Question 1

The figure above shows the demand and cost curves facing a price-setting firm.In profit-maximizing (or loss-minimizing)equilibrium,the price-setting firm earns $______ in total revenue,which is ___________ the maximum possible total revenue of $________.

Accepted Answer

The answer of  The figure above shows the demand...

Question 2

A firm with market power will maximize profit by hiring the amount of an input at which the

Accepted Answer

A firm with market power will maximize profit by hiring the amount of an input at which the marginal revenue product (MRP) of the last unit of the input hired equals its marginal cost (MC). This is equivalent to saying that the last unit of the input hired adds the same amount to total revenue (through its contribution to output and thus sales) as it adds to total cost.

Question 3

Columns 1 and 2 make up a portion of a monopolist's production function for a single variable input,labor.Columns 2 and 3 represent the demand function facing the monopolist over this range of output: $\begin{array}{c}
\begin{array}{c}
(1)\
\text {Units of Labor}\
3 \
4 \
5 \
6 \
7
\end{array}
\begin{array}{c}
(2)\
\text {Units of Output}\
370 \
490 \
570 \
600\
620
\end{array}
\begin{array}{c}
(3)\
\text {Price}\
\$10\
9\
8\
7\
6
\end{array}
\end{array}$
 If the monopolist faces a fixed wage rate of $300,how many units of labor will the firm employ?

Accepted Answer

The monopolist will employ 4 units of labor because at this level of employment, the marginal revenue product of labor ($9) is equal to the wage rate ($300).

Question 4

The above graph shows the demand and cost conditions facing a price-setting firm. What is the maximum amount of profit the firm can earn?

Accepted Answer

The maximum profit occurs where MR=MC, which is at output level Q=8. At this output level, the price charged will be $20, and the total cost will be $10*8=$80. The total revenue will be $20*8=$160. Therefore, the maximum profit the firm can earn is $160-$80=$80, which is option B.

Question 5

The figure above shows the demand and cost curves facing a price-setting firm.At what output is marginal revenue $20?

Accepted Answer

The answer of  The figure above shows the demand...

Question 6

Which of the following is true of a monopolist in the long run?

Accepted Answer

A monopolist in the long run will charge a price higher than long-run marginal cost (A) and equal to or greater than long-run average cost (B), making both A and B correct.

Question 7

Refer to the following table which gives the demand and cost data for a price-setting firm: $\begin{array}{rrc}
\text { Price } & \text { Output } & \text { Total Cost } \
\hline \$ 20 & 7 & \$ 36 \
19 & 8 & 45 \
18 & 9 & 54 \
17 & 10 & 63 \
16 & 11 & 72 \
15 & 12 & 81
\end{array}$
 What is the profit-maximizing price?

Accepted Answer

The profit-maximizing price is where marginal revenue equals marginal cost. Calculate profit for each price and choose the highest: At $18, profit is $108 - $54 = $54, which is the highest.

Question 8

A firm with market power is producing a level of output at which price is $8,marginal revenue is $5,average variable cost is $6,and marginal cost is $10.In order to maximize profit,the firm should

Accepted Answer

The firm is currently producing at a level where marginal cost is greater than marginal revenue ($5<$10). This means the firm is not maximizing profit. In order to increase profit, the firm should reduce output until marginal revenue equals marginal cost. However, since the price ($8) is already greater than average variable cost ($6), the firm is covering its variable costs and some fixed costs. Hence, reducing output to where MR=MC would not cover all the fixed costs and will cause a greater loss. Therefore, the firm should increase price in order to increase the marginal revenue and maximize profit.

Question 9

A monopolist will maximize profit by producing the level of output at which

Accepted Answer

The answer of A monopolist will maximize profit by producing...

Question 10

Suppose that a profit-maximizing monopolist has a plant of optimal size and is producing a level of output at which price is $30,average total cost is $55,and average fixed cost is $40.The firm should

Accepted Answer

In the short run, a firm should continue to operate if it can cover its variable costs, even if it's not covering its total costs. Here, the average total cost is $55, and the average fixed cost is $40, so the average variable cost is $15 ($55 - $40). Since the price ($30) is above the average variable cost, the firm should operate in the short run (A). In the long run, if the firm cannot cover its total costs, it should exit the market (C). Thus, both A and C are correct.

