Question 6

A monopolist produces 14,000 units of output and charges $14 per unit. Its MR is $10, its MC is $10, its ATC is $12 and AVC is $9, then this firm in order to maximize its profit, it should produce where:

Select one:

a.

ATC equals price.

b.

MR equals MC.

c.

MC equals price.

d.

AVC equals price.

Question 7

A monopolistic competitive firm in the long run:

Select one:

a.

Makes a loss.

b.

Earns zero economic profit.

c.

May make a positive or negative profit.

d.

Earns positive economic profit.

Question 8

A price-taking firm .

Select one:

a.

Sets the product's price to whatever level the owner decides upon

b.

Asks the government to set the price of its product.

c.

Talks to rival firms to determine the best price for all of them to charge

d.

Cannot influence the price of the product it sells

Question 9

A computer manufacturer gathered average monthly sales from its 56 branch offices and dealers and estimated the following demand for its products:

Q=15,000-2.8 P +150 A +0.3 Pc+ 0.35 Pm +0.2 Pt

(2.17)(0.85)(2.5)(2.05)(1.53)

where: P is the price of basic model=$7000

A is advertising expenditures (in thousands)=$52

Pc average price of personal computer= $4000

Pm average price of minicomputer= $15000

Pt average price of leading competitor's workstation =$8000

the numbers in brackets are the t-statistics

We can say from the results that there is a positive relation between advertising expenditures and sales Q?

Select one:

True

False

Question 10

Andrea's Day Spa began to offer a relaxing aromatherapy treatment. The firm asks you how much to charge to maximize profits. The demand curve for the treatments is given by the first two columns in the following table; its total costs are given in the third column. Answer the following question accordingly.

PriceQuantityTC

$25.000$100

$24.0010$250

$23.0020$420

$22.0030$600

$21.0040$780

$20.0050$970

$19.0060$1,170

A)The profit maximizing price in the above table is:

Select one:

a.

$22

b.

$24

c.

$21

d.

$25

B) Total variable costs of producing 20 units of output in the above table is:

Select one:

a.

$100

b.

$320

c.

$420

d.

$970

Question 11

Cheating can threaten formal or informal agreements of cartel.

Select one:

True

False

Question 12

One of the requirements for a monopoly is that.

Select one:

a.

Products are high priced.

b.

The product cannot be produced by small firms.

c.

There are several close substitutes for the product

d.

There is a unique product with no close substitutes

Question 13

In the long run monopolistic competition like perfect competition, will earn zero economic profit.

Select one:

True

False

Question 14

A computer manufacturer gathered average monthly sales from its 56 branch offices and dealers and estimated the following demand for its products:

Q=15,000-2.8 P +150 A +0.3 Pc+ 0.35 Pm +0.2 Pt

(2.17)(0.85)(2.5)(2.05)(1.53)

where: P is the price of basic model=$7000

A is advertising expenditures =$52000

Pc average price of personal computer= $4000

Pm average price of minicomputer= $15000

Pt average price of leading competitor's workstation =$8000

the numbers in brackets are the t-statistics

Which variable(s) are significant in influencingthe demand for the above firm?

a.

P, Pc and Pm

b.

P, Pm and Pt

c.

P, A and Pc

d.

A and Pc