Question

1. Equilibrium price is $10 in a perfectly competitive market. For a perfectly competitive firm, MR=MC at 1200 units of output. At 1200 units, atc is $23 and avc is $18. The best policy for this firm is to ___ in the short run. Also, this firm earns ___ of ___ if it produces and sells 1200 units. a.shut down, losses, 15,600 b.shut down, losses, 9,600 c.continue to produce, losses, $15,600 d.continue to produce, profits, $15,600

2. Ultimately, market supply curves are upward sloping because of a.the law of diminishing marginal returns b.economies of scale c.average fixed cost falling continually as more output is produced d.the law of the short-run marginal cost revenue e.specialization

3. The long-run industry supply curve is the graphic representation of the quantity of output that the industry is prepared to a.supply at different prices after the entry and exit of firms is completed b.supply at a single price after the entry and exit of firms is completed c.purchase at different prices after the entry and exit of firms is completed d.purchase at different prices after the entry of firms is completed e.supply at different prices after the exit of firms is completed

4. When an industry is described as a decreasing-cost, increasing-cost, or constant-cost industry, the “cost” that is being referred to is a.marginal cost b.average total cost c.average variable cost d.sunk cost e.fixed cost

5. Which of the following comments is true? A.a perfectly competitive firm that seels to maximize profits will not be resource-allocative efficient b.If the demand curve and the marginal revenue curve weren’t the same curve for a perfectly competitive firm, then the firm would not be resource-allocative efficient c.resource allocative efficiency exists when a firm produces its output at the lowest possible per-unit cost (lowest atc) d.productive efficiency exists when firms produce the quantity of output at which price equals marginal cost e.c and d

6. A public franchise is a right granted a.to one firm by another firm, for example, McDonalds corporation grants restaurant owners a franchise to make its hamburgers b.to a firm by gov. that prevents other firms from producing the same product or service c.to a cooperative of buyers that allows the group to purchase goods at wholesale prices d.by gov. That enables a person to engage in arbitrage

7. Which of the following is the best example of a barrier to entry into a monopolistic industry? A.diminishing returns b.comparative advantage c.high elasticity of demand d.a public franchise

8. Which of the following is not an example of a legal barrier industry? A.beautician’s license b.patent c.exclusive ownership of raw materials d.public franchise e.copyright

9. A monopolist can sell 16000 units at a price of $100 per unit. Lowering price by $1 raises the quantity of demand by 500 units. What is the change in total revenue resulting from this price change? A.33,500 b.12,500 c.65,500 d.-33,500

10. Your school pays one rate for the first million kilowatts of electricity and a lower rate for any power it uses over one million kilowatts. What is occurring here? A.perfect price discrimination b.second degree price discrimination c.third degree discrimination d.economies of scale

Answer 1

Answer)

1. Equilibrium price is $10 in a perfectly competitive market. For a perfectly competitive firm, MR=MC at 1200 units of output. At 1200 units, atc is $23 and avc is $18. The best policy for this firm is to ___ in the short run. Also, this firm earns ___ of ___ if it produces and sells 1200 units. a.shut down, losses, 15,600.

Since P<AVC,so firm should shutdown.

TR at 1200 units = PQ = 10*1200 = 12000

TC at 1200 units = ATC*Q = 23*1200 = 27600

Losses = 12000 - 27600 = -15600

2) Ultimately market supply curves are upward sloping because of

a.the law of diminishing marginal returns

3)Thelong-run industry supply curve is the graphic representation of the quantity of output that the industry is prepared to

a.supply at different prices after the entry and exit of firms is completed

4) When an industry is described as a decreasing-cost, increasing-cost, or constant-cost industry, the “cost” that is being referred to is

b.average total cost

5)Which of the following comments is true? c.resource allocative efficiency exists when a firm produces its output at the lowest possible per-unit cost (lowest atc) d.productive efficiency exists when firms produce the quantity of output at which price equals marginal cost . Option C & D both are correct,so correct option is option E .

6 )A public franchise is a right granted b.to a firm by gov. that prevents other firms from producing the same product or service

7)Which of the following is the best example of a barrier to entry into a monopolistic industry? b.comparative advantage

8) which of the following is not an example of a legal barrier industry? A.beautician’s license

9)A Monopolist can sell 16000 units at a price of $100 per unit. Lowering price by $1 raises the quantity of demand by 500 units. What is the change in total revenue resulting from this price change? d.-33,500

10 )Yours school pays a rate for the first million kilowatts of electricity and a lower rate for any power it uses over one million kilowatts. What is occurring here?b.second degree price discrimination

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