Question 11

The figure above shows the demand and cost curves facing a price-setting firm.The profit-maximizing (or loss-minimizing)level of output is

Accepted Answer

The answer of  The figure above shows the demand...

Question 12

Columns 1 and 2 make up a portion of a monopolist's production function for a single variable input,labor.Columns 2 and 3 represent the demand function facing the monopolist over this range of output: $\begin{array}{c}
\begin{array}{c}
(1)\
\text {Units of Labor}\
3 \
4 \
5 \
6 \
7
\end{array}
\begin{array}{c}
(2)\
\text {Units of Output}\
370 \
490 \
570 \
600\
620
\end{array}
\begin{array}{c}
(3)\
\text {Price}\
\$10\
9\
8\
7\
6
\end{array}
\end{array}$
 If an increase in consumers' income increases product price by $2 at each level of output,how many units of labor will the firm employ at a wage rate of $300?

Accepted Answer

The correct answer is C because at a wage rate of $300, the firm will employ 5 units of labor. This is because the marginal revenue product of labor (MRPL) is equal to the wage rate at this level of employment. The MRPL is the change in total revenue divided by the change in labor input. In this case, the MRPL is $100, which is equal to the wage rate of $300.

Question 13

The figure above shows the demand and cost curves facing a price-setting firm.What is marginal revenue when output is 100 units?

Accepted Answer

The answer of  The figure above shows the demand...

Question 14

A profit-maximizing firm with market power will always produce a level of output where

Accepted Answer

A profit-maximizing firm with market power will produce where demand is elastic because this ensures that marginal revenue is positive, allowing the firm to increase profits by increasing output.

Question 15

A monopolist is producing a level of output at which price is $65,marginal revenue is $35,average total cost is $35,and marginal cost is $50.In order to maximize profit,the firm should

Accepted Answer

The monopolist is currently producing at a level of output where marginal cost exceeds marginal revenue ($50 < $35), indicating that the firm is incurring losses on each additional unit produced. To maximize profit, the firm should reduce its output level until marginal revenue equals marginal cost. This will involve producing less and increasing the price above the current $65.

Question 16

A monopolist is currently hiring 5,000 units of labor.At this level,the marginal revenue of output is $10,the (fixed)wage rate is $300,and the marginal product of labor is 50.In order to maximize profit,the firm should

Accepted Answer

The answer of A monopolist is currently hiring 5,000 units...

Question 17

Columns 1 and 2 make up a portion of a monopolist's production function for a single variable input,labor.Columns 2 and 3 represent the demand function facing the monopolist over this range of output: $\begin{array}{c}
\begin{array}{c}
(1)\
\text {Units of Labor}\
3 \
4 \
5 \
6 \
7
\end{array}
\begin{array}{c}
(2)\
\text {Units of Output}\
370 \
490 \
570 \
600\
620
\end{array}
\begin{array}{c}
(3)\
\text {Price}\
\$10\
9\
8\
7\
6
\end{array}
\end{array}$
 How much does the fifth unit of labor add to the firm's total revenue?

Accepted Answer

The fifth unit of labor increases output from 490 to 570 units. The price falls from $9 to $8. The marginal revenue is (570 units * $8) - (490 units * $9) = $4,560 - $4,410 = $150.

Question 18

A monopolist which suffers losses in the short run will

Accepted Answer

In the long run, a monopolist will exit the market if it cannot achieve at least zero economic profit, as it seeks to cover both variable and fixed costs.

Question 19

A firm facing a downward sloping demand curve is producing a level of output at which price is $7,marginal revenue is $5,and average total cost,which is at its minimum value,is $3.In order to maximize profit,the firm should

Accepted Answer

The answer of A firm facing a downward sloping demand...

Question 20

Refer to the following table which gives the demand and cost data for a price-setting firm: $\begin{array}{rrc}
\text { Price } & \text { Output } & \text { Total Cost } \
\hline \$ 20 & 7 & \$ 36 \
19 & 8 & 45 \
18 & 9 & 54 \
17 & 10 & 63 \
16 & 11 & 72 \
15 & 12 & 81
\end{array}$
 What is the maximum amount of profit that this firm can earn?

