Please give explanation to the answer choice and step for solving 1 At the profit maximizing level of output, what is relationship between the total revenue (TR) and total cost (TC) curves A) They must have the same slope B) They must intersect, with TC cutting TR from above C) They must be tangent to each other D) They cannot be tangent to each other E) They must intersect, with TC cutting TR from below 2 Suppose all firms have constant marginal costs that are the same for each firm in the short run In this case, the market level supply curve is and producer surplus equals A) perfectly inelastic, fixed costs B) perfectly inelastic, zero C) perfectly elastic, zero D) perfectly elastic, fixed costs 3 If current output is less than the profit maximizing output, which must be true A) Marginal revenue is less than marginal cost B) Marginal revenue is greater than marginal cost C) Total revenue is less than total cost D) Average revenue is less than average cost E) Average revenue is greater than average cost 5 If a competitive firm's marginal cost curve is U shaped then A) its short run supply curve is U shaped too B) its short run supply curve is the downward sloping portion of the marginal cost curve C) its short run supply curve is the upward sloping portion of the marginal cost curve D) its short run supply curve is the upward sloping portion of the marginal cost curve that lies above the short run average total cost curve E) its short run supply curve is the upward sloping portion of the marginal cost curve that lies above the short run average variable cost curve 6 The textbook for your class was not produced in a perfectly competitive industry because A) it is not costless to enter or exit the textbook industry B) there are so few firms in the industry that market shares are not small, and firms' decisions have an impact on market price C) upper division microeconomics texts are not all alike D) of all of the above reasons 7 In the long run equilibrium of a competitive market, the market supply and demand are Supply P 20 0 50Q Demand P 50 1 5Q, where P is dollars per unit and Q is rate of production and sales in hundreds of units per day A typical firm in this market has a marginal cost of production expressed as MC 2 0 15q a Determine the market equilibrium rate of sales and price b Determine the rate of sales by the typical firm 8 Which of the following is true at the output level where P MC A) The monopolist is maximizing profit B) The monopolist is earning a positive profit C) The monopolist is not maximizing profit and should increase output D) The monopolist is not maximizing profit and should decrease output 9 Use the following two statements to answer this question I For a monopolist, at every output level, average revenue is equal to price II For a monopolist, at every output level, marginal revenue is equal to price A) I is true, and II is false B) I is false, and II is true C) Both I and II are true D) Both I and II are false E) Statements I and II could either be true or false depending upon demand 10 Trisha has a monopoly on formal gowns in the local market She is currently charging $37 5 per gown and sells 20 in a month The elasticity of demand is 3 at this price and output level What must be Trisha's marginal cost of the last gown produced if she is maximizing profits What is the value of the Lerner index under perfect competition A) infinity B) two times the price C) 1 D) 0 11 Compared to the equilibrium price and quantity sold in a competitive market, a monopolist will charge a price and sell a quantity A) higher larger B) lower larger C) lower smaller D) higher smaller E) none of these 12 Which of the following statements about natural monopolies is true A) Natural monopolies are only found in the markets for natural resources (like crude oil and coal) B) Natural monopolies cannot be regulated C) For natural monopolies, marginal cost is always below average cost D) For natural monopolies, average cost is always increasing 13 Suppose Orange Inc sells MP3 players and initially has monopoly power because there are only a few close substitutes available to consumers As more types of MP3 players are introduced into the market, the demand facing Orange becomes elastic and the Lerner index achieved by the firm in this market A) less, declines B) less, increases C) more, increases D) more, declines 14 A monopolist faces inverse demand P 300 2Q and has total cost TC 60Q 2Q 2 and marginal cost MC 60 4Q What is the maximum profit the monopolist can earn in this market A) 60 B) 240 C) 1200 D) 3600 E) None of the above

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Please give explanation to the answer choice and step for solving 1- At the profit-maximizing level of output, what is relationship between the total revenue

Please give explanation to the answer choice and step for solving

1- At the profit-maximizing level of output, what is relationship between the total revenue (TR) and total cost (TC) curves?

