Question 1

A monopolistic competitor is producing a level of output at which price is $200,marginal revenue is $100,average total cost is $210,marginal cost is $100,and average variable cost is $180.In order to maximize profit,the firm should

Accepted Answer

The answer of A monopolistic competitor is producing a level...

Question 2

The graph above shows the demand and cost conditions facing a monopolist.What is the maximum profit the monopolist can earn?

Accepted Answer

The monopolist will produce where MR=MC, which occurs at Q=4. At this output level, the price will be $900 and the total cost will be $100. Therefore, the monopolist's profit will be ($900- $100) x 4 = $3,200. However, this includes the fixed cost of $2,400, so the maximum profit the monopolist can earn is $3,200 - $2,400 = $800.

Question 3

A manager of a firm with market power faces the marginal revenue product and average revenue product curves shown below.The firm incurs weekly fixed costs of $1,800.The firm employs a single variable input,labor,which costs $600 per worker each week.  Given the above,suppose the weekly wage rate increases to $1,400 per worker.The firm would hire _______ workers and earn a profit of _______ per week.

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The answer of A manager of a firm with market...

Question 4

The figure above shows the demand and cost curves facing a price-setting firm.In profit-maximizing or loss-minimizing)equilibrium,the Lerner index is _____,and the elasticity of demand is ______.

Accepted Answer

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

Question 5

All of the following could be a barrier to entry EXCEPT:

Accepted Answer

The answer of All of the following could be a...

Question 6

Refer to the following table that gives the demand facing a monopolist:  If a firm earns profits of $250 by producing 40 units of output,the firm charges a price of _____ and has total costs of ______.

Accepted Answer

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

Question 7

Refer to the following table that gives the demand facing a monopolist:  Demand is __________ between 65 and 70 units of output because marginal revenue in that range is ______.

Accepted Answer

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

Question 8

Refer to the following table that gives the demand facing a monopolist:  How much does the 28th unit of output add to total revenue?

Accepted Answer

The 28th unit of output will be sold at a price of $10, since the monopolist faces a downward-sloping demand curve. Therefore, the 28th unit of output will add $10 to total revenue.

Question 9

A manager of a firm with market power faces the marginal revenue product and average revenue product curves shown below.The firm incurs weekly fixed costs of $1,800.The firm employs a single variable input,labor,which costs $600 per worker each week.  Given the above,the maximum profit the firm can earn is _____________.

Accepted Answer

To maximize profit, the firm should hire labor up to the point where the marginal revenue product (MRP) equals the wage rate. In this case, that would be where MRP intersects with the wage rate of $600, which occurs at a quantity of 3 workers.

At a quantity of 3 workers, the MRP is $1,800 and the average revenue product (ARP) is $600. Therefore, the total revenue from 3 workers is $1,800 and the total variable cost is $1,800 ($600 per worker x 3 workers).

The total cost of production is the sum of the total fixed cost ($1,800) and the total variable cost ($1,800), which equals $3,600.

The total revenue ($1,800) minus the total cost ($3,600) equals a loss of $1,800.

However, since the fixed costs are unavoidable in the short run, the firm should still produce as long as they can cover their variable costs. Therefore, the best choice is B, which represents a profit equal to the total revenue ($1,800) minus the variable cost ($1,800), or $1,800.

Question 10

If a monopolistically competitive market is in long-run equilibrium,each firm

Accepted Answer

The answer of If a monopolistically competitive market is in...

Question 11

A manager of a firm with market power faces the marginal revenue product and average revenue product curves shown below.The firm incurs weekly fixed costs of $1,800.The firm employs a single variable input,labor,which costs $600 per worker each week. Given the above,the 14^th worker hired adds $_______ to the firm's total revenue each week.

Accepted Answer

The answer of A manager of a firm with market...

Question 12

The graph above shows the demand and cost conditions facing a monopolist.What price will the monopolist set?

Accepted Answer

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

Question 13

A manager of a firm with market power faces the marginal revenue product and average revenue product curves shown below.The firm incurs weekly fixed costs of $1,800.The firm employs a single variable input,labor,which costs $600 per worker each week.  Given the above,in order to maximize profit,the manager should hire ________ workers per week.

Accepted Answer

The profit-maximizing level of employment occurs where the marginal revenue product (MRP) equals the wage rate. Looking at the graph, we can see that the MRP curve intersects with the wage rate ($600) at 12 workers. At this level of employment, the firm will produce where MRP = MC (marginal cost), which is at a quantity of 9. At this level of output, the firm's average revenue product (ARP) is $700, which is greater than the wage rate. Therefore, the firm will continue to hire more workers until the MRP curve falls below the wage rate, which occurs after 12 workers. Therefore, the best choice is C)12.

Question 14

A monopolist will

Accepted Answer

A monopolist will always aim to maximize profits, and this is achieved by producing at a level of output where marginal revenue equals marginal cost. However, they will charge a price that is higher than marginal cost since they have some market power and can charge a higher price. Therefore, the best choice is D, which includes both options B and C. Option A is not always true as a monopolist may have a price that is equal to average cost in some cases.

