QUESTION

A firm that is a natural monopoly

a.is not likely to be concerned about new entrants eroding its monopoly power.

b.is taking advantage of economies of scale.

c.would experience a higher average total cost if more firms entered the market.

d.All of the above are correct.

QUESTION

Bev is opening her own court-reporting business. She financed the business by withdrawing money from her personal savings account. When she closed the account, the bank representative mentioned that she would have earned $300 in interest next year. If Bev hadn't opened her own business, she would have earned a salary of $25,000. In her first year, Bev's revenues were $30,000, and she spent $1,000 on materials and supplies. Which of the following statements is correct?

a.Bev's total explicit costs are $26,300

b.Bev's economic profit is $3,700.

c.Bev's total implicit costs are $300.

d.Bev's accounting profits exceed her economic profits by $300.

QUESTION

Bob's Butcher Shop is the only place within 100 miles that sells bison burgers. Assuming that Bob is maximizing his profit, which of the following statements is true?

a.The price of Bob's bison burgers will exceed Bob's marginal cost.

b.The price of Bob's bison burgers will equal Bob's marginal cost.

c.The price of Bob's bison burgers will be less than Bob's marginal cost.

d.Costs are irrelevant to Bob because he is a monopolist.

QUESTION

A monopolist can sell 300 units of output for $45 per unit. Alternatively, it can sell 301 units of output for $44.60 per unit. The marginal revenue of the 301^stunit of output is

a.-$120.00

b.-$75.40.

c.-$0.40.

d.$75.40.

QUESTION

Consider a firm that operates in a perfectly competitive market.Currently the firm is producing 50 units of output and at that output level, marginal revenue is $6.Suppose that the firm increases output by 50%.Total revenue will be

a.$600

b.$300.

c.the same since price will fall by 50%.

d.$450.

QUESTION

An example of an opportunity cost that is also an implicit cost is

a.a lease payment.

b.the cost of raw materials.

c.the value of the business owner's time.

d.All of the above are correct.

QUESTION

An example of an explicit cost of production would be the

a.cost of forgone labor earnings for an entrepreneur.

b.lost opportunity to invest in capital markets when the money is invested in one's business.

c.lease payments for the land on which a firm's factory stands.

d.Both a and c are correct.

QUESTION

For a monopolist, when the price effect is greater than the output effect, marginal revenue is

a.negative

b.positive.

c.maximized.

d.zero.

QUESTION

A competitive firm has been selling its output for $10 per unit and has been maximizing its profit. Then, the price rises to $14, and the firm makes whatever adjustments are necessary to maximize its profit at the now-higher price. Once the firm has adjusted, its

a.marginal revenue is lower than it was previously

b.marginal cost is lower than it was previously.

c.quantity of output is higher than it was previously.

d.All of the above are correct.

QUESTION

Competitive firms differ from monopolies in which of the following ways?

(i)Competitive firms do not have to worry about the price effect lowering their total revenue.(ii)Marginal revenue for a competitive firm equals price, while marginal revenue for a monopoly is less than the price it is able to charge.

(iii)Monopolies must lower their price in order to sell more of their product, while competitive firms do not.

a.(ii) and (iii) only

b.(i) and (iii) only

c.(i), (ii), and (iii)

d.(i) and (ii) only

QUESTION

A monopoly firm is a price

a.maker and has an upward-sloping supply curve.

b.taker and has no supply curve.

c.maker and has no supply curve

d.taker and has an upward-sloping supply curve.