1.
A consultant has advised Consolidated Fish, Inc., a perfectly competitive firm, that it should cut back its production in order to increase its profits. We can conclude from this that
CF's total costs must be greater than its total revenues.
CF's marginal cost must be greater than the price of its product.
CF's costs are increasing at a rate less than its revenues.
fixed costs are not being covered and CF should shut down.
2.
If marginal cost is equal to marginal revenue
the firm should hold output constant.
the firm should expand output.
there is no way to determine if the firm should expand output, contract output, or hold output constant.
the firm should contract output.
3.
Which statement is true?
The minimum point on the firm's marginal cost curve is the shutdown point.
The minimum point on the firm's average variable cost curve is the shutdown point.
The minimum point on the firm's average total cost curve is the shutdown point.
The minimum point on the firm's marginal cost curve is the break-even point.
4.
As output expands beyond the break-even point, the vertical distance between the AVC and ATC will
remain constant.
get smaller.
get larger.
5.
Total revenue divided by output equals
average variable cost.
marginal cost.
price.
average total cost.
6.
A monopoly firm selling mustache wax to vain men in a small town is currently maximizing profits by charging a price of $5. It follows that the marginal cost of mustache wax
is equal to $5.
is greater than $5.
is less than $5.
None of these choices are true.
7.
A firm can sell 14 units at $18, but to sell 15 units, the firm must cut the price to $17. The marginal revenue derived from selling the 15th unit is
-$18
$3
$17
0
8.
If total revenue is increasing as output is rising, then
marginal revenue must be greater than zero.
marginal revenue must be less than zero.
marginal revenue must be equal to zero.
price must be increasing.
9.
Firms that had virtual monopolies, that is control over at least 80 percent of industry production, because of control over an essential resource include all of the following except
the DeBeers Diamond Company.
the Standard Oil Company.
the Ford Motor Company.
the International Nickel Company.
10.
Which statement is true?
None of these statements are true.
Most natural monopolies are government regulated or government owned.
All monopolies are bad.
All monopolies are good.
11.
Which is the most accurate statement?
There are virtually no oligopolies in the U.S.
The most important aspect of oligopoly is product differentiation.
There are a whole range of oligopolistic models, from a cartel to cutthroat competition.
An oligopolistic industry cannot have more than five firms
12.
Oligopolists have more control over prices than monopolistic competitors because
their prices are always set by the government.
since an oligopolist is the only competitor in the market, setting prices is no problem.
they can legally collude whereas monopolistic competitors may not.
with fewer competitors, they are able to monitor and determine their own prices much easier.
13.
The definition of monopolistic competition differs from that of perfect competition
in neither the number of firms nor the type of product.
in both the number of firms and the type of product.
with respect to the type of product.
with respect to the number of firms in the industry.
14.
The typical monopolistic competitor
may compete on the basis of physical differences, convenience, service, and ambience.
always competes on the basis of producing a product that is physically different from those of its competitors.
never uses price discrimination.
is a large firm.
15.
Which statement is true?
The monopolistic competitor may make a profit in the long run.
The monopolistic competitor has a perfectly elastic demand curve.
None of these statements are true.
The monopolistic competitor operates at the minimum point of her ATC curve.
16.
Which statement is true about the monopolistic competitor in the long run?
It will be breaking even.
It will be making a profit.
It may be making a profit or taking a loss.
It will be taking a loss.
17.
Which statement is true?
Most monopolistic competitors are large firms.
Monopolistic competitors produce goods or services for which there are no close substitutes.
None of these statements are true.
Monopolistic competitors usually operate at the minimum point of their average total cost curves.
18.
Which statement is false?
As the price of a good rises the consumer surplus decreases.
A person would maximize her total utility when she had no consumer surplus.
We will consume a service when its marginal utility is equal to its price.
A product's utility to a buyer is measured by how much the buyer is willing to pay for it.
1.
A consultant has advised Consolidated Fish, Inc., a perfectly competitive firm, that it should cut back its production in order to increase its profits. We can conclude from this that
CF's total costs must be greater than its total revenues.
CF's marginal cost must be greater than the price of its product.
CF's costs are increasing at a rate less than its revenues.
fixed costs are not being covered and CF should shut down.
2.
If marginal cost is equal to marginal revenue
the firm should hold output constant.
the firm should expand output.
there is no way to determine if the firm should expand output, contract output, or hold output constant.
the firm should contract output.
3.
Which statement is true?
The minimum point on the firm's marginal cost curve is the shutdown point.
The minimum point on the firm's average variable cost curve is the shutdown point.
The minimum point on the firm's average total cost curve is the shutdown point.
The minimum point on the firm's marginal cost curve is the break-even point.
4.
As output expands beyond the break-even point, the vertical distance between the AVC and ATC will
remain constant.
get smaller.
get larger.
5.
Total revenue divided by output equals
average variable cost.
marginal cost.
price.
average total cost.
6.
A monopoly firm selling mustache wax to vain men in a small town is currently maximizing profits by charging a price of $5. It follows that the marginal cost of mustache wax
is equal to $5.
is greater than $5.
is less than $5.
None of these choices are true.
7.
A firm can sell 14 units at $18, but to sell 15 units, the firm must cut the price to $17. The marginal revenue derived from selling the 15th unit is
-$18
$3
$17
0
8.
If total revenue is increasing as output is rising, then
marginal revenue must be greater than zero.
marginal revenue must be less than zero.
marginal revenue must be equal to zero.
price must be increasing.
9.
Firms that had virtual monopolies, that is control over at least 80 percent of industry production, because of control over an essential resource include all of the following except
the DeBeers Diamond Company.
the Standard Oil Company.
the Ford Motor Company.
the International Nickel Company.
10.
Which statement is true?
None of these statements are true.
Most natural monopolies are government regulated or government owned.
All monopolies are bad.
All monopolies are good.
11.
Which is the most accurate statement?
There are virtually no oligopolies in the U.S.
The most important aspect of oligopoly is product differentiation.
There are a whole range of oligopolistic models, from a cartel to cutthroat competition.
An oligopolistic industry cannot have more than five firms
12.
Oligopolists have more control over prices than monopolistic competitors because
their prices are always set by the government.
since an oligopolist is the only competitor in the market, setting prices is no problem.
they can legally collude whereas monopolistic competitors may not.
with fewer competitors, they are able to monitor and determine their own prices much easier.
13.
The definition of monopolistic competition differs from that of perfect competition
in neither the number of firms nor the type of product.
in both the number of firms and the type of product.
with respect to the type of product.
with respect to the number of firms in the industry.
14.
The typical monopolistic competitor
may compete on the basis of physical differences, convenience, service, and ambience.
always competes on the basis of producing a product that is physically different from those of its competitors.
never uses price discrimination.
is a large firm.
15.
Which statement is true?
The monopolistic competitor may make a profit in the long run.
The monopolistic competitor has a perfectly elastic demand curve.
None of these statements are true.
The monopolistic competitor operates at the minimum point of her ATC curve.
16.
Which statement is true about the monopolistic competitor in the long run?
It will be breaking even.
It will be making a profit.
It may be making a profit or taking a loss.
It will be taking a loss.
17.
Which statement is true?
Most monopolistic competitors are large firms.
Monopolistic competitors produce goods or services for which there are no close substitutes.
None of these statements are true.
Monopolistic competitors usually operate at the minimum point of their average total cost curves.
18.
Which statement is false?
As the price of a good rises the consumer surplus decreases.
A person would maximize her total utility when she had no consumer surplus.
We will consume a service when its marginal utility is equal to its price.
A product's utility to a buyer is measured by how much the buyer is willing to pay for it.
