Quiz 10 of ECON251 Purdue University In Tutorial Library
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TITLE: Quiz 10 of ECON251 Purdue University
UNIVERSITY / INSTITUTE: Purdue University
CLASS / COURSE: ECON 25100: Microeconomics
QUESTION DESCRIPTION:
Quiz 10 (Chapter 10)
1. Which is most characteristic of a pure monopoly?
A. There is a dominant firm in a multifirm industry
B. The firm produces a good or a service for which there are no close substitutes
C. The firm has considerable control over the quantity of the output produced, but not over price
D. Exit from the industry is blocked but entry into the industry is relatively easy
2. Under conditions of pure monopoly:
A. There are close substitutes
B. There is no advertising
C. The firm is a price taker
D. Entry is blocked
3. Which is a barrier to entry in an industry?
A. Economies of scale
B. Allocative efficiency
C. Profit maximization
D. Economic profits
4. It shows the demand schedule facing Nina, a monopolist selling baskets.
Refer to the above table. What is the change in total revenue if she raises the price from $10 to $12?
A. -$300
B. +$300
C. +$120
D. -$120
5. Suppose that a monopolist calculates that at present output and sales levels, marginal revenue is $1.00 and marginal cost is $2.00. He or she could maximize profits or minimize losses by:
A. Decreasing price and increasing output
B. Increasing price and decreasing output
C. Decreasing price and leaving output unchanged
D. Decreasing output and leaving price unchanged
6. A profit-maximizing firm should shut down in the short run if the average revenue it receives is less than:
A. Average variable cost
B. Average total cost
C. Average fixed cost
D. Marginal cost
7. A monopolist will definitely discontinue production in the short run if:
A. Price is less than average total cost
B. Price is less than average variable cost
C. Marginal revenue is less than average total cost
D. Marginal revenue is less than average variable cost
8. The graph above represents the short-run cost and revenue curves faced by a monopolist who is currently producing at Q1 and charging price P1. To maximize profits the monopolist should:
A. Increase output and decrease price
B. Increase output and increase price
C. Decrease output and decrease price
D. Decrease output and increase price
9. When compared with the purely competitive industry with identical costs of production, a monopolist will produce:
A. More output and charge the same price
B. More output and charge a higher price
C. Less output and charge a higher price
D. Less output and charge the same price
10. If a monopolist produces 100 units of output at a market price of $5 per unit with marginal revenue per unit equaling $4, we would expect that if the monopolist's good was provided under pure competition, quantity would be:
A. Higher than 100 units, price lower than $5, and MR = price
B. Lower than 100 units, price greater than $5, and MR = price
C. Higher than 100 units, price greater than $5, and MR = price
D. Lower than 100 units, price lower than $5, and MR = price
11. Refer to the above graph. The pure monopolist firm will charge a price of:
A. P1
B. P2
C. P3
D. P4
SOLUTION DESCRIPTION: Completed Solution is attached. Click on Buy button and then download file to get full solution.
SUBJECTS / CATEGORIES:
1. Business Economics
2. Economics
3. Microeconomics
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