QUESTION 35

1. You read a story in the newspaper about the "economies of mass production." This means that
2. Total cost is less at larger levels of production.
3. Long-run average cost is less at larger levels of production.
4. Marginal cost is less at larger levels of production.
5. Fixed cost is less at larger levels of production.

1 points  

QUESTION 36

1. Economies of scale exist when
2. Total cost decreases as output increases.
3. Long-run average cost decreases as output increases.
4. Marginal cost decreases as output increases.
5. Fixed cost decreases as output increases.

1 points  

QUESTION 37

1. A dry cleaner currently has 10 workers and 4 machines. The workers' wage rate is $300 per worker and the rental rate for a machine is $500. The last worker added 600 units to total output and the last machine also added 600 units to total output, and the last machine also added 600 units to total output. If the dry cleaner uses 11 workers and 3 machines instead, then
2. Cost will be unchanged and output will increase by 300 units.
3. Cost will be unchanged and output will decrease by 200 units.
4. Output will be unchanged and cost will decrease by $500.
5. Output will be unchanged and cost will decrease by $200.
6. None of the above.

1 points  

QUESTION 38

1. The WildTimes Bar offers female patrons a lower price for a drink than male patrons. The bar will maximize profit by selling a total of 200 drinks per night. At the current prices, male customers buy 150 drinks, while female customers buy 50 drinks. The marginal revenue from the last drink sold to a male customer is $1.50, while the marginal revenue from the last drink sold to a female customer is $0.50.
2.  
3. The bar
4. Should lower the price for male customers and raise the price for female customers.
5. Should lower the price for female customers and raise the price for male customers.
6. Should charge the same price regardless of gender.
7. Is maximizing profit; should keep selling 150 drinks to male customer and 50 drinks to female customers.

1 points  

QUESTION 39

1. Firm A and firm B both have total revenues of $200,000 and total costs of $250,000; firm A has total fixed costs of $40,000, while firm B has total fixed costs of $70,000. Which of the following statements are true in the short run?
2. Firm A should operate.
3. Firm B should operate.
4. Firm A should shut down.
5. Firm B should shut down.
6. Both b and c.

1 points  

QUESTION 40

1. A typical firm in a perfectly competitive market made positive economic profits last period. This period,
2. Market supply will increase.
3. Market price will rise.
4. The firm will produce more.
5. The firm's profits will increase.

1 points  

QUESTION 41

1. Firms that employ exceptionally productive resources
2. Have lower costs than other firms in the industry and are able to earn positive economic profit in the long run.
3. Earn zero economic profit.
4. Will typically have to pay the exceptional resource economic rent equal to the reduction in cost attributable to employing the exceptionally productive resource.
5. Both a and b.
6. Both b and c.

1 points  

QUESTION 42

1. A monopolistic competitor is similar to a monopolist in that
2. Both have market power.
3. Both earn positive economic profit in the long run.
4. Both produce the output at which long-run average cost is at a minimum.
5. a and b.
6. All of the above.

1 points  

QUESTION 43

1. A monopolist which suffers losses in the short run will
2. Continue to operate as long as total revenue covers fixed cost.
3. Raise price in order to eliminate losses.
4. Exit in the long run if there is no plant size that will result in economic profit that is greater than or equal to zero.
5. Both a and b.
6. Both a and c.

1 points  

QUESTION 44

1. A monopolistically competitive industry is in the process of moving toward long-run equilibrium. This period the product of a typical firm has more substitutes than last period. This means that
2. There was entry into the industry.
3. A typical firm will produce more this period.
4. A typical firm's profits will fall this period.
5. Both a and c.
6. All of the above.

1 points  

QUESTION 45

1. A monopolistic competitor is currently producing 2,000 units of output; price is $100, marginal revenue is $80, average total cost is $130, marginal cost is $60, and average variable cost is $60. The firm should
2. Raise price because the firm is losing money.
3. Keep the price the same because the firm is producing at minimum average variable cost.
4. Raise price because the last unit of output decreased profit by $30.
5. Lower price because the next unit of output increases profit by $20.

1 points  

QUESTION 46

1. Actions taken by oligopolists to plan for and react to actions of rival firms represent
2. Strategic behavior.
3. Interdependence.
4. Cooperative behavior.
5. Game theory.
6. All of the above.

1 points  

QUESTION 47

1. Which of the following is an example of strategic entry deterrence?
2. Price reductions.
3. Building excess capacity.
4. Economies of scale.
5. Both b and c.
6. Both a and b.

1 points  

QUESTION 48

1. A form of strategic entry deterrence is
2. Forming a cartel.
3. Maintaining excess capacity.
4. Limit pricing.
5. Both b and c.
6. All of the above.

1 points  

QUESTION 49

1. A firm selling in two markets is practicing price discrimination
2. Anytime it charges different consumers different prices.
3. When it is charging different consumers different prices and the price difference is not based upon cost differences.
4. When it refuses to sell the good to some group of consumers.
5. All of the above.
6. None of the above.

1 points  

QUESTION 50

1. To successfully practice price discrimination
2. The firm must be a pure monopoly.
3. The firm must possess market power.
4. It must be difficult for consumers in one market to sell to consumers in the other market
5. Both a and c.
6. Both b and c.

1 points  

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