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3. A flashlight manufacturing company has the following cost structure (some columns are intentionally left blank): Marginal Quantity Cost ($] 0 1 12 2 8 3 10 4 13 5 17 a. Supposing that the firm is a price taker and can sell each flashlight it makes for $13, graph the Marginal Cost and Marginal Revenue curves for this flashlight manufacturer. b. If you apply marginal analysis, what does the figure you drew in part (a) imply is the profit-maximizing output level for the firm? Chapter 6-Market Structure 6 C. Assume that the firm has fixed costs of $10. Calculate Total Cost, Total Revenue and Total Profit for the firm at the various production levels, using the blank columns in the table above. d. With flashlights selling for $13, what is maximum profit the firm can make? What should it do? Explain.Questions 7-8 refer to the following scenario. Bertha's Bath Supplies produces packets of bath salts, which are sold for $5 each. Bertha's Bath Supplies is a price-taking firm. Total revenue and total cost curves for the firm are shown in the graph below. Total Revenue Curve D Total Cost Cost and Revenue Curve C Quantity of Bath Salt Packets 7. Which of the following statements is true regarding the graph shown above? a. Profits are maximized at point E. b. The distance from B to C represents profit earned. C. The distance from B to D represents profit earned. d. The distance from C to D represents profit earned. e. At point B, marginal revenue is designated by point D. 8. Which of the following statements about Bertha's Bath Supplies do you know to be true, based on the information provided above?c a. Profits are maximized when production reaches 100 packets. b. Profits are maximized at point E. c. Profits are maximized when marginal costs equal $5 per packet. d. Point B represents a production level yielding zero accounting profit. e. Point E represents a production level yielding positive economic profit. Chapter 6-Market Structure 11 Questions 9 and 10 refer to the scenario below. Tillie's Tack Place manufactures thumb tacks and sells them for $2.00 per box of tacks. The graph below shows marginal cost and marginal revenue for Tillie's Tack Place. Marginal Cost Marginal Cost and Price ($) Marginal Revenue 200 Boxes of Thumbtacks 9. When Tillie's Tack Place is producing 200 boxes of thumbtacks, which of the following statements must be true?It]. When Tillie's Tack Place is producing EDI] boxes of thumbtacks, the marginal cost perbox is equal to a. ll h. $25 c. 35 d. 32 e. The marginal cost cannot be determined from the information given here. 11. In the short run. a perfectly competitive rm should keep producing as long as it is making an economic prot. it is making an accounting prot. its total revenues are greater than its tted costs. its total revenues are greater than its variable costs. its marginal revenues are positive. ash-age Chapter 5 lv![arket Sthcture 12 12. 1f negative economic prots are being made in a perfectly competitive market, what two changes are likely to occur? a. The market supply curve will shift to the left and each rms' production quantity will fall. h. The market supply curve will shift to the right and each rms' production quantity will rise. c. The market supply curve will shift to the left and each rms' production quantity will rise. d. The market supply curve will shift to the right and each rms' production quantity will fall. e. None of the above 13. Which of the following is a condition of monopoly? a. Two or more sellers. h. Only one buyer. c. A good with several close substitutes. d. Barriers to enuy. e. None of the above. 14. A \"natural monopoly\" is a. An oligopoly. h. A monopoly characterized by diseconomies of scale. c. A monopoly that emerges because of economies of scale. d. A monopoly on a scarce natural resource. e. A monopoly that solves the problem of diseconomies of scale. 15. The demand curve for the output of a monopolistic rm is equal to a. The marginal revenue for the product in question. h. The market supply curve for the product in question. c. The market demand curve for the product in question. d. The demand curve for a rm in a perfectly competitive market. e. The concentration ratio of the rm. 16. Suppose a firm can sell five units of output at a price of $10 each. To sell six units of output, the firm must lower its price to $9 per unit. To sell seven units, the firm must lower its price to $8 per unit. Which of the following statements is true? a. The firm can maximize profits at all of the production levels listed above. b. The firm faces an upward sloping demand curve. c. Based on the information given above, we can conclude that seven units is the profit maximizing level of production. d. Based on the information given above, we can conclude that this firm faces net losses at the levels of production considered here. e. The firm can be described as a "price maker." Questions #17 and #18 refer to the graph below. D B Cost and Price E F Quantity The graph shown above depicts the demand, marginal revenue, and marginal cost curves faced by a monopolistic firm. 17. Point A indicates a. Total cost. b. The point where MR=MC. c. The price buyers are willing to pay at equilibrium. d. The point where MC=P e. Total revenue. Chapter 6-Market Structure 14 18. Which of the following statements is false? a. When the firm chooses a level of production F, buyers will pay a price E. b. Point A is on the marginal cost curve. C. Point B shows the level of demand that corresponds to the profit maximizing level of production. d. Point C indicates the price and quantity of production that would exist in a competitive equilibrium. e. Because the firm described by this graph is a monopoly, production is lower and price is higher than they would be at competitive equilibrium. 19. Which of the following statements is false? a. In some cases, monopoly can be a preferable option for society as a whole compared with a situation of perfect competition. b. For some services, such as passenger rail transportation, government subsidies to a monopolist may produce the most socially beneficial outcome. C. Government regulation of an industry characterized by natural monopoly can help to reduce the inefficiencies associated with market power. d. Optimally efficient pricing always leads to self-sustaining revenues. e. All of the above are true.19. Which of the following statements is false? a. In some cases, monopoly can be a preferable option for society as a whole compared with a situation of perfect competition. b. For some services, such as passenger rail transportation, government subsidies to a monopolist may produce the most socially beneficial outcome. c. Government regulation of an industry characterized by natural monopoly can help to reduce the inefficiencies associated with market power. d. Optimally efficient pricing always leads to self-sustaining revenues. e. All of the above are true. 20. Which of the following is an example of a price discriminating seller? a. Frank sells condominiums only to buyers of a certain ethnic background. b. Ellen charges different prices to different buyers, depending on their ethnic or religious background. c. Amelia charges different prices to different buyers depending on their ability or willingness to pay. d. An airline charges the same price to all travelers. e. Both a and b are correct. 21. Which of the following statements is true of a monopolistically competitive firm? a. It faces a downward sloping demand curve. b. It earns positive economic profits in the long run. c. It produces more than a perfectly competitive firm. d. It charges lower prices than a perfectly competitive firm. e. Its profits are protected by significant barriers to entry. Chapter 6-Market Structure 15 22. Under conditions of oligopoly, firms may collude in order to a. To raise the prices of the goods they offer. b. Increase competition. . Solve the concentration ratio problem. d. Create a prisoner's dilemma for buyers. e. Initiate a price war with one another. 23. Which of the following statements about oligopoly is false? a. Under conditions of oligopoly, entry into the market is difficult. b. The amount of long-run economic profit made by oligopolistic firms is variable. c. Each firm in an oligopoly makes decisions without regard for the actions of other firms. d. Game theory is used to analyze the behavior of firms in an oligopoly. e. Firms in an oligopolistic market often have an incentive to collude. 24. Which one of the following statements is false? b a. One of the reasons that markets are becoming more concentrated in the U.S. is lax enforcement of existing antitrust laws. b. The existence of "exceptional" profits by companies is a sign that a market economy is functioning well. c. Most lobbying organizations in the U.S. represent business interests. d. Many retiring members of the U.S. Congress take new jobs as lobbyists. e. Net neutrality requires that internet providers treat all online content the same