Y5

Question 1 (2 points) Saved Remember that for a profit-maximizing firm, marginal benefits are measured by marginal revenue. Suppose a perfectly competitive firm's marginal revenue is $10 while its marginal cost is $10. Under these circumstances the firm: Question 1 options: needs to know the market price before it can determine whether it is maximizing profit. is not maximizing profit and should reduce output. is not maximizing profit and should increase output. is maximizing profit and should not change output. Question 2 (2 points) Movie theaters offer reduced tickets for matinees (before 5pm). If the reason for the discount is price discrimination, then we can conclude that: Question 2 options: people who can attend the matinee have a more elastic demand for movies than the general public. people who can attend the matinee have a less elastic demand for movies than the general public. elasticity of demand has nothing to do with price discrimination. there is no difference between a matinee moviegoer's elasticity of demand and any other person's elasticity of demand for movies. Question 3 (2 points) Comparing a monopolist and a perfectly competitive firm: Question 3 options: the monopolist cannot keep their profits into the long run but the perfect competitor can. Both the monopolist and perfect competitor cannot keep their profits into the long run. Both the monopolist and perfect competitor can keep their profits into the long run. the monopolist can keep their profits into the long run but the perfect competitor cannot. Question 4 (2 points) There are fewer than half as many publishers of college textbooks in the United States now as a generation ago. Three companies alone account for almost two-thirds of the sale of new textbooks. This market situation characterized by very few sellers is known as: Question 4 options: pure monopoly. an oligopoly. monopolistic competition. perfect competition. Question 5 (2 points) Which of the following is correct? Question 5 options: All of the above. Monopolies due to ownership of a resource present low barriers to entry for competitors. Monopolies due to ownership of a resource are known as a natural monopoly. Monopolies where if production increases then average total costs fall are known as natural monopolies. Question 6 (10 points) Match each term to the correct definition. Question 6 options: Perfect competition Monopolistic competition Marginal revenue Long run Short run 1. The change in total revenue due to output increasing by one unit. 2. A market structure each firm is a small part of the total industry but where there are many firms overall. 3. A type of market structure where neither the firm nor the buyer can affect the selling price. 4. A period of time where all inputs are variable. 5. A period of time where there is at least one fixed input.