Accepted Answer

The answer of Refer to the following table which gives...

Quiz 12: Managerial Decisions for Firms With Market Power

The figure above shows the demand and cost curves facing a price-setting firm.In profit-maximizing (or loss-minimizing) equilibrium,the price-setting firm earns $ in total revenue,which is _ the maximum possible total revenue of $____.

A firm with market power will maximize profit by hiring the amount of an input at which the

The above graph shows the demand and cost conditions facing a price-setting firm. What is the maximum amount of profit the firm can earn?

The figure above shows the demand and cost curves facing a price-setting firm.At what output is marginal revenue $20?

Which of the following is true of a monopolist in the long run?

A firm with market power is producing a level of output at which price is $8,marginal revenue is $5,average variable cost is $6,and marginal cost is $10.In order to maximize profit,the firm should

A monopolist will maximize profit by producing the level of output at which

Suppose that a profit-maximizing monopolist has a plant of optimal size and is producing a level of output at which price is $30,average total cost is $55,and average fixed cost is $40.The firm should

The figure above shows the demand and cost curves facing a price-setting firm.The profit-maximizing (or loss-minimizing) level of output is

The figure above shows the demand and cost curves facing a price-setting firm.What is marginal revenue when output is 100 units?

A profit-maximizing firm with market power will always produce a level of output where

A monopolist is producing a level of output at which price is $65,marginal revenue is $35,average total cost is $35,and marginal cost is $50.In order to maximize profit,the firm should

A monopolist is currently hiring 5,000 units of labor.At this level,the marginal revenue of output is $10,the (fixed) wage rate is $300,and the marginal product of labor is 50.In order to maximize profit,the firm should

A monopolist which suffers losses in the short run will

A firm facing a downward sloping demand curve is producing a level of output at which price is $7,marginal revenue is $5,and average total cost,which is at its minimum value,is $3.In order to maximize profit,the firm should

Quiz 12: Managerial Decisions for Firms With Market Power

The figure above shows the demand and cost curves facing a price-setting firm.In profit-maximizing (or loss-minimizing) equilibrium,the price-setting firm earns $______ in total revenue,which is ___________ the maximum possible total revenue of $________.

A firm with market power will maximize profit by hiring the amount of an input at which the

The above graph shows the demand and cost conditions facing a price-setting firm. What is the maximum amount of profit the firm can earn?

The figure above shows the demand and cost curves facing a price-setting firm.At what output is marginal revenue $20?

Which of the following is true of a monopolist in the long run?

A firm with market power is producing a level of output at which price is $8,marginal revenue is $5,average variable cost is $6,and marginal cost is $10.In order to maximize profit,the firm should

A monopolist will maximize profit by producing the level of output at which

Suppose that a profit-maximizing monopolist has a plant of optimal size and is producing a level of output at which price is $30,average total cost is $55,and average fixed cost is $40.The firm should

The figure above shows the demand and cost curves facing a price-setting firm.The profit-maximizing (or loss-minimizing) level of output is

The figure above shows the demand and cost curves facing a price-setting firm.What is marginal revenue when output is 100 units?

A profit-maximizing firm with market power will always produce a level of output where

A monopolist is producing a level of output at which price is $65,marginal revenue is $35,average total cost is $35,and marginal cost is $50.In order to maximize profit,the firm should

A monopolist is currently hiring 5,000 units of labor.At this level,the marginal revenue of output is $10,the (fixed) wage rate is $300,and the marginal product of labor is 50.In order to maximize profit,the firm should

A monopolist which suffers losses in the short run will

A firm facing a downward sloping demand curve is producing a level of output at which price is $7,marginal revenue is $5,and average total cost,which is at its minimum value,is $3.In order to maximize profit,the firm should

The figure above shows the demand and cost curves facing a price-setting firm.In profit-maximizing (or loss-minimizing) equilibrium,the price-setting firm earns $ in total revenue,which is _ the maximum possible total revenue of $____.