Question

1. Which of the following best describes the objective of the perfect price discriminator? a) Charge each consumer a higher price than s/he is willing to pay b) Charge different prices based on characteristics of consumers that are correlated with willingness to pay c) Charge all consumers the price that the last consumer is willing to pay d) Charge each consumer the price that s/he is willing to pay e) None of the above

2. Which of the following best describes the break-even point of the firm? a) Quantity at which average cost is at its lowest level b) Price at which quantity demanded equals quantity supplied c) Quantity at which marginal revenue equals marginal cost d) Quantity at which marginal cost equals marginal product e) None of the above

3. Which of the following best describes a firm that has increasing marginal cost? a) Increasing returns to scale b) Inefficient relative to other firms in the market c) Decreasing marginal product d) A price maker e) A firm that is a perfect price discriminator

4. Which of the following best describes how a competitive firm determines how much output to supply to the market? a) Produce the quantities at which price is greater than average cost b) Produce the quantity at which marginal revenue equals average product c) Produce all quantities at which price is greater than average product d) Produce the quantity at which price equals marginal cost e) Produce the quantity at which marginal revenue equals average cost

Answer 1

1. d) Charge each consumer the price that s/he is willing to pay

2. a) Quantity at which average cost is at its lowest level

3. b) Inefficient relative to other firms in the market

4. d) Produce the quantity at which price equals marginal cost