Question:

Economies of scale exist if:

A.

As the amount of capital increases, the cost of producing per unit rises

B.

As the amount of capital increases, the cost of producing per unit falls

C.

As the amount of capital increases, the marginal cost rises

D.

As the amount of capital increases, the marginal physical product falls

Answer» b. As the amount of capital increases, the cost of producing per unit falls

Question:

Which of the following is NOT a characteristic of monopolistic competition?

A.

there are many sellers

B.

there are many buyers

C.

everybody is perfectly informed

D.

the goods are identical

Answer» d. the goods are identical

Question:

An international price discrimination

A.

Dumping

B.

Bundling

C.

Discounting

D.

Off loading

Answer» a. Dumping

Question:

The best, or optimum, level of output for the pure monopolist occurs at the point where

A.

STC is minimum

B.

TR = STC

C.

TR is maximum

D.

the TR and STC curves are parallel.

Answer» d. the TR and STC curves are parallel.

Question:

In the case of monopolistic competition,

A.

Short run supply curve cannot be defined

B.

MR curve cannot be defined

C.

AR curve cannot be defined

D.

None of the above

Answer» a. Short run supply curve cannot be defined

Question:

If P exceeds AVC but is smaller than AC at the best level of output, the firm is

A.

making a profit

B.

incurring a loss but should continue to produce in the short run

C.

incurring a loss and should stop producing immediately

D.

breaking even.

Answer» b. incurring a loss but should continue to produce in the short run