# Chapter 13 - Summative Quiz - 1. In the following diagram ...

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1.In the following diagram, which curve represents the marginal revenue curve? a.curve A b.curve B c.curve C d.The marginal revenue curve is not represented on the diagram above.
2.In the following diagram, ______ represents the profit-maximizing price, while _____ represents the profit- maximizing quantity.
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3.In the following diagram, the area given by ______ represents the total profit accruing to a firm with market power.
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4.In the following diagram, the area given by ______ represents the deadweight loss accruing to society as a result of the monopoly.
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5.Consider a market, as illustrated in the figure below, in which all firms have the same average cost curve. If a perfectly competitive firm in this market tried to set a price above the minimum point on its average cost curve, how many units would it sell? a. The firm would sell Qm units, the optimal quantity of a monopoly. b.The firm would sell Qc units, the quantity sold in a perfectly competitive market. c.The firm would sell slightly less than the quantity of a perfectly competitive market. d.The firm would sell zero units.
6.Consider a market like the one illustrated in the figure below. If a monopoly in this market tried to set its price above the minimum point on its average cost curve, what would happen to the number of units it sells?
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7.In the textbook, The Applied Theory of Price, D. N. McCloskey refers to the equation MR = MC as the rule of rational life. What types of firms follow this rule?
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8.Rapido, the shoe company, is so popular that it has monopoly power. It's selling 20 million shoes per year, and it's highly profitable. The marginal cost of making extra shoes is quite low, and it doesn't change much if they produce more shoes. Rapido's marketing experts tell the CEO of Rapido that if it decreased prices by 20%, it would sell so many more shoes that profits would rise. If the expert is correct, at its current output, what can you infer about its marginal revenue and marginal cost?
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