The more elastic the demand curve, a monopoly A) will have a larger Lerner Index. B) will face a lower marginal cost. C) will earn more profit. D) will lose more sales as it raises its price. ANSWER D
Date: September 9th, 2020
If transaction costs are high, then it is more likely a firm’s demand curve is downward sloping. Indicate whether the statement is true or false ANSWER True . Transaction costs increase the costs for consumers to find a new firm. Thus, high transaction costs allow a firm to charge more than others.
Date: September 9th, 2020
If a firm makes zero economic profit, then the firm A) has total revenues greater than its economic costs. B) must shut down. C) can be earning positive business profit. D) must have no fixed costs. ANSWER C
Date: September 9th, 2020
The introduction of satellite television systems would cause the demand curve for cable television to be A) more elastic. B) less elastic. C) perfectly inelastic. D) unchanged. ANSWER A
Date: September 9th, 2020
If a monopoly can produce a good at zero marginal cost, then its Lerner Index is A) zero. B) one. C) infinity. D) undetermined. ANSWER B
Date: September 9th, 2020
A small business owner earns $50,000 in revenue annually. The explicit annual costs equal $30,000. The owner could work for someone else and earn $25,000 annually. The owner’s business profit is ________ and the economic profit is ________. A) $20,000; $5,000 B) $20,000; -$5,000 C) $25,000; -$5,000 D) $45,000; -$5,000 ANSWER B
Date: September 9th, 2020
If marginal revenue equals marginal cost, the firm is maximizing profits as long as A) the resulting profits are positive. B) marginal cost exceeds marginal revenue for greater levels of output. C) the average cost curve lies above the demand curve. D) All of the above are required. ANSWER B
Date: September 9th, 2020
If a competitive firm’s marginal profit is positive at an output of 1000 units, A) at 1000 units, MR = MC. B) it should produce more than 1000 units. C) it should produce less than 1000 units. D) at 1000 units, MR < MC. ANSWER B
Date: September 9th, 2020
Explain why individual firms in competitive markets face more elastic demand curves than the market as a whole. What will be an ideal response? ANSWER In a competitive market, if an individual firm increases its price it will lose all of its customers, as consumers simply buy from another firm. However, if the price […]
Date: September 9th, 2020
The introduction of satellite television systems would cause the Lerner Index for cable television to A) become smaller. B) increase. C) change in accordance to the increase in market power of cable TV providers. D) be unchanged. ANSWER A
Date: September 9th, 2020