Question 15

In a monopolistically competitive industry in long-run equilibrium

Accepted Answer

In a monopolistically competitive industry in long-run equilibrium, each firm makes a normal profit because the presence of many firms with differentiated products ensures that no single firm can earn economic profits in the long run. Firms can enter and exit the market freely, which drives economic profits to zero, leaving firms with just enough revenue to cover their costs, including a normal profit.

Question 16

If a monopolist is producing a level of output at which demand is inelastic,then

Accepted Answer

If demand is inelastic, it means that a change in price will result in a proportionally smaller change in quantity demanded. Therefore, if the monopolist increases output, it will have to lower the price, but the resulting increase in quantity demanded will not be enough to offset the lower price, and total revenue will decrease. This means that the monopolist is not maximizing profit, which is the main goal of a profit-maximizing firm. Additionally, since marginal revenue is the additional revenue from selling one more unit of output, if total revenue is decreasing, then marginal revenue must be negative (not positive, as option B suggests).

Question 17

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

Accepted Answer

The firm should continue to produce as long as the marginal cost is less than the marginal revenue. Since the marginal cost of the next unit is $60 and the marginal revenue is $80, producing the next unit will increase profit. Therefore, the firm should lower the price to increase demand and produce more units to increase profit.

Question 18

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

Accepted Answer

The increased availability of substitutes indicates that there has been entry into the industry, which leads to greater competition and a decrease in a typical firm's profits. As a result, the answer is both a and c.

Question 19

The figure above shows the demand and cost curves facing a price-setting firm.The maximum profit the firm can earn is $________.

Accepted Answer

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

Question 20

A manager of a firm with market power faces the marginal revenue product and average revenue product curves shown below.The firm incurs weekly fixed costs of $1,800.The firm employs a single variable input,labor,which costs $600 per worker each week.  Given the above,in profit-maximizing or loss-minimizing)equilibrium,the firm's total variable costs are

Accepted Answer

The answer of A manager of a firm with market...

Quiz 12: Managerial Decisions for Firms With Market Power

A monopolistic competitor is producing a level of output at which price is $200,marginal revenue is $100,average total cost is $210,marginal cost is $100,and average variable cost is $180.In order to maximize profit,the firm should

The graph above shows the demand and cost conditions facing a monopolist.What is the maximum profit the monopolist can earn?

The figure above shows the demand and cost curves facing a price-setting firm.In profit-maximizing or loss-minimizing) equilibrium,the Lerner index is _,and the elasticity of demand is __.

All of the following could be a barrier to entry EXCEPT:

Refer to the following table that gives the demand facing a monopolist: If a firm earns profits of $250 by producing 40 units of output,the firm charges a price of _ and has total costs of __.

Refer to the following table that gives the demand facing a monopolist: Demand is ____ between 65 and 70 units of output because marginal revenue in that range is .

Refer to the following table that gives the demand facing a monopolist: How much does the 28th unit of output add to total revenue?

If a monopolistically competitive market is in long-run equilibrium,each firm

The graph above shows the demand and cost conditions facing a monopolist.What price will the monopolist set?

A monopolist will

In a monopolistically competitive industry in long-run equilibrium

If a monopolist is producing a level of output at which demand is inelastic,then

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

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

The figure above shows the demand and cost curves facing a price-setting firm.The maximum profit the firm can earn is $________.

Quiz 12: Managerial Decisions for Firms With Market Power

A monopolistic competitor is producing a level of output at which price is $200,marginal revenue is $100,average total cost is $210,marginal cost is $100,and average variable cost is $180.In order to maximize profit,the firm should

The graph above shows the demand and cost conditions facing a monopolist.What is the maximum profit the monopolist can earn?

The figure above shows the demand and cost curves facing a price-setting firm.In profit-maximizing or loss-minimizing) equilibrium,the Lerner index is _____,and the elasticity of demand is ______.

All of the following could be a barrier to entry EXCEPT:

Refer to the following table that gives the demand facing a monopolist: If a firm earns profits of $250 by producing 40 units of output,the firm charges a price of _____ and has total costs of ______.

Refer to the following table that gives the demand facing a monopolist: Demand is __________ between 65 and 70 units of output because marginal revenue in that range is ______.

Refer to the following table that gives the demand facing a monopolist: How much does the 28th unit of output add to total revenue?

If a monopolistically competitive market is in long-run equilibrium,each firm

The graph above shows the demand and cost conditions facing a monopolist.What price will the monopolist set?

A monopolist will

In a monopolistically competitive industry in long-run equilibrium

If a monopolist is producing a level of output at which demand is inelastic,then

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

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

The figure above shows the demand and cost curves facing a price-setting firm.The maximum profit the firm can earn is $________.

The figure above shows the demand and cost curves facing a price-setting firm.In profit-maximizing or loss-minimizing) equilibrium,the Lerner index is _,and the elasticity of demand is __.

Refer to the following table that gives the demand facing a monopolist: If a firm earns profits of $250 by producing 40 units of output,the firm charges a price of _ and has total costs of __.

Refer to the following table that gives the demand facing a monopolist: Demand is ____ between 65 and 70 units of output because marginal revenue in that range is .