Question:

In the short run, a monopolist’s profits:

A.

may be positive, negative, or zero.

B.

are positive because of the monopolist\s market power.

C.

are positive if the monopolist\s elasticity of demand is less than 1.

D.

are positive if the monopolist\s selling price is above average variable cost.

Answer» a. may be positive, negative, or zero.

Question:

If the Average Total Cost curve of a firm in monopolistic competition happens to beabove the demand curve, it means:

A.

the firm will have to sell a lot in order to make a profit

B.

the firm will have to sell at a very high price in order to make a profit

C.

other firms are performing better in the market than the firm depicted in the diagram

D.

that firms in that industry will be incurring losses in the short run

Answer» d. that firms in that industry will be incurring losses in the short run

Question:

Inflation represents:

A.

fall in price level

B.

increase value of money

C.

decrease value of money

D.

None

Answer» c. decrease value of money

Question:

At the profit-maximizing level of output, a monopolist will always operate where:

A.

price is greater than marginal cost.

B.

price is greater than average revenue.

C.

average total cost equals marginal cost.

D.

total revenue is greater than total cost.

Answer» a. price is greater than marginal cost.

Question:

_______ is situation in which a single company or group owns all or nearly all of themarket for a given type of product or service.

A.

monopsony

B.

oligopoly

C.

perfect competition

D.

monopoly

Answer» d. monopoly

Question:

A profit-maximizing firm in the short run will expand output:

A.

until marginal cost begins to rise.

B.

until total revenue equals total cost.

C.

until marginal cost equals average variable cost.

D.

as long as marginal revenue is greater than marginal cost.

Answer» d. as long as marginal revenue is greater than marginal cost.

Question:

The market structure with Perfect knowledge is called

A.

Perfect competition

B.

Monopoly

C.

Monopolistic competition

D.

Oligopoly

Answer» a. Perfect competition

Question:

________ is a market in which there are only a few large buyers for a product or service.

A.

monopsony

B.

oligopoly

C.

oligopsony

D.

monopoly

Answer» c. oligopsony

Question:

When a purely competitive firm is in long-run equilibrium, price is equal to:

A.

marginal cost, but may be greater or less than average cost.

B.

minimum average cost, and also to marginal cost.

C.

minimum average cost, but may be greater or less than marginal cost.

D.

marginal revenue, but may be greater or less than both average and marginal cost.

Answer» b. minimum average cost, and also to marginal cost.

Question:

If the demand curve facing a firm is perfectly elastic, then:

A.

its marginal revenue will equal price.

B.

its marginal revenue schedule will decrease at an increasing rate.

C.

its marginal revenue schedule decreases twice as fast as the demand curve.

D.

it can increase its total revenue by lowering the price of its product.

Answer» a. its marginal revenue will equal price.