Question

QUESTION 9 - 5.2

What is the supply response character for agricultural output in the short run?

		Ag supply tends to be inelastic in the short run
		Ag supply tends to be elastic in the short run

QUESTION 10 - 5.2

What happens to the degree of industry concentration if existing firms merge or buy out competitors?

		The industry becomes less concentrated
		Industry concentration is not affected by mergers or acquisitions
		The industry becomes more concentrated

QUESTION 1 - 6.1

Suppose you operate a wholesale business that sells and delivers bulk coffee to office break rooms. You are the only firm that provides this service in your city, so you hold a local monopoly position in this market. If the price of gasoline declines for your delivery fleet, your marginal cost curve will shift downward. What happens to your profit maximizing level of output?

		Does not change
		Increases
		Decreases

QUESTION 2 - 6.1

Which of the following statements is true?

		Monopolies have an incentive to increase profits by cutting costs
		Monopoly market power is permanent
		Monopoly market output is higher than perfectly competitive market output
		Monopolies are always profitable

Answer 1

Question 9 :-

Supply response character for agricultural output in short run is inelastic

Reason :-

Because the production of the agricultural output is a time consuming process and does it cannot be increased in short run.

Question 10 :-

The Industry becomes more concentrated

Reason :-

The market power shifts within few hands and firms .

Question 1 :-

Increases

Reason :-

The marginal revenue is downward sloping and the profit-maximizing level of output is the point where the marginal cost curve intersects the marginal revenue curve . Now if the marginal cost curve shifts downwards, it cuts the marginal revenue at a a level of output which has higher than the previous output leading to increase and profit maximizing level of output.

Question 2 :-

Monopolies have an incentive to increase its profits by cutting cost.

Reason :-

If if a monopolist form reduces its cost keeping the price same, the profits will become higher than the previous level.