Question:

Which of the following statements is true regarding a profit maximizing monopoly

A.

it will cause a deadweight loss

B.

it will produce less than perfect competition

C.

it will sell at a higher price than perfect competition

D.

all of the above

Answer» d. all of the above

Question:

A perfectly competitive firm should reduce output or shut down in the short run if marketprice is equal to marginal cost and price is

A.

greater than average total cost

B.

less than average total cost

C.

greater than average variable cost

D.

less than average variable cost

Answer» d. less than average variable cost

Question:

In perfect competition the shutdown point is defined by

A.

where price = avc

B.

where price = ac

C.

where price = mc

D.

when the firm starts to incur loss

Answer» a. where price = avc

Question:

Product differentiation is seen in

A.

perfect competition

B.

monopoly

C.

monopolistic competition

D.

pure competition

Answer» c. monopolistic competition

Question:

In the long run, a constant cost industry

A.

has an upward sloping supply curve as the quantity supplied increases with increases in demand

B.

expands in response to an increase in demand despite rising input costs, and so the long run supply curve is horizontal

C.

can expand in response to an increase in demand without input costs changing, and so the long run supply curve is horizontal

D.

does not expand in response to an increase in demand and so the long run supply curve is horizontal

Answer» c. can expand in response to an increase in demand without input costs changing, and so the long run supply curve is horizontal

Question:

Original IS-LM model is a ……..model.

A.

Open

B.

Closed

C.

Both

D.

None

Answer» b. Closed

Question:

A discriminating monopolist will charge a higher price from whichgroup of customers?

A.

Group with more elastic

B.

Group with less elastic

C.

Group with Unitary Elastic

D.

Group with Infinitely Elastic

Answer» b. Group with less elastic

Question:

For the monopolist, at the profit maximizing level of output

A.

price is greater than marginal cost (p > mc)

B.

price is equal to marginal cost (p=mc)

C.

price may be greater than or equal to marginal cost,

D.

price is less than marginal cost (p <mc)

Answer» a. price is greater than marginal cost (p > mc)

Question:

Which of the following is known as the perfect price discrimination

A.

First degree price discrimination

B.

Second degree price discrimination

C.

Third degree price discrimination

D.

Nine of the above

Answer» a. First degree price discrimination

Question:

If many students choose to study to become accountants, when all of these studentseventually graduate, we can expect accountant’s wages to ________, and the equilibrium number of accountants will ________

A.

rise, increase

B.

drop, increase

C.

rise, decrease

D.

drop, decrease

Answer» b. drop, increase