Question 1

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

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

Question 2

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

Accepted Answer

If demand is inelastic, increasing production would lead to a decrease in total revenue, as the increase in sales volume would not be enough to offset the decrease in the price due to the inelastic demand. Therefore, the monopolist is not maximizing profit by producing at the current level of output. Additionally, when demand is inelastic, marginal revenue is negative, so B is incorrect. Hence, both options A and C are correct, making E the best choice.

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.

Accepted Answer

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

Question 4

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 rule for a firm with market power is to hire workers up to the point where the marginal revenue product of labor equals the wage rate. In this case, the wage rate is $600 per worker per week. At that wage rate, the marginal revenue product of labor is equal to the slope of the average revenue product curve, which is the point where the curve intersects the horizontal axis. This occurs at a quantity of 12 workers. Therefore, the manager should hire 12 workers per week in order to maximize profit.

Question 5

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 6

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 7

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

Accepted Answer

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

Question 8

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 9

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

Accepted Answer

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

Question 10

Refer to the following table that gives the demand facing a monopolist: $$\begin{array} { c c } 
\text { Price } & \text { Quartity } \
\hline \$ 20 & 20 \
15 & 40 \
10 & 65 \
5 & 70
\end{array}$$ 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

Since the monopolist is earning a profit of $250 from producing 40 units, we can assume that its marginal cost (MC) at that quantity is less than $15 (otherwise, it wouldn't be earning a profit). 
To maximize profits, the monopolist should produce at the quantity where MR=MC. Using the table, we can see that if the monopolist produces 65 units (where price is $10), it can sell at a price of $15 (where quantity demanded is 40) and earn a profit of $350 ($15 * 40 - MC * 65 = $350). Therefore, the answer is (B): the monopolist charges a price of $15 and has total costs of $350.

Question 11

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

Since marginal revenue ($80) is higher than marginal cost ($60), producing one more unit will increase the firm's profit by $20 ($80 - $60). This indicates that lowering the price to sell more units could be beneficial for the firm.

Question 12

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

If there are more substitutes, it indicates that there was entry into the industry, as new firms offering substitutes have emerged. This increased competition means that a typical firm's profits will fall this period, as it will have to lower its price to remain competitive. Therefore, both option A and C are correct.

Question 13

A monopolist will

Accepted Answer

A monopolist will always seek to maximize profits, which means choosing the level of output at which marginal revenue equals marginal cost. However, this level of output will typically occur at a price higher than marginal cost, as the monopolist has market power and can charge a higher price than would be possible in a perfectly competitive market. Therefore, both options B and C are correct and the best choice is D. Option A is incorrect as it is too broad of a statement and not always true in every case.

Question 14

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 15

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 16

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...

Question 17

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 18

Refer to the following table that gives the demand facing a monopolist: $$\begin{array} { c c } 
\text { Price } & \text { Quartity } \
\hline \$ 20 & 20 \
15 & 40 \
10 & 65 \
5 & 70
\end{array}$$ How much does the 28th unit of output add to total revenue?

Accepted Answer

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

Question 19

Refer to the following table that gives the demand facing a monopolist: $$\begin{array} { c c } 
\text { Price } & \text { Quartity } \
\hline \$ 20 & 20 \
15 & 40 \
10 & 65 \
5 & 70
\end{array}$$ Demand is __________ between 65 and 70 units of output because marginal revenue in that range is ______.

Accepted Answer

Marginal revenue becomes negative when the additional revenue from selling one more unit is less than the price at which the previous units were sold, indicating inelastic demand. This is because the total revenue decreases as more units are sold, which happens when the price decrease necessary to sell additional units leads to a proportionally larger decrease in total revenue.

Question 20

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

Accepted Answer

In long-run equilibrium, a monopolistically competitive firm charges a price higher than marginal cost due to product differentiation and downward-sloping demand, but it earns zero economic profit and does not produce at minimum average cost.

Quiz 12: Managerial Decisions for Firms With Market Power

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

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 __.

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

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

In a monopolistically competitive industry in long-run equilibrium

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

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

A monopolist will

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

Refer to the following table that gives the demand facing a monopolist: $\begin{array} { c c } \text { Price } & \text { Quartity } \\\hline \$ 20 & 20 \\15 & 40 \\10 & 65 \\5 & 70\end{array}$ How much does the 28th unit of output add to total revenue?

Refer to the following table that gives the demand facing a monopolist: $\begin{array} { c c } \text { Price } & \text { Quartity } \\\hline \$ 20 & 20 \\15 & 40 \\10 & 65 \\5 & 70\end{array}$ Demand is ____ between 65 and 70 units of output because marginal revenue in that range is .

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

Quiz 12: Managerial Decisions for Firms With Market Power

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

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 ______.

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

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

In a monopolistically competitive industry in long-run equilibrium

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

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

A monopolist will

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

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

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 __.