A) They must have the same slope.

B) They must intersect, with TC cutting TR from above.

C) They must be tangent to each other.

D) They cannot be tangent to each other.

E) They must intersect, with TC cutting TR from below.

2- Suppose all firms have constant marginal costs that are the same for each firm in the short run.In this case, the market level supply curve is ________ and producer surplus equals ________:

A) perfectly inelastic, fixed costs

B) perfectly inelastic, zero

C) perfectly elastic, zero

D) perfectly elastic, fixed costs

3- If current output is less than the profit-maximizing output, which must be true?

A) Marginal revenue is less than marginal cost.

B) Marginal revenue is greater than marginal cost.

C) Total revenue is less than total cost.

D) Average revenue is less than average cost.

E) Average revenue is greater than average cost.

5- If a competitive firm's marginal cost curve is U-shaped then

A) its short run supply curve is U-shaped too

B) its short run supply curve is the downward-sloping portion of the marginal cost curve

C) its short run supply curve is the upward-sloping portion of the marginal cost curve

D) its short run supply curve is the upward-sloping portion of the marginal cost curve that lies above the short run average total cost curve

E) its short run supply curve is the upward-sloping portion of the marginal cost curve that lies above the short run average variable cost curve

6- The textbook for your class was not produced in a perfectly competitive industry because

A) it is not costless to enter or exit the textbook industry.

B) there are so few firms in the industry that market shares are not small, and firms' decisions have an impact on market price.

C) upper-division microeconomics texts are not all alike.

D) of all of the above reasons.

7- In the long-run equilibrium of a competitive market, the market supply and demand are:

Supply:P = 20 + 0.50Q

Demand:P = 50 - 1.5Q,

where P is dollars per unit and Q is rate of production and sales in hundreds of units per day.A typical firm in this market has a marginal cost of production expressed as:MC = 2.0 + 15q.

a.Determine the market equilibrium rate of sales and price.
b.Determine the rate of sales by the typical firm.

8- Which of the following is true at the output level where P=MC?

A) The monopolist is maximizing profit.

B) The monopolist is earning a positive profit.

C) The monopolist is not maximizing profit and should increase output.

D) The monopolist is not maximizing profit and should decrease output.

9- Use the following two statements to answer this question:

I.For a monopolist, at every output level, average revenue is equal to price.

II.For a monopolist, at every output level, marginal revenue is equal to price.

A) I is true, and II is false.

B) I is false, and II is true.

C) Both I and II are true.

D) Both I and II are false.

E) Statements I and II could either be true or false depending upon demand.

10- Trisha has a monopoly on formal gowns in the local market.She is currently charging $37.5 per gown and sells 20 in a month.The elasticity of demand is -3 at this price and output level.What must be Trisha's marginal cost of the last gown produced if she is maximizing profits?

What is the value of the Lerner index under perfect competition?

A) infinity

B) two times the price

C) 1

D) 0

11- Compared to the equilibrium price and quantity sold in a competitive market, a monopolist will charge a __________ price and sell a __________ quantity.

A) higher; larger

B) lower; larger

C) lower; smaller

D) higher; smaller

E) none of these

12- Which of the following statements about natural monopolies is true?

A) Natural monopolies are only found in the markets for natural resources (like crude oil and coal).

B) Natural monopolies cannot be regulated.

C) For natural monopolies, marginal cost is always below average cost.

D) For natural monopolies, average cost is always increasing.

13- Suppose Orange Inc. sells MP3 players and initially has monopoly power because there are only a few close substitutes available to consumers.As more types of MP3 players are introduced into the market, the demand facing Orange becomes ________ elastic and the Lerner index achieved by the firm in this market ________.

A) less, declines

B) less, increases

C) more, increases

D) more, declines

14- A monopolist faces inverse demand P = 300 - 2Q and has total cost TC = 60Q + 2Q² and marginal cost MC = 60 + 4Q.What is the maximum profit the monopolist can earn in this market?

A) 60

B) 240

C) 1200

D) 3600

E) None of the above