50 terms

You are the manager of a firm that produces output in two plants. The demand for your firm's product is P = 78 - 15Q, where Q = Q1 + Q2. The marginal costs associated with producing in the two plants are MC1 = 3Q1 and MC2 = 2Q2. How much output should be produced in plant 1

in order to maximize profits?

in order to maximize profits?

1

You are the manager of a firm that produces output in two plants. The demand for your firm's product is P = 78 - 15Q, where Q = Q1 + Q2. The marginal costs associated with producing in the two plants are MC1 = 3Q1 and MC2 = 2Q2. What price should be charged to maximize

profits?

profits?

$40.5

You are the manager of a firm that produces output in two plants. The demand for your firm's product is P = 78 - 15Q, where Q = Q1 + Q2. The marginal costs associated with producing in the two plants are MC1 = 3Q1 and MC2 = 2Q2. What price should be charged in order to

maximize revenues?

maximize revenues?

$39

Which of the following is true under monopoly?

P > MC.

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 is:

5.

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 are:

Your firm's cost function is C = 40 + 5Q2. Your firm's maximum profits are:

85.

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 is:

Your costs are C = 5 + 30Q. The profit-maximizing output for your firm is:

5.

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 is:

Your costs are C = 5 + 30Q. The profit-maximizing price is:

130.

You are the manager of a monopoly that faces a demand curve described by P = 230 - 20Q.

Your costs are C = 5 + 30Q. Your firm's maximum profits are:

Your costs are C = 5 + 30Q. Your firm's maximum profits are:

495.

You are the manager of a firm that produces output in two plants. The demand for your firm's product is P = 120 - 6Q, where Q = Q1 + Q2. The marginal costs associated with producing in the two plants are MC1 = 2Q1 and MC2 = 4Q2. How much output should be produced in plant 1

in order to maximize profits?

in order to maximize profits?

6

You are the manager of a firm that produces output in two plants. The demand for your firm's product is P = 120 - 6Q, where Q = Q1 + Q2. The marginal costs associated with producing in the two plants are MC1 = 2Q1 and MC2 = 4Q2. What price should be charged to maximize

profits?

profits?

66

You are the manager of a firm that produces output in two plants. The demand for your firm's product is P = 120 - 6Q, where Q = Q1 + Q2. The marginal costs associated with producing in the two plants are MC1 = 2Q1 and MC2 = 4Q2. What price should be charged in order to

maximize revenues?

maximize revenues?

60

In a competitive industry with identical firms, long-run equilibrium is characterized by:

All of the statements associated with this question are correct.

Which of the following is true?

In the short run, a monopoly will shut down if P < AVC.

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. The profit-maximizing output for your firm is:

5.

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 are:

40

You are the manager of a monopoly that faces a demand curve described by P = 85 - 5Q. Your costs are C = 20 + 5Q. The profit-maximizing output for your firm is:

8

You are the manager of a monopoly that faces a demand curve described by P = 85 - 5Q. Your costs are C = 20 + 5Q. The profit-maximizing price is:

45

You are the manager of a monopoly that faces a demand curve described by P = 85 - 5Q. Your costs are C = 20 + 5Q. The revenue-maximizing output is:

None of the answers is correct.

You are the manager of a firm that sells its product in a competitive market at a price of $60. Your firm's cost function is C = 50 + 3Q2. The profit-maximizing output for your firm is:

10

You are the manager of a firm that sells its product in a competitive market at a price of $60.

Your firm's cost function is C = 50 + 3Q2. Your firm's maximum profits are:

Your firm's cost function is C = 50 + 3Q2. Your firm's maximum profits are:

250

You are the manager of a monopoly that faces a demand curve described by P = 63 - 5Q. Your

costs are C = 10 + 3Q. The profit-maximizing output for your firm is:

costs are C = 10 + 3Q. The profit-maximizing output for your firm is:

6

You are the manager of a monopoly that faces a demand curve described by P = 63 - 5Q. Your costs are C = 10 + 3Q. The profit-maximizing price is:

33

You are the manager of a monopoly that faces a demand curve described by P = 63 - 5Q. Your costs are C = 10 + 3Q. Your firm's maximum profits are:

170

You are the manager of a monopoly that faces a demand curve described by P = 63 - 5Q. Your costs are C = 10 + 3Q. The revenue-maximizing output is:

6.3

Which of the following is true under monopoly?

None of the answers is correct.

In the long run, monopolistically competitive firms:

have excess capacity.

If a monopolistically competitive firm's marginal cost increases, then in order to maximize

profits, the firm will:

profits, the firm will:

reduce output and increase price.

Which of the following market structures would you expect to yield the greatest product

variety?

variety?

Monopolistic competition

The primary difference between monopolistic competition and perfect competition is:

None of the answers is correct.

Which of the following industries is best characterized as monopolistically competitive?

Toothpaste

Which of the following is an example of monopoly?

Local utility industry in a small town

Differentiated goods are a feature of a:

monopolistically competitive market.

Firms have market power in:

monopolistically competitive markets and monopolistic markets.

There is no market supply curve in:

monopolistically competitive and monopolistic markets.

Suppose that initially the price is $50 in a perfectly competitive market. Firms are making zero economic profits. Then the market demand shrinks permanently, some firms leave the industry, and the industry returns to a long-run equilibrium. What will be the new equilibrium price,

assuming cost conditions in the industry remain constant?

assuming cost conditions in the industry remain constant?

50

Which of the following statements concerning monopoly is NOT true?

A monopoly is always undesirable.

Which of the following features is common to both perfectly competitive markets and

monopolistically competitive markets?

monopolistically competitive markets?

There is free entry and long-run profits are zero.

The source(s) of monopoly power for a monopoly may be:

All of the statements associated with this question are correct.

Economies of scale exist whenever:

average total costs decline as output increases.

The number of efficient plants compatible with domestic consumption of the refrigerator industry in Sweden is 0.7. Which of the following implications is(are) correct?

In the absence of imports, the refrigerator industry in Sweden is monopolistic.

A monopoly has two production plants with cost functions C1 = 50 + 0.1Q12 and C2 = 30 + 0.05Q22. The demand it faces is Q = 500 - 10P. What is the condition for profit maximization?

MC1(Q1) = MC2(Q2) = MR(Q1 + Q2).

A monopoly has two production plants with cost functions C1 = 50 + 0.1Q12 and C2 = 30 + 0.05Q22. The demand it faces is Q = 500 - 10P. What is the profit-maximizing level of output?

Q1 = 62.5; Q2 = 125.

A monopoly has two production plants with cost functions C1 = 50 + 0.1Q12 and C2 = 30 + 0.05Q22. The demand it faces is Q = 500 - 10P. What is the profit-maximizing price?

$31.25 per unit

Which of the following is a correct representation of the profit maximization condition for a monopoly?

MC = MR

Let the demand function for a product be Q = 100 - 2P. The inverse demand function of this demand function is:

P = 50 - 0.5Q

A linear demand function exhibits:

less elastic demand as output increases.

Which of the following is NOT a basic feature of a monopolistically competitive industry?

Each firm owns a patent on its product.

In the long run, monopolistically competitive firms produce a level of output such that:

All of the statements associated with this question are correct.

Chris raises cows and produces cheese and milk because he enjoys:

economies of scope.