Market structures_monopoly and monopolistic competition (22/25)

   

Question 1

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All of the following are characteristics of a monopoly market except which one?

Select one:

A.

a single seller in the market

B.

no close substitutes to the good produced in the market

C.

the firm is a price-taker

D.

an insurmountable barrier to entry exists

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Question 2

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For ________ units a monopoly produces, the price is ________ than the marginal revenue.

Select one:

A.

some; greater

B.

all; greater

C.

some; less

D.

all; less

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Question 3

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All of the following are true regarding a monopolist’s marginal revenue except which one?

Select one:

A.

It is less than the price for all units produced.

B.

It is horizontal.

C.

It is downward sloping.

D.

It is equal to the change in total revenue resulting from a change in quantity sold.

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Question 4

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To maximize profit, a monopolist must ________.

Select one:

A.

produce the quantity that sets marginal revenue equal to marginal cost

B.

produce the quantity that makes the marginal revenue exceed the marginal cost

C.

produce the quantity that makes the difference between marginal revenue and marginal cost  negative

D.

produce the quantity that makes the difference between marginal revenue and marginal cost  positive

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Question 5

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A monopolist creates a deadweight loss by producing a quantity that is ________ the efficient quantity.

Select one:

A.

more than

B.

equal to

C.

exactly double

D.

less than

Question 6

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If Sweet Dreams creates a new insomnia drug, the managers of Sweet Dreams are most likely to obtain which of the following to prevent another firm from copying their drug’s formula?

Select one:

A.

copyright

B.

trademark

C.

patent

D.

trade secret

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Question 7

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The duck that is used to advertise AFLAC’s insurance is an example of a ________.

Select one:

A.

copyright

B.

patent

C.

trademark

D.

trade secret

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Question 8

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All of the following are barriers to entry except which one?

Select one:

A.

control of an essential raw material

B.

patents

C.

the presence of a natural monopoly in the market

D.

a deadweight loss

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Question 9

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Quantity

Price

MC

 

0

400

180

 

10

380

185

 

20

360

200

 

30

340

225

 

40

320

260

 

50

300

305

 

60

280

360

 

70

260

425

 

80

240

500

 

90

220

585

 

100

200

680

 

110

180

785

The above table shows the quantity demanded at varying prices and the corresponding marginal cost of production for a monopoly firm.
 

Refer to the table above. What is the monopolist’s total revenue from producing 40 units of output?

Select one:

A.

$12,800

B.

$10,200

C.

$300

D.

$260

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Question 10

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Quantity

Price

MC

 

0

400

180

 

10

380

185

 

20

360

200

 

30

340

225

 

40

320

260

 

50

300

305

 

60

280

360

 

70

260

425

 

80

240

500

 

90

220

585

 

100

200

680

 

110

180

785

The above table shows the quantity demanded at varying prices and the corresponding marginal cost of production for a monopoly firm.
 

Refer to the table above. If the monopoly produces 40 units, charges the corresponding price of $320, and its average total cost to produce the 40 units is $206, what is their profit or loss?

Select one:

A.

$56,000

B.

$12,600

C.

-$4,560

D.

$4,560

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Question 11

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The smaller the price elasticity of demand, the ________ the profit-maximizing price and the ________ the markup.

Select one:

A.

lower; smaller

B.

higher; larger

C.

lower; larger

D.

higher; smaller

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Question 12

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At the profit-maximizing quantity, the price elasticity of demand is 2.5. What is the markup?

Select one:

A.

1.32

B.

1.67

C.

0.71

D.

2.57

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Question 13

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All of the following are characteristics of monopolistic competition except which one?

Select one:

A.

no barriers to entry

B.

firms produce differentiated products

C.

many sellers

D.

barriers to entry

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Question 14

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If a monopolistically competitive firm is producing 1,200 units of output and the marginal revenue from producing the 1,200th unit of output is $5 and the marginal cost is $4.50, which of the following is true?

Select one:

A.

The firm should decrease production to maximize profit.

B.

The difference between marginal revenue and marginal cost (MR – MC) at the 1,200th unit is negative.

