Question 1

A kinked demand curve:

Select one:

a. has a steep section above the business's original price

b. is faced by monopolistic competitors

c. has three segments

d. has a flat section below the business's original price

e. is typical of rival oligopolists

Question 2

The shape of the demand curve faced by an individual business in a perfectly competitive market is the result of:

Select one:

a. mutual interdependence

b. advertising

c. the business's inability to affect price

d. the sale of a product that is distinct from others

e. existing entry barriers

Question 3

A business will maximize profits at the output at which:

Select one:

a. the difference between marginal revenue and price is at a maximum

b. the excess of total revenue over total cost is greatest

c. price exceeds average cost by the largest amount

d. total revenue and total cost are equal

e. the excess of total cost over total revenue is greatest

Question 4

A monopolistic competitor maximizes short-run profits by:

Select one:

a. finding the price that equates average revenue to marginal cost

b. equating demand and average revenue

c. setting price equal to marginal cost

d. setting price equal to average cost

e. finding the quantity of output that equates marginal revenue and marginal cost

Question 5

Marginal product:

Select one:

a. is always less than average product

b. may initially increase, then diminishes, and ultimately becomes negative

c. is always greater than average product

d. may initially increase, then diminishes, but never becomes negative

e. diminishes at all levels of production