Econ 2610: Principles of Microeconomics, Spring 2010
Quiz # 7
Econ 2610: Principles of Microeconomics, Spring 2010
Yogesh Uppal
Date: 04/15/2010
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1) An imperfectly competitive firm is oneA) that attempts but fails to compete perfectly.
B) with the ability to set price at any level it wishes.
C) that possesses some degree of control over its price.
D) that faces perfectly elastic demand.
Answer: C
2) The market power in an imperfectly competitive market signifies
A) a perfectly elastic demand curve.
B) downward sloping demand curve.
C) upward sloping supply curve.
D) none of these.
Answer: B
3) Suppose a firm is collecting $100 in total revenues when it sells 10 units and it receives $110 in total revenues when it sells 11 units. The firm is a(n)
A) pure monopolist.
B) Oligopolist
C) Monopolistic competitor
D) Perfect competitor
Answer: D
4) Economies of scale mean that
A) a firm’s total cost decreases as output increases.
B) a firm’s average total cost decreases as output increases.
C) a firm’s average variable cost decreases as output increases.
D) a firm’s marginal cost decreases as output increases.
Answer: B
5) A firm is most likely to experience economies of scale if it has _____ start up costs and ______marginal costs.
A) low, high
B) high, low
C) low, low
D) high, high
Answer: B
Consider figure 1 on the next page. Marginal cost for this firm is constant at $5 as can be seen from the figure. Answer the following questions.
Figure 1
6) Refer to figure 1. What is the profit maximizing level of output and price for a monopolist?A) 3.5, 5
B) 3.5, 22.50
C) 7, 19.30
D) 3.5, 33.50
Answer: B
7) Refer to figure 1. What is value of average total cost at the profit maximizing level of output for the monopolist?
A) 5
B) 22.50
C) 19.30
D) 33.50
Answer: D
8) Refer to figure 1. How much profit or loss the monopolist is making?
A) a loss of $38.50
B) a profit of $38.50
C) a loss of $11.20
D) a profit of $11.20.
Answer: A
9) Refer to figure 1. What is the profit maximizing level of output and price for a perfectly competitive firm?
A) 3.5, 5
B) 3.5, 22.50
C) 7, 5
D) 7, 19.50
Answer: C
10) Refer to figure 1. How much is the deadweight loss due to monopolistic production?
A) 30.625
B) 38.50
C) 49.25
D) 13.25
Answer: A