C.

The firm maximizing profit.

D.

The firm should increase production to maximize profit.

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Question 15

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All of the following are characteristics of monopolistic competition except which one?

Select one:

A.

few sellers

B.

many sellers

C.

firms produce differentiated products

D.

no barriers to entry

Question 11

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The smaller the price elasticity of demand, the ________ the profit-maximizing price and the ________ the markup.

Select one:

A.

lower; smaller

B.

higher; larger

C.

lower; larger

D.

higher; smaller

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Question 12

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At the profit-maximizing quantity, the price elasticity of demand is 2.5. What is the markup?

Select one:

A.

1.32

B.

1.67

C.

0.71

D.

2.57

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Question 13

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All of the following are characteristics of monopolistic competition except which one?

Select one:

A.

no barriers to entry

B.

firms produce differentiated products

C.

many sellers

D.

barriers to entry

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Question 14

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If a monopolistically competitive firm is producing 1,200 units of output and the marginal revenue from producing the 1,200th unit of output is $5 and the marginal cost is $4.50, which of the following is true?

Select one:

A.

The firm should decrease production to maximize profit.

B.

The difference between marginal revenue and marginal cost (MR – MC) at the 1,200th unit is negative.

C.

The firm maximizing profit.

D.

The firm should increase production to maximize profit.

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Question 15

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All of the following are characteristics of monopolistic competition except which one?

Select one:

A.

few sellers

B.

many sellers

C.

firms produce differentiated products

D.

no barriers to entry

Question 16

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Monopolistically competitive firms ________ earn profits in the long run due to ________.

Select one:

A.

cannot; barriers to entry

B.

cannot; no barriers to entry

C.

can; barriers to entry

D.

can; no barriers to entry

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Question 17

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In the long run, a monopolistically competitive firm produces where its ________ is tangent to its ________.

Select one:

A.

marginal cost; marginal revenue curve

B.

average total cost; demand curve

C.

marginal cost; demand curve

D.

average total cost; marginal revenue curve

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Question 18

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Monopolistically competitive firms have some market power because ________.

Select one:

A.

there are no barriers to entry

B.

each firm cannot set their own price

C.

there are perfect substitutes for each firm’s product

D.

each firm produces a differentiated product

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Question 19

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A monopolistically competitive firm’s demand curve is ________.

Select one:

A.

horizontal

B.

upward sloping

C.

vertical

D.

downward sloping

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Question 20

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The demand curve for the monopolistically competitive firm makes the ________ lie ________ the demand curve.

Select one:

A.

marginal cost curve; above

B.

marginal cost curve; below

C.

marginal revenue curve; below

D.

marginal revenue curve; above

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Question 21

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Managers of firms with market power prefer a price elasticity of demand equal to ________ compared to ________.

Select one:

A.

3.3; 3.2

B.

4.0; 3.5

C.

1.3; 1.2

D.

1.2; 1.3

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Question 22

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A price elasticity of demand equal to ________ allows a greater markup than a price elasticity of demand equal to ________.

Select one:

A.

2.3; 2.1

B.

1.6; 1.8

C.

1.1; 1.08

D.

3.1; 2.3

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Question 23

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Managers of firms with market power should be cautious not to ________ when they are earning ________ economic profit.

Select one:

A.

mark up their product; negative

B.

mark up their product; positive

C.

overexpand; negative

D.

overexpand; positive

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Question 24

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An insurmountable barrier to entry can enable a firm to produce a quantity at which its ________ exceeds its ________ in the long run.

Select one:

A.

average total cost; price

B.

marginal cost; price

C.

price; average total cost

D.

marginal cost; marginal revenue

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Question 25

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You are the manager of Happy Avocados, the dominant firm in the ready-made guacamole market. At your current production level, your marginal cost is $0.60 and you have estimated that your price elasticity of demand is between 1.1 and 1.2. What range of prices should you charge to maximize your profit?

Select one:

A.

The range between $5.60 and $6.60.

B.

The range between $3.60 and $6.60.

C.

The range between $4.60 and $5.60.

D.

The range between $3.11 and $6.12