If a monopolisticall (Points: 1) If a monopolistically

QUESTION

1. If a monopolisticall (Points: 1)If a monopolistically competitive firm’s marginal cost increases, then in order to maximize profits the firm willa. reduce output and increase price.b. increase output and decrease price.c. increase both output and price.d. reduce both output and price.2. You are the manager 6 (Points: 1)You are the manager of a Mom and Pop store that can buy milk from a supplier at $3.00 per gallon. If you believe the elasticity of demand for milk by customers at your store is -4, then your profit-maximizing price isa. $2.00.b. $2.50.c. $4.00.d. $5.00.3. During spring break, (Points: 1)During spring break, students have an elasticity of demand for a trip to Florida of -3. How much should an airline charge students for a ticket if the price it charges the general public is $360? Assume the general public has an elasticity of -2.a. $240.b. $250.c. $260.d. $270.4. You are the manager 2 (Points: 1)You are the manager of a firm that sells its product in a competitive market at a price of $50. Your firm’s cost function is C = 40 + 5Q2. Your firm’s maximum profits area. 125.b. 250.c. 100.d. 85.5. Which of the followi 2 (Points: 1)Which of the following is true under monopoly?a. Profits are always positive.b. P > minimum of ATC.c. P = MR.d. None of the statements associated with this question are correct.6. You are a manager in (Points: 1)You are a manager in a perfectly competitive market. The price in your market is $14. Your total cost curve is C(Q) = 10 + 4Q + 0.5 Q2. What price should you charge in the short-run?a. $12.b. $14.c. $16.d. $18.7. The Sweezy model of (Points: 1)The Sweezy model of oligopoly reveals thata. capacity constraints are not important in determining market performance.b. perfectly competitive prices can arise in markets with only a few firms.c. changes in marginal cost may not affect prices.d. all of the statements associated with this question are correct.8. You are a manager in 2 (Points: 1)You are a manager in a perfectly competitive market. The price is $14. Your total cost curve is C(Q) = 10 + 4Q + 0.5 Q2. What level of output should you produce in the short-run?a. 5.b. 8.c. 10.d. 15.9. Cinemas sometimes gi (Points: 1)Cinemas sometimes give senior citizens discounts. What is the possible privately motivated purpose for them to do so?a. Purely because entrepreneurs are benevolent.b. Senior citizens have a more elastic demand for movies than ordinary citizens.c. Senior citizens lack recreational activities.d. None of the statements associated with this question are correct.10. In a Sweezy Oligopol (Points: 1)In a Sweezy Oligopoly, a decrease in a firm’s marginal cost generally leads to:a. reduced output and a higher price.b. increased output and a lower price.c. higher output and a higher price.d. none of the statements associated with this question are true.11. Second-degree price (Points: 1)Second-degree price discriminationa. is the practice of posting a discrete schedule of declining prices for different ranges of quantities.b. eliminates the problem of double marginalization.c. results in transfer pricing.d. none of the statements associated with this question are correct.12. Bertrand model of ol (Points: 1)Bertrand model of oligopoly reveals thata. capacity constraints are not important in determining market performance.b. perfectly competitive prices can arise in markets with only a few firms.c. changes in marginal cost do not affect prices.d. all of the statements associated with this question are true.13. A market is not cont (Points: 1)A market is not contestable if:a. all producers have access to the same technology.b. consumers respond quickly to a price change.c. existing firms cannot respond quickly to entry by lowering their price.d. there are sunk costs.14. You are the manager (Points: 1)You are the manager of a firm that sells its product in a competitive market at a price of $50. Your firm’s cost function is C = 40 + 5Q2. The profit-maximizing output for your firm isa. 4/5.b. 10.c. 5.d. 45.15. There are many diffe (Points: 1)There are many different models of oligopoly because:a. beliefs are not incorporated in oligopolistic competition.b. firms do not maximize profits in oligopolistic competition.c. oligopoly is the most complicated type of market structure.d. both beliefs are not incorporated in oligopolistic competition and oligopoly is the most complicated type of market structure.16. To engage in first-d (Points: 1)To engage in first-degree