1. A monopolist has set her level of output to maximize profit. The firm's marginal cost is $20, and the price elasticity of demand is -2.0. The firm's profit maximizing price is approximately:

Select one:

a. $40

b. $0

c. $20

d. This problem cannot be answered without knowing the marginal cost.

e. $10

2. As the manager of a firm you are producing at an output where the marginal revenue is $152 and marginal cost is $200. You should:

Select one:

a. expand output.

b. expand output until marginal revenue equals zero.

c. reduce output until marginal revenue equals marginal cost.

d. do nothing without information about your fixed costs.

e. reduce output beyond the level where marginal revenue equals zero.

3. At the profit-maximizing level of output for a monopolist, demand is:

Select one:

a. infinitely elastic.

b. inelastic, but not completely inelastic.

c. unit elastic.

d. completely inelastic.

e. elastic, but not infinitely elastic.

4. DVDs can be produced at a constant marginal cost of $5 per disk, and Roaring Lion Studios is releasing the DVDs for its last two major films. The DVD forFrozenis priced at $20 per disk, and the DVD forSchreckis priced at $30 per disk. What are the price elasticities of demand for these two movies?

Select one:

a. -0.75 and -5/6, respectively

b. Both equal -1.2.

c. -1.33 and -1.2, respectively

d. -1.33 and -2, respectively

5. A monopolist will always produce along the _____________ section of the demand curve.

Select one:

a. elastic

b. unit elastic

c. elastic or inelastic

d. inelastic

6. A monopolist faces the following demand curve, marginal revenue curve, total cost curve and marginal cost curve for its product:

Q = 200 - 2P

MR = 100 - Q

TC = 5Q

MC = 5

What level of output maximizes total revenue?

Select one:

a. 95

b. 0

c. none of answers given is correct

d. 100

e. 90

7. A monopolist faces the following demand curve, marginal revenue curve, total cost curve and marginal cost curve for its product:

Q = 200 - 2P

MR = 100 - Q

TC = 5Q

MC = 5

What is the profit maximizing price?

Select one:

a. $5.00

b. $10.00

c. $52.50

d. $95.00