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Lecture

Review Part 3 Ch 14 to 21-4.ppt

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Department
Economics
Course
ECON 1B03
Professor
Bridget O' Shaughnessy
Semester
Winter

Description
Chapters 14, 15, 16, 17, 18, 19, 11, and 21 1) In perfect competition, the marginal revenue curve A)and the demand curve facing the firm are identical. B)is always above the demand curve facing the firm. C)is always below the demand curve facing the firm. D)intersects the demand curve when marginal revenue is minimized. 1) In perfect competition, the marginal revenue curve A)and the demand curve facing the firm are identical. B)is always above the demand curve facing the firm. C)is always below the demand curve facing the firm. D)intersects the demand curve when marginal revenue is minimized. 2) If a firm is producing where MR > MC, A) the revenue gained by producing one more unit of output exceeds the cost incurred by doing so. B) the revenue gained by producing one more unit of output equals the cost incurred by doing so. C)the revenue gained by producing one more unit of output is less than the cost incurred by doing so. D)the firm is already maximizing profits since revenue is being increased by more than costs. 2) If a firm is producing where MR > MC, A) the revenue gained by producing one more unit of output exceeds the cost incurred by doing so. B) the revenue gained by producing one more unit of output equals the cost incurred by doing so. C)the revenue gained by producing one more unit of output is less than the cost incurred by doing so. D)the firm is already maximizing profits since revenue is being increased by more than costs. 3) A firm in a perfectly competitive industry is producing 50 units, its profit-maximizing quantity. Industry price is $2 and total fixed costs and total variable costs are $25 and $40, respectively. The firm's economic profit is A)$15. B)$30. C)$35. D)$60. 3) A firm in a perfectly competitive industry is producing 50 units, its profit-maximizing quantity. Industry price is $2 and total fixed costs and total variable costs are $25 and $40, respectively. The firm's economic profit is A)$15. B)$30. C)$35. D)$60. Number of TFC TVC TC MC Fruit Baskets 0 $50 $0 $50 -- 1 50 10 60 10 2 50 15 65 5 3 50 21 71 6 4 50 31 81 10 5 50 46 96 15 6 50 68 118 22 4) Assume that fruit baskets are sold in a perfectly competitive market. The market price of a fruit basket is $10. To maximize profits, Exotic Fruit should sell ____ fruit basket(s). A) zero B) one C) four D) either one or four Number of TFC TVC TC MC Fruit Baskets 0 $50 $0 $50 -- 1 50 10 60 10 2 50 15 65 5 3 50 21 71 6 4 50 31 81 10 5 50 46 96 15 6 50 68 118 22 4) Assume that fruit baskets are sold in a perfectly competitive market. The market price of a fruit basket is $10. To maximize profits, Exotic Fruit should sell ____ fruit basket(s). A) zero B) one C) four D) either one or four 5) A perfectly competitive firm faces total costs TC = 10 + 5Q . Its marginal costs are MC = 10Q. If the market price is P = $50, the firm will produce how many units of output? A) zero; price is too low B) 50 C) 10 D) 5. 5) A perfectly competitive firm faces total costs TC = 10 + 5Q . Its marginal costs are MC = 10Q. If the market price is P = $50, the firm will produce how many units of output? A) zero; price is too low B) 50 C) 10 D) 5. 6) A perfectly competitive firm faces total costs TC = 10 + 5Q . Its marginal costs are MC = 10Q. If the market price is P = $50, the firm’s profit is A) $250 B) $115 C) $135 D) $0. 6) A perfectly competitive firm faces total costs TC = 10 + 5Q . Its marginal costs are MC = 10Q. If the market price is P = $50, the firm’s profit is A) $250 B) $115 C) $135 D) $0. 7) If a firm is maximizing profit when its marginal cost is $25, A) price must be greater than the firm’s average total cost B) marginal revenue is at a maximum C) average variable cost must be $25 D) average revenue must be $25. 7) If a firm is maximizing profit when its marginal cost is $25, A) price must be greater than the firm’s average total cost B) marginal revenue is at a maximum C) average variable cost must be $25 D) average revenue must be $25. 8) An increase in the number of firms will cause which of the following? A)No change in the industry supply curve and an outward shift in the firm's supply curve. B)The industry supply curve will shift to the right and the firm's supply curve will be unchanged. C)Both the industry supply curve and the firm's supply curve will shift to the right. D)Neither the industry supply curve nor the firm's supply curve will shift. 8) An increase in the number of firms will cause which of the following? A)No change in the industry supply curve and an outward shift in the firm's supply curve. B)The industry supply curve will shift to the right and the firm's supply curve will be unchanged. C)Both the industry supply curve and the firm's supply curve will shift to the right. D)Neither the industry supply curve nor the firm's supply curve will shift. 9) A natural monopoly exists when A) the government protects the firm by granting an exclusive franchise. B) the average total cost curve is upward sloping. C) there are no rivals in the market. D) one firm can supply the entire market and be the most efficient plant size. E) production can take place with constant returns to scale. 9) A natural monopoly exists when A) the government protects the firm by granting an exclusive franchise. B) the average total cost curve is upward sloping. C) there are no rivals in the market. D) one firm can supply the entire market and be the most efficient plant size. E) production can take place with constant returns to scale. 10)sloping demand curve, the marginal revenue never exceeds the price because the A) producers of substitutes keep the price low. B) monopolist has a low marginal cost relative to a competitive firm. C) monopolist must lower the price in order to sell more during any given period of time. D) monopoly will be a large corporation with high fixed costs. E) monopolist must accept the marginal revenue set by the market as a whole. 10)sloping demand curve, the marginal revenue never exceeds the price because the A) producers of substitutes keep the price low. B) monopolist has a low marginal cost relative to a competitive firm. C) monopolist must lower the price in order to sell more during any given period of time. D) monopoly will be a large corporation with high fixed costs. E) monopolist must accept the marginal revenue set by the market as a whole. 11) The monopolist will maximize the profit of the firm by A) setting the price equal to the marginal cost of production. B) producing the quantity where marginal revenue equals price. C) charging a price that is as high as the market can bear. D) producing the quantity where the marginal cost equals the price charged. E) producing the quantity where the marginal that output for as high a price as the market cang bear. 11) The monopolist will maximize the profit of the firm by A) setting the price equal to the marginal cost of production. B) producing the quantity where marginal revenue equals price. C) charging a price that is as high as the market
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