QUESTION 1

Economic profit can be derived from calculating total revenues minus all of the firm's costs,

1. excluding its opportunity costs.
2. including its opportunity costs.
3. including its marginal revenue.
4. excluding its marginal revenue

5 points

QUESTION 2

The demand curve as perceived by a monopolistic competitor is ____________.

1. upward-sloping
2. U shaped
3. downward-sloping
4. flat

5 points

QUESTION 3

Refer to the diagram below. In this instance, at the range of output represented at point b,

1. total costs exceed total revenues.
2. total revenues exceed total costs.
3. the firm is earning profits.
4. the firm should shut-down.

5 points

QUESTION 4

The marginal revenue curve for a monopolist _________ the market demand curve.

1. always rises above
2. always lies beneath
3. always runs parallel
4. always is the same

5 points

QUESTION 5

Refer to the diagram below. Which of the following explains the slope of the total revenue curve illustrated in this graph?

1. Total revenue shown as a straight line sloping up indicates a perfectly competitive firm.
2. The slope of the total revenue curve is determined by the price of the goods produced.
3. At higher levels of output, diminishing returns will cause total cost to slope downward steeply.
4. The slope of the total revenue curve is explained by both a and b above.

5 points

QUESTION 6

In the highly competitive setting in which oligopoly firms operate, which of the following are considered to be typical temptations each may face?

1. To cooperate to generate and then divide up monopoly-like profits.
2. To cooperate to mutually decide what price to charge.
3. To cooperate to make decisions about what quantity to produce.
4. To cooperate to act as a single monopoly and all of the above.

5 points

QUESTION 7

Refer to the diagram above. In this instance, the marginal revenue curve

1. reflects a perfectly competitive firm.
2. is equal to the price of the good.
3. is horizontal straight line.
4. reflects each of the above.

5 points

QUESTION 8

If the firm is producing at a quantity of output where marginal revenue exceeds marginal cost, then,

1. the firm's perceived demand will shift to the left.
2. the firm should keep expanding production.
3. each marginal unit adds profit by bringing in less revenue than its cost.
4. the firm is now earning zero for profit.

5 points

QUESTION 9

Why are the underlying economic meanings of the perceived demand curves for a monopolist and monopolistic competitor different?

1. A monopolist faces the market demand curve and a monopolist competitor does not.
2. A monopolist competitor faces the market demand curve and a monopolist does not.
3. Because the demand curve for a monopolistic competitor is upward sloping.
4. Because the demand curve perceived by the monopolist is flatter than that of a monopolist competitor.

5 points

QUESTION 10

In economics, the term "shutdown point" refers to the point where the

1. marginal cost curve crosses the total revenue curve.
2. average variable cost curve crosses the total revenue curve.
3. average variable cost curve crosses the marginal cost curve.
4. marginal cost curve crosses the average variable cost curve.

5 points

QUESTION 11

If a monopoly or a monopolistic competitor raises their prices, the quantity demanded ____________.

1. will expand
2. stays the same
3. will decline
4. will decline in the short run

5 points

QUESTION 12

The demand curve as perceived by a perfectly competitive firm is _______________.

1. flat
2. downward sloping
3. upward sloping
4. hump shaped

5 points

QUESTION 13

If a monopolistic competitor raises its price, it ___________ customers than a perfectly competitive firm, but ____________ customers compared to the number that a monopoly that raised its prices would.

1. will lose more; it will lose as many
2. will lose more; it will lose more
3. will lose fewer; it will lose more
4. will lose fewer; it will lose as many

5 points

QUESTION 14

Why would a profit-seeking firm need to tailor its decisions about the quantity of labor inputs that it purchases?

1. To produce the highest profitable quantity of output at the lowest possible marginal cost.
2. Deciding what quantity to produce is one of the major choices a profit-seeking firm makes.
3. The quantity of labor is the only variable cost choice a profit-seeking firm can make.
4. To produce the profit-maximizing quantity of output at the lowest possible average cost.

5 points

QUESTION 15

An _________________ is calculated by subtracting the firm's costs from its total revenues, _______________________.

1. accounting profit; excluding opportunity cost
2. accounting profit; including opportunity cost
3. economic profit; excluding opportunity cost
4. opportunity cost; including economic profit

5 points

QUESTION 16

When a firm pursues a predatory pricing strategy, it does so

1. to hire more staff to lower unemployment.
2. to increase supply to benefit consumers.
3. to maximize profits in the long run.
4. to discourage short run competition.

5 points

QUESTION 17

A monopolist is able to maximize its profits by

1. setting the price at the level that will maximize its per-unit profit.
2. producing output where MR = MC and charging a price along the demand curve.
3. setting output at MR = MC and setting price at the demand curve's highest point.
4. producing maximum output where price is equal to its marginal cost.

5 points

QUESTION 18

If a perfectly competitive firm raises its price, the quantity demanded of its product ____________.

1. diminishes temporarily in the short run
2. falls to zero
3. stays the same
4. falls below marginal cost

5 points

QUESTION 19

The total revenue curve for monopolist will

1. start high, rise, and then decline.
2. start low, decline, and then rise
3. start high, decline, and then rise
4. start low, rise, and then decline

5 points

QUESTION 20

If a monopoly or a monopolistic competitor raises their prices, then

1. decline in quantity demanded will be larger for the monopoly.
2. decline in quantity demanded will be larger for the monopolistic competitor.
3. the quantity demanded for the monopoly product falls to zero.
4. the quantity demanded for the monopolistic competitor will fall to zero.