on one structural aspect of market organization that is more important than the others.It is

Accepted Answer

A)  the number of buyers and sellers.
B)  product homogeneity or differentiation.
C)  the quality of market information.
D)  the entry and exit conditions.E) C) and D)
F) None of the above

Question 3

Under what market structure do we have products like toothpaste,airlines,fast food,and shampoos?

Accepted Answer

A)  Perfect competition
B)  Monopoly
C)  Monopolistic competition
D)  OligopolyE) A) and B)
F) A) and C)

Question 4

Under monopoly we have "unexploited gains from trade" because

Accepted Answer

A)  if the firm were competitive it would have increased output in the long run.
B)  if the firm were competitive it would have decreased output in the long run.
C)  if the firm were competitive it would have not changed output in the long run.
D)  the FCC is always trying to regulate it.E) A) and B)
F) All of the above

Question 5

Currently,a monopolist's MR = $10 and its MC = $5 and it serves 10 consumers.An 11th consumer walks in.Should the company provide service to the additional customer?

Accepted Answer

A)  Yes,MR > MC,so it should provide service to the additional customer.
B)  Yes,MR is equal to the number of customers,so it should provide service to the additional customer.
C)  No,MR > MC,so it should not provide service to the additional customer.
D)  No,MC is less than the number of customers,so it should not provide service to the additional customer.E) All of the above
F) None of the above

Question 6

The importance of the marginal cost curve of a company is that it is also the

Accepted Answer

A)  supply curve for its product.
B)  demand curve for its product.
C)  average cost curve for its product.
D)  marginal revenue curve for its product.E) A) and B)
F) All of the above

Question 7

A market where a few firms produce most of the output is called a(n)

Accepted Answer

A)  oligopolistic market.
B)  monopolistically competitive market.
C)  perfectly competitive market.
D)  monopolistic market.E) None of the above
F) All of the above

Question 8

If a firm with monopoly pricing power in the market faces a demand curve of P = 2,000 - 2Q and marginal cost of MC = 1,100 + 2Q,then the firm will produce at a price of

Accepted Answer

A)  $16.
B)  $1,400.
C)  $1,700.
D)  $1,600.E) None of the above
F) B) and C)

Question 9

Firm A has been dealing in baby food products for the past 10 years and enjoys a good market share.Suppose a new firm enters the market to capitalize on the increasing demand for such products.However,the products of the new firm fail to attract customers.The failure of the new firm is due to

Accepted Answer

A)  the pioneering brand advantage of the incumbent.
B)  the learning curve effect.
C)  scale economies.
D)  the specific assets owned by the incumbent.E) C) and D)
F) A) and B)

Question 10

If a firm operating in a fairly competitive market earns a large economic profit,then,over time,

Accepted Answer

A)  old firms will exit and prices will rise.
B)  old firms will exit and prices will fall.
C)  new firms will enter and prices will rise.
D)  new firms will enter and prices will fall.E) B) and C)
F) B) and D)

Question 11

Always Round Tire is the only producer of tires for the new British import,the Maxi Copper.Demand for a set of four tires is P = 800 - 5Q while the cost incurred by the firm is MC = 15Q.What would be the monopoly price and quantity? What would happen to price and quantity if the market was perfectly competitive (assuming the same costs)?

Accepted Answer

A monopoly would maximize its profits by...

Question 12

Under which market structure is a firm's MR curve horizontal?

Accepted Answer

A)  Perfect Competition
B)  Monopoly
C)  Monopolistic Competition
D)  OligopolyE) None of the above
F) B) and C)

Question 13

The problem of the cartel points out that

Accepted Answer

A)  the interests of consumers and duopolists are the same.
B)  the interests of consumers and duopolists conflict.
C)  the interests of consumers and duopolists are the same in pricing,but conflict in output management.
D)  the interests of consumers and duopolists are the same in output management,but conflict in pricing.E) B) and C)
F) A) and D)

Question 14

In this chapter,the discussion on competitive markets tells us that each firm's demand curve is horizontal.Is this not inconsistent with the industry's demand curve,which slopes downward?

Accepted Answer

No,this is not inconsistent.The industry...

Question 15

Under what market structure do we have only one firm?

Accepted Answer

A)  Perfect Competition
B)  Monopoly
C)  Monopolistic Competition
D)  OligopolyE) C) and D)
F) B) and D)

Question 16

In a monopolistically competitive market,the seller maximizes profits by

Accepted Answer

A)  setting P = ATC.
B)  setting MC = ATC.
C)  setting price where MR = MC.
D)  setting price where P = MC.E) B) and D)
F) C) and D)

Question 17

In a purely competitive market,a company views its demand curve as

Accepted Answer

A)  completely price insensitive.
B)  horizontal (flat) .
C)  vertical.
D)  convex.E) A) and D)
F) B) and C)

Question 18

Under monopoly,there are

Accepted Answer

A)  unexploited gains from trade.
B)  many competitors.
C)  advantages of heterogeneous products.
D)  problems of easy entry.E) All of the above
F) B) and D)

Question 19

Refer to Figure 6.1.The area RSTU represents

Accepted Answer

A)  economic surplus.
B)  the profit earned by the monopolist.
C)  the loss incurred by the monopolist.
D)  deadweight loss.E) A) and B)
F) A) and C)

Question 20

For a perfectly or purely competitive firm,profit maximization occurs at an output level where

Accepted Answer

A)  P = MC.
B)  MC = ATC.
C)  P = AVC.
D)  P < AVC.E) None of the above
F) All of the above

Exam 6: Market Structure

The importance of the marginal cost curve of a company is that it is also the

Correct Answer
verified

Under what market structure do we have only one firm?

