-----------------multiple choice------------

6. En. Thoo sells corn to a broker in Kajang, Selangor. Because the market for corn is generally considered to be competitive, Mr.Thoo maximizes his profit by choosing

a. to produce the quantity at which average variable cost is minimized.

b. to produce the quantity at which average fixed cost is minimized.

c. the quantity at which market price is equal to En.Thoo marginal

cost of production.

d. the quantity at which market price exceeds En. Thoos marginal cost

of production by the greatest amount.

7. Monopolies are inefficient because they

(i) eliminate barriers to entry.

(ii) price their product at a level where marginal revenue exceeds marginal cost.

(iii) restrict output below the socially efficient level of production.

a. (i) and (ii) only

b. (ii) and (iii) only

c. (iii) only

d. (i), (ii), and (iii)

8. Monopoly profit is not a social problem because

a. the size of the economic pie grows when monopoly profits increase.

b. producers are more efficient than consumers.

c. the profit represents a transfer from the consumer to the producer with no

loss in total surplus.

d. None of the above are correct.

9. The profit-maximization problem for a monopolist differs from that of a competitive firm in which of the following ways?

a. A competitive firm maximizes profit at the point where marginal revenue equals marginal cost; a monopolist maximizes profit at the point where marginal revenue exceeds marginal cost.

b. A competitive firm maximizes profit at the point where average revenue equals marginal cost; a monopolist maximizes profit at the point where average revenue exceeds marginal cost.

c. For a competitive firm, marginal revenue at the profit-maximizing level of output is equal to marginal revenue at all other levels of output; for a monopolist, marginal revenue at the profit-maximizing level of output is smaller than it is for larger levels of output.

d. For a profit-maximizing competitive firm, thinking at the margin is much more important than it is for a profit-maximizing monopolist.

10. Each firm in a monopolistically competitive industry faces a downward-sloping demand curve because

a. there are many other sellers in the market.

b. there are very few other sellers in the market.

c. the firm's product is different from those offered by other firms in the

market.

d. the firm faces the threat of entry into the market by new firms.