Question:

Profits are maximized when the firm

A.

captures the largest market share in its market

B.

produces at an output level where marginal revenue exceeds marginal cost

C.

produces at the output level where marginal revenue equals marginal cost

D.

produces at the output level where total revenue is maximized

Answer» c. produces at the output level where marginal revenue equals marginal cost

Question:

Under monopolistic competition, an increase in the number of firms producing close substitutes will make the demand curve ofeach firm

A.

Inelastic

B.

Elastic

C.

Downward sloping

D.

Perfectly inelastic

Answer» b. Elastic

Question:

A business cycle is composed of —– phases:

A.

2 Phase

B.

3 Phase

C.

4 Phase

D.

No Phase

Answer» c. 4 Phase

Question:

Which of the following is not a type of market structure?

A.

Competitive monopoly

B.

Oligopoly

C.

Perfect competition

D.

All of the above are types of market structures.

Answer» a. Competitive monopoly

Question:

Under perfect market conditions the individual firm in the industry has——————- control over the price of the product.

A.

Some

B.

Full

C.

No

D.

None of the above

Answer» c. No

Question:

A firm under perfect competitions shall be in equilibrium when marginal cost will be equal to marginal revenue and marginal cost curve is still

A.

Declining

B.

Rising

C.

Constant

D.

None of the above

Answer» b. Rising

Question:

If the monopolist faces identical demand for his commodity in the two separate markets, by practicing third degree pricediscrimination

A.

Will increase his TR and total profit

B.

Can increase his TR and profit

C.

Cannot increase his TR and profit

D.

Will charge different prices in different market

Answer» c. Cannot increase his TR and profit

Question:

The pure monopolist who is nondiscriminating must decrease price on all units of aproduct sold in order to sell additional units. This explains why:

A.

there are barriers to entry in pure monopoly.

B.

a monopoly has a perfectly elastic demand curve.

C.

marginal revenue is less than average revenue.

D.

total revenues are greater than total costs at the profit maximizing level of output.

Answer» c. marginal revenue is less than average revenue.

Question:

Shut-down point is a point where price is equal to

A.

AC

B.

AVC

C.

AFC

D.

MC

Answer» b. AVC

Question:

Excess capacity is a hallmark of

A.

Perfect competition

B.

Monopoly

C.

Oligopoly

D.

Monopolistic competition

Answer» d. Monopolistic competition