Correct Answer
verified

Firm A has been dealing in baby food products for the past 10 years and enjoys a good market share.Suppose a new firm enters the market to capitalize on the increasing demand for such products.However,the products of the new firm fail to attract customers.The failure of the new firm is due to

Correct Answer
verified

A market where a few firms produce most of the output is called a(n)

Correct Answer
verified

Under monopoly we have "unexploited gains from trade" because

Correct Answer
verified

Under monopoly,there are

Correct Answer
verified

Currently,a monopolist's MR = $10 and its MC = $5 and it serves 10 consumers.An 11^th consumer walks in.Should the company provide service to the additional customer?

Correct Answer
verified

Correct Answer
verified
A monopoly would maximize its profits by...
View Answer

If a firm operating in a fairly competitive market earns a large economic profit,then,over time,

Correct Answer
verified

For a perfectly or purely competitive firm,profit maximization occurs at an output level where

Correct Answer
verified

For any company operating in a marketplace,the firm attempts to maximize the value of the company's worth by setting the output where

Correct Answer
verified

If a firm with monopoly pricing power in the market faces a demand curve of P = 2,000 - 2Q and marginal cost of MC = 1,100 + 2Q,then the firm will produce at a price of

Correct Answer
verified

In a purely competitive market,a company views its demand curve as

Correct Answer
verified

Economists tend to focus on one structural aspect of market organization that is more important than the others.It is

Correct Answer
verified

The problem of the cartel points out that

Correct Answer
verified

Refer to Figure 6.1.The area RSTU represents

Correct Answer
verified

Under which market structure is a firm's MR curve horizontal?

Correct Answer
verified

In this chapter,the discussion on competitive markets tells us that each firm's demand curve is horizontal.Is this not inconsistent with the industry's demand curve,which slopes downward?

Correct Answer
verified
No,this is not inconsistent.The industry...
View Answer

In a monopolistically competitive market,the seller maximizes profits by

Correct Answer
verified

Under what market structure do we have products like toothpaste,airlines,fast food,and shampoos?

Correct Answer
verified

Exam 6: Market Structure

The importance of the marginal cost curve of a company is that it is also the

Correct AnswerverifiedShow Answer

Under what market structure do we have only one firm?

Correct AnswerverifiedShow Answer

Firm A has been dealing in baby food products for the past 10 years and enjoys a good market share.Suppose a new firm enters the market to capitalize on the increasing demand for such products.However,the products of the new firm fail to attract customers.The failure of the new firm is due to

Correct AnswerverifiedShow Answer

A market where a few firms produce most of the output is called a(n)

Correct AnswerverifiedShow Answer

Under monopoly we have "unexploited gains from trade" because

Correct AnswerverifiedShow Answer

Under monopoly,there are

Correct AnswerverifiedShow Answer

Currently,a monopolist's MR = $10 and its MC = $5 and it serves 10 consumers.An 11th consumer walks in.Should the company provide service to the additional customer?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedA monopoly would maximize its profits by...View AnswerShow Answer

If a firm operating in a fairly competitive market earns a large economic profit,then,over time,

Correct AnswerverifiedShow Answer

For a perfectly or purely competitive firm,profit maximization occurs at an output level where

Correct AnswerverifiedShow Answer

For any company operating in a marketplace,the firm attempts to maximize the value of the company's worth by setting the output where

Correct AnswerverifiedShow Answer

If a firm with monopoly pricing power in the market faces a demand curve of P = 2,000 - 2Q and marginal cost of MC = 1,100 + 2Q,then the firm will produce at a price of

Correct AnswerverifiedShow Answer

In a purely competitive market,a company views its demand curve as

Correct AnswerverifiedShow Answer

Economists tend to focus on one structural aspect of market organization that is more important than the others.It is

Correct AnswerverifiedShow Answer

The problem of the cartel points out that

Correct AnswerverifiedShow Answer

Refer to Figure 6.1.The area RSTU represents

Correct AnswerverifiedShow Answer

Under which market structure is a firm's MR curve horizontal?

Correct AnswerverifiedShow Answer

In this chapter,the discussion on competitive markets tells us that each firm's demand curve is horizontal.Is this not inconsistent with the industry's demand curve,which slopes downward?

Correct AnswerverifiedNo,this is not inconsistent.The industry...View AnswerShow Answer

In a monopolistically competitive market,the seller maximizes profits by

Correct AnswerverifiedShow Answer

Under what market structure do we have products like toothpaste,airlines,fast food,and shampoos?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Currently,a monopolist's MR = $10 and its MC = $5 and it serves 10 consumers.An 11^th consumer walks in.Should the company provide service to the additional customer?

Correct Answer
verified

Correct Answer
verified
A monopoly would maximize its profits by...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
No,this is not inconsistent.The industry...
View Answer

Correct Answer
verified

Correct Answer
verified