Identify the choice that best completes the statement or answers the question. ____ 1. In the model of perfect competition, firms produce a: a. standardized product with considerable control over...

\\Final Exam

Multiple Choice
Identify the choice that best completes the statement or answers the question.
____ 1. In the model of perfect competition, firms produce a:
a. standardized product with considerable control over price.
b. differentiated product with considerable control over price.
c. standardized produc\t with no control over price.
d. differentiated product with no control over price.
e. standardized or differentiated product with some control over price.
____ 2. In the model of perfect competition, there:
a. are many firms producing differentiated products.
b. are a few firms producing undifferentiated products.
c. are a few firms producing differentiated products.
d. are many firms producing undifferentiated products.
e. is one firm producing a highly differentiated product.
____ 3. If the perfectly competitive market demand for gym shoes is given by QD = 100 – P and the market
supply is given by QS = 10 + 2P, then the equilibrium price and quantity will be:
a. P = 50 and Q = 50.
b. P = 40 and Q = 90.
c. P = 40 and Q = 60.
d. P = 30 and Q = 70.
e. P = 25 and Q = 75.\
1
____ 4. In the model of perfect competition, firms maximize profits by producing where:
a. the difference between marginal revenue and marginal cost is maximized.
b. marginal revenue equals price.
c. the difference between price and marginal cost is maximized.
d. price equals marginal cost.
e. the difference between price and marginal revenue is maximized.
____ 5. A representative firm with short-run total cost given by TC = 50 + 2q + 2q
2
operates in a competitive
industry where the short-run market demand and supply curves are given by QD = 1,410 – 40P and QS = –
390 + 20P. Its short-run profit-maximizing level of output is:
a. 0 units.aq
b. 1 unit.
c. 2 units.
d. 5 units.
e. 7 units.
____ 6. The following diagram represents the market for paperback books. Which area represents producer
surplus?
file://final
a. A.
b. B.
c. C.
d. D.
e. None of the above.
____ 7. If a monopolist faces a constant-elasticity demand curve given by Q = 202,500P
–3
and has total costs
given by TC = 10Q, its profit-maximizing level of output is:
a. 50.
b. 60.
c. 75.
d. 100.
e. 120.
____ 8. At the profit-maximizing level of output for the monopolist:
a. total revenue is equal to total cost.
b. total costs are minimized.
c. total revenue is maximized.
d. marginal revenue is equal to marginal cost.
e. average revenue is equal to average cost.
____ 9. Bathworks has exclusive rights to sell its perfumes. The demand for its perfumes facedby Bathworks is
given by Q = 250 – 0.5P. Bathworks’s costs are given by TC = 50Q + 5.5Q
2
. Its maximum monopoly
profit is:
a. $6,750.
b. $7,050.
c. $7,500.
d. $7,750.
e. $8,750.
____ 10. Cal’s Cab Company (CCC) has a taxi monopoly in Wen Kroy. The demand for taxi services in Wen Kroy
is given by Q = 1,500 – P. CCC’s costs are given by TC = 100 – Q
2
+ 5Q
3
. Its maximum monopoly profit
is:
a. $0.
b. $5,500.
c. $6,600.
d. $7,700.
e. 9,900.
____ 11. The optimal level of output and price for the profit-maximizing monopolist in the following figure would
be:
a. Q = 30 and P = $35.
b. Q = 60 and P = $20.
c. Q = 30 and P = $20.
d. Q = 100 and P = $35.
e. none of the above.
____ 12. Price discrimination is defined as:
a. selling a product at the same price to each and every consumer.
b. selling a product at more than one price.
c. selling a product at its marginal cost plus a markup.
d. selling more than one version of a product.
e. producing goods and services for sale within the firm.
____ 13. If the monopolist shown in the...