Your quiz has been submitted successfully. Chapter 8 shutdown point Question 1 1 / 1 point If a firm’s revenues do not cover its average variable costs then that firm has reached its _________________ . a) opportunity margin b) price taking point c) shutdown point d) marginal point Chapter 8 perfectly competitive market Question 2 0 / 1 point A perfectly competitive industry is a a) hypothetical extreme. b) hypothetical assumption. c) realistic extreme. d) realistic assumption. Chapter 8 perfectly competitive firm Question 3 1 / 1 point In the _________ if profits are not possible the perfectly competitive firm will seek out the quantity of output where _____________________ . a) short run; fixed costs can be reduced b) short run; losses are smallest c) long run; fixed costs can be eliminated d) long run; increasing production Chapter 8 competitive firm costs of production Question 4 0 / 1 point Temperatures have persisted below freezing levels in Florida throughout the months of December and January. As a result demand for electricity sharply increased and the price of electricity rose sharply. The price of coal also rose. In these circumstances any resulting shifts in the supply curves for coal miners and electricity producers a) shifts marginal costs to the right enabling both to produce more at any given market price. b) at all levels of output shifts marginal costs to the right. c) will determine what price to produce at given the market demand. d) can also be interpreted as shifts of their respective marginal cost curves. Chapter 8 Problem (table) Question 5 0 / 1 point Refer to the table below. In this instance expansion of output Q P TR MR TC MC 0 $30 0 — $15 — 1 $30 $30 $30 $25 $10 2 $30 $60 $30 $40 $15 3 $30 $90 $30 $60 $20 4 $30 $120 $30 $85 $25 5 $30 $150 $30 $115 $30 6 $30 $180 $30 $150 $35 a) leaves input prices constant as demand for inputs increases. b) causes input prices to rise as demand for inputs decreases. c) occurs because of increasing returns to scale. d) causes diseconomies of scale to occur. Question 6 1 / 1 point Given the data provided in the table below what will the fixed costs equal for production at quantity (Q) level 4? Q P TC TR MR MC Profit 0 $5 $9 1 $5 $10 2 $5 $12 3 $5 $15 4 $5 $19 5 $5 $24 6 $5 $30 7 $5 $45 a) $35.00 b) $36.00 c) $4.00 d) $9.00 Chapter 8 Graphs Question 7 1 / 1 point Refer to the diagram above. In this instance point e shown on the graph indicates a) the point where profits will increase by reducing output b) the profit-maximizing point where MR = MC c) the profit-maximizing point where MR is less an MC d) the point where profits will increase by increasing output Chapter 9 Monopoly position on the market place Question 8 1 / 1 point If it was possible for one company to gain ownership control all of the uranium processing plants in the US then a) the factors of market demand and supply will set the price. b) that firm could set up barriers to entry to discourage competition. c) government will deregulate to ensure the company’s monopoly. d) they will strive to reach efficiencies only they know how to make. Question 9 0 / 1 point Occasionally _________________ may lead to pure monopoly; in other market conditions they may limit competition _________________ . a) barriers to entry; to a few oligopoly firms b) barriers to entry; to a natural monopoly c) deregulation; requiring new patent law d) deregulation; requiring new copyright law Chapter 9 Problems Question 10 1 / 1 point The following table shows a monopolist’s demand curve and cost information for the production of its good. What quantity will it produce? Quantity Price per Unit Total Cost 10 $10 $20 20 $8 $50 30 $6 $65 40 $4 $90 50 $2 $120 a) 30 b) 10 c) 20 d) 40 Question 11 0 / 1 point The following table shows a monopolist’s demand curve and cost information for the production of its good. What price will it charge? Quantity Price per Unit Total Cost 25 $5 $110 30 $10 $125 35 $14 $130 40 $15 $140 a) $13 b) $11 c) $15 d) $12 Chapter 10 Random Question 12 0 / 1 point The typical slope of the demand curve as perceived by a monopolistic competitor will a) be steeper than the demand curve perceived by a monopolist. b) reflect that firm’s ability raise its price without losing all of its customers. c) show less of a decline in demand than would a monopoly that raised its prices. d) be reflective of a perfectly competitive firm and all of the above. Chapter 10 Problems Question 13 1 / 1 point The table below shows the demand curve and cost information for a firm that is a monopoly. Price Quantity TC $1 000 0 $500 $800 5 $1 200 $600 10 $3 100 $400 15 $7 000 $200 20 $11 500 If they maximize their profits what price will they charge? a) $600 b) $800 c) $400 d) $200 Chapter 11 Problems Question 14 0 / 1 point City Gas is a natural monopoly that supplies natural gas to a particular city. Its cost and demand information are given below. Quantity (Millions of therms) Price ($ per therm) Total Cost (million $) 1 48 35 2 44 64 3 38 90 4 30 113 5 20 133 6 8 150 If the government decides to regulate this natural monopoly by forcing them to produce at the point where the demand curve intersects marginal cost then the firm will make a ____ and ____ continue in the long run. a) profit of $33 million will b) loss of $33 million will not c) loss of $24 million will not d) profit of $24 million will Question 15 1 / 1 point The information below sets out the estimated market shares for the cellular phone manufacturing market. Firm Market Share Nokia 36% Fujitsu 3% Kyocera 3% LG 6% Motorola 16% Samsung 6% Sanyo 4% Siemens 7% Sony Ericsson 11% Plus 8 more firms with 1% each If Samsung were to acquire Sanyo the four-firm concentration ratio would be a) 73 b) 65 c) 68 d) 70 Chapter 11 Random Question 16 1 / 1 point In competitive settings profits will lead firms to _________________ and losses will lead firms ___________ so the incentives for producing at low cost and coming up with new ways of pleasing customers are strong. a) reduce output; increase price b) privatize; nationalize c) monopolize; to lower costs d) enter the market; to exit Question 17 1 / 1 point If an industry is perfectly competitive or monopolistically competitive then the government has relatively little reason for concern about a) new ways of pleasing customers. b) taking advantage of economies of scale. c) the extent of competition. d) regulatory recapture. Question 18 0 / 1 point The FTC and the Department of Justice guidelines state that in the US market-driven economy firms will be forbidden to a) agree to rig bids or allocate lines of commerce. b) refuse to share or divide markets. c) refuse to share customers suppliers or territories. d) agree to let the market set prevailing prices or output. Question 19 1 / 1 point The application of current US antitrust law a) includes a wide arrange of anticompetitive practices. b) extends its long reach to block mergers that reduce competition. c) includes a narrow range of anticompetitive practices. d) reaches beyond the subjective judgments of antitrust regulators. Question 20 1 / 1 point The fundamental belief behind the market-oriented US economy is that firms are in the best position to know if their actions will a) contravene antitrust regulations. b) lead to attracting more customers. c) let them produce more efficiently. d) the right answer is both b and c. ________________________________________
