Question

1. Which of the following is a command-and-control based pollution control policy?

• a subsidy provided by the city for keeping land undeveloped.
• a state emissions tax on coal power plants.
• a federal government requirement that all vehicle fleets average a set level of emissions by 2030.
• a county selling permits for toxic waste dumping.

2. A natural monopoly firm will produce where the _____ curve intersects the downward-sloping part of the _____ curve.

• marginal revenue; fixed cost
• marginal cost; total profit
• supply; long run total cost
• demand; long run average cost

3. If a firm is a monopolistic competitor, then the firm faces

• many competitors selling slightly differentiated products.
• no competitors, and is the only seller of its product.
• only a handful of other competitors due to numerous barriers to entry.
• many competitors selling the exact same product.

4. The following table shows the demand curve and cost information for a firm that is a monopoly.

Price	Quantity	Total Cost
$30	0	$500
$28	50	$600
$26	100	$1,300
$24	150	$2,250
$22	200	$3,350

If they maximize their profits, what will their profits equal?

$1,300

$700

$1,350

$1,050

5. The following table shows the demand curve and cost information for a firm that is a monopoly.

Price	Quantity	Total Cost
$15	0	$200
$14	500	$400
$13	850	$700
$12	1,000	$1,200
$11	1,100	$2,000

What quantity should they produce to maximize their profits?

500 units

850 units

1,000 units

600 units

6. Comparing a monopoly firm and a monopolistic competitor, the price elasticity of demand will be

higher for the monopolistic competitor.

higher for the monopoly firm.

equal for both.

indeterminate between the two.

7. Monopolistic competitors in the certified used vehicles industry will often include a warranty as a means to

• be environmentally responsible.
• be perceived less favorably.
• differentiate their product.
• be socially responsible.

Answer 1