Q1, Game theory is important for understanding which of the following market types?

Select one:

a.perfectly competitive and oligopolistic markets.

b.oligoplistic but not perfectly competitive markets.

c.perfectly competitive markets but not oligopolistic markets.

d.neither oligopolistic nor perfectly competitive markets.

Q2, A monopolistically competitive firm has the following cost structure:

Output

10

20

30

40

50

60

70

Total Cost($)

800

875

1,025

1,250

1,550

1,925

2,375

The firm faces the following demand curve:

Price ($). Quantity

50. 10

42. 20

34. 30

26. 40

18. 50

10. 60

2. 70

To maximize profit (or minimize losses), the firm will produce

Select one:

a.40 units.

b.20 units.

c.50 units.

d.30 units.

Q3, Which of the following statements isnotcorrect?

Select one:

a.

Consumers will likely benefit in the form of lower prices from buying a product made by a natural monopoly than if the market were served by several firms.

b.

Monopolists typically produce larger quantities of output than competitive firms.

c.

Monopolists typically charge higher prices than competitive firms.

d.

Consumers may benefit from monopolies if the firms invest their higher profits into something that benefits society such as medical research.

Q4, Suppose that a firm has only one variable input, labor, and firm output is zero when labour is zero. When the firm hires 6 workers it produces 90 units of output. Fixed cost of production are $6 and the variable cost per unit of labor is $10. The marginal product of the seventh unit of labour is 4. Given this information, what is the total cost of production when the firm hires 7 workers?

Select one:

a.$76

b.$946

c.$66

d.$906

Q5, A monopolistically competitive firm is currently producing 20 units of output. At this level of output the firm is charging a price equal to $20, has marginal revenue equal to $12, has marginal cost equal to $12, and has average total cost equal to $18. From this information we can infer that

Select one:

a.the firm is currently maximizing its profit.

b.the profits of the firm are negative.

c.firms are likely to leave this market in the long run.

d.All of the above are correct.

Q6, For a monopoly, the level of output at which marginal revenue equals zero is also the level of output at which

Select one:

a.

marginal cost is zero.

b.

profit is maximized.

c.

average revenue is zero.

d.

total revenue is maximized.

Q7, A monopolistically competitive firm faces the following demand curve for its product:

Price ($). Quantity

40. 4

36. 10

32. 16

28. 22

24. 28

20. 34

16. 40

12. 46

8. 52

4. 58

The firm has total fixed costs of $100 and a constant marginal cost of $25 per unit. The firm will maximize profit with the production of

Select one:

a.10 units of output.

b.4 units of output.

c.22 units of output.

d.16 units of output.

Q8,Because oligopoly markets have only a few sellers, the actions of any one seller

Select one:

a.will only affect the prices of other firms, but not their output.

b.can have a large impact on the profits of other sellers in the market.

c.will affect how other firms behave in the market.

d.Both b and c are correct.

e.All the above are correct.

Q9,Scenario A

Consider a transportation corporation named Reading's that has just completed the development of a new light rail system in Minneapolis. Currently, there are plenty of seats on the train, and it is never crowded. Its capacity far exceeds the needs of the city. After just a few years of operation, the shareholders of Reading's experienced incredibly high rates of return on their investment due to the profitability of the corporation.

Refer to Scenario A. Which of the following statements is most likely to be true?

(i)

New entrants to the market know they will have a smaller market share than Reading's currently has.(ii)

Reading's is most likely experiencing decreasing average total cost.(iii)

Reading's is a natural monopoly.

Select one:

a.

(i) and (ii) only

b.

(i) and (iii) only

c.

(ii) and (iii) only

d.

(i), (ii), and (iii)

Q10, For a monopolist, marginal revenue is

Select one:

a.

equal to price, whereas marginal revenue is less than price for a perfectly competitive firm.

b.

equal to price, as it is for a perfectly competitive firm.

c.

less than price, as it is for a perfectly competitive firm.

d.

less than price, whereas marginal revenue is equal to price for a perfectly competitive firm.