price discrimination a firm musta. be able to set P > MC.b. know each consumer’s maximum willingness to pay.c. prevent low-value consumers from reselling to high-value consumers.d. all of the statements associated with this question are correct.17. Suppose P = 20 – 2Q (Points: 1)Suppose P = 20 – 2Q is the market demand function for a local monopoly. The marginal cost is 2Q. The local monopoly tries to maximize its profits by equating MC = MR and charging a uniform price. What will be the equilibrium price and output?a. $6.33, 3.33 units.b. $6.33, 5 units.c. $13.33, 3.33 units.d. $10, 5 units.18. Suppose two types of (Points: 1)Suppose two types of consumers buy suits. Consumers of type A will pay $100 for a coat, and $50 for pants. Consumers of type B will pay $75 for a coat, and $75 for pants. The firm selling suits faces no competition and has a marginal cost of zero. If the firm can identify each consumer type and can price discriminate, what is the optimal price for a pair of pants?a. Charge both types $150.b. Charge both types $75.c. Charge type A consumers $50, and type B consumers $75.d. Charge type A consumers $50, and type B consumers $50.19. An oligopolist has a (Points: 1)An oligopolist has a marginal revenue curve that jumps down at 500 units of output. What kind of oligopoly does the firm most likely belong to?a. Sweezy.b. Cournot.c. Stackelberg.d. Bertrand.20. Which of the followi (Points: 1)Which of the following market structures would you expect to yield the greatest product variety?a. Monopoly.b. Monopolistic Competition.c. Bertrand Oligopoly.d. Perfect Competition.21. Which of the followi 4 (Points: 1)Which of the following is not a condition for a firm to engage in price discrimination?a. Consumers are partitioned into two or more types, with one type having a more elastic demand than the other.b. The firm has a means of identifying consumer types.c. The consumers are assured to be sincere in telling their true natures.d. There is no resale market for the good.22. A local video store (Points: 1)A local video store estimates their average customer’s demand per year is Q = 7 – 2P, and knows the marginal cost of each rental is $0.5. How much should the store charge for each rental if it engages in optimal two-part pricing?a. $0.35.b. $0.5.c. $0.7.d. $1.00.23. Let the demand funct (Points: 1)Let the demand function for a product be Q = 100 – 2P. The inverse demand function of this demand function is:a. Q = 100 + 2P.b. P = 50 – 0.5Q.c. P = 50 + 0.5Q.d. none of the statements associated with this question are correct.24. You are the manager 3 (Points: 1)You are the manager of a monopoly that faces a demand curve described by P = 230 – 20Q. Your costs are C = 5 + 30Q. The profit-maximizing price isa. 150.b. 90.c. 130.d. 110.25. Which of the followi 3 (Points: 1)Which of the following is not a basic feature of a monopolistically competitive industry?a. There are many buyers and sellers in the industry.b. Each firm in the industry produces a differentiated product.c. There is free entry and exit into the industry.d. Each firm owns a patent on its product.26. You are the manager 4 (Points: 1)You are the manager of a monopoly that faces a demand curve described by P = 230 – 20Q. Your costs are C = 5 + 30Q. The profit-maximizing output for your firm isa. 4.b. 5.c. 6.d. 7.27. The average consumer (Points: 1)The average consumer at a firm with market power has an inverse demand function of P = 10 – Q. The firm’s cost function is C = 2Q. If the firm engages in two part pricing, what is the optimal fixed fee to charge each consumer?a. $2.b. $32.c. $64.d. none of the statements associated with this question are correct.28. You are the manager 5 (Points: 1)You are the manager of a firm that sells its product in a competitive market at a price of $40. Your firm’s cost function is C = 60 + 4Q2. Your firm’s maximum profits area. 36.b. 60.c. 40.d. 80.29. Suppose fixed costs (Points: 1)Suppose fixed costs rise to $200. What will happen in the market?a. The firm will decrease its output and lower its price.b. The firm will increase the price.c. The firm will shut down immediately.d. The firm continues to produce the same output and charge the same price.30. The Cournot theory o (Points: 1)The Cournot theory of oligopoly assumes rivals willa. keep their output constant.b. increase their output whenever a firm increases its output.c. decrease output whenever a firm increases its output.d. follow the learning curve.

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