Quiz_127 - Figure13-1 23 RefertoFigure13-1. toP1 equals B...

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Unformatted text preview: Figure 13-1 23) Refer to Figure 13-1. The marginal revenue from the increase in price from P0 to P1 equals B) the area (A - D). D) the area (C - B). A) the area A. C) the area (B + D - A). Answer: B Diff: 2 Page Ref: 432-434/432-434 Topic: Demand and Marginal Revenue Learning Outcome: Micro 2: Interpret and analyze information presented in different types of graphs AACSB: Analytic Skills 7 23) Figure 13-2 24) Refer to Figure 13-2. The marginal revenue from selling the additional unit Qb instead of Qa equals A) the area (E + F) - (G + H). C) the area G. 24) B) the area (G + H). D) the area (H - E). Answer: D Diff: 2 Page Ref: 432-434/432-434 Topic: Demand and Marginal Revenue Learning Outcome: Micro 2: Interpret and analyze information presented in different types of graphs AACSB: Analytic Skills 25) Which of the following statements is true about marginal revenue? A) Marginal revenue increases as price falls and quantity sold increases. B) If marginal revenue is positive, the additional revenue received from selling 1 more unit of the good is smaller than the revenue lost from receiving a lower price on all the units that could have been sold at the original price. C) If marginal revenue is zero, it means that quantity demanded falls to zero when a firm changes its price. D) If marginal revenue is negative, the additional revenue received from selling 1 more unit of the good is smaller than the revenue lost from receiving a lower price on all the units that could have been sold at the original price. Answer: D Diff: 2 Page Ref: 432-434/432-434 Topic: Demand and Marginal Revenue Learning Outcome: Micro 15: Discuss the role of differentiation in monopolistic competition in comparison to other market conditions AACSB: Reflective Thinking 8 25) TRUE/FALSE. Write ʹTʹ if the statement is true and ʹFʹ if the statement is false. 26) In monopolistic competition, if a firm produces a highly desirable product relative to its competitors, the firm will be able to raise its price without losing any customers. Answer: True 26) False Diff: 1 Page Ref: 432/432 Topic: Characteristics of Monopolistic Competition Learning Outcome: Micro 15: Discuss the role of differentiation in monopolistic competition in comparison to other market conditions AACSB: Reflective Thinking 27) When a monopolistically competitive firm cuts its price to increase its sales, it experiences a loss in revenue due to the income effect and a gain in revenue due to the substitution effect. Answer: True 27) False Diff: 1 Page Ref: 433/433 Topic: Demand and Marginal Revenue Learning Outcome: Micro 15: Discuss the role of differentiation in monopolistic competition in comparison to other market conditions AACSB: Reflective Thinking 28) If marginal revenue is negative then the revenue lost from receiving a lower price on all the units that could have been sold at the original price is smaller than the additional revenue from selling one more unit of the good. Answer: True False Diff: 2 Page Ref: 433-434/433-434 Topic: Demand and Marginal Revenue Learning Outcome: Micro 15: Discuss the role of differentiation in monopolistic competition in comparison to other market conditions AACSB: Reflective Thinking SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. 29) What are the most important differences between perfectly competitive markets and monopolistically competitive markets? 29) Answer: In both perfectly competitive and monopolistically competitive industries there are many firms and low barriers to entry. However, while products are identical in perfectly competitive markets, products are similar — but not identical — in monopolistically competitive markets. Diff: 1 Page Ref: 432/432 Topic: Comparing Perfect Competition and Monopolistic Competition Learning Outcome: Micro 15: Discuss the role of differentiation in monopolistic competition in comparison to other market conditions AACSB: Reflective Thinking 30) Explain the differences between total revenue, average revenue, and marginal revenue. Answer: Total revenue equals price × quantity; average revenue = (total revenue)/quantity (and also equals price); marginal revenue = (change in total revenue)/(change in quantity). Diff: 1 Page Ref: 433/433 Topic: Demand and Marginal Revenue Learning Outcome: Micro 15: Discuss the role of differentiation in monopolistic competition in comparison to other market conditions AACSB: Reflective Thinking 9 30) 28) 31) Complete the following table. Energy Drinks Consumed per Week 0 1 2 3 4 5 6 7 8 Price (P) $6.00 5.50 5.00 4.50 4.00 3.50 3.00 2.50 2.00 Answer: Energy Drinks Consumed per Week 0 1 2 3 4 5 6 7 8 31) Total Revenue Average Marginal (TR) Revenue (AR) Revenue (MR) Price (P) $6.00 5.50 5.00 4.50 4.00 3.50 3.00 2.50 2.00 Total Revenue (TR) $0.00 5.50 10.00 13.50 16.00 17.50 18.00 17.50 16.00 Average Revenue (AR) -- $5.50 5.00 4.50 4.00 3.50 3.00 2.50 2.00 Marginal Revenue (MR) -- $5.50 4.50 3.50 2.50 1.50 0.50 -0.50 -1.50 Diff: 1 Page Ref: 433/433 Topic: Demand and Marginal Revenue Learning Outcome: Micro 15: Discuss the role of differentiation in monopolistic competition in comparison to other market conditions AACSB: Analytic Skills MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 32) What is the profit-maximizing rule for a monopolistically competitive firm? A) to produce a quantity that maximizes total revenue B) to produce a quantity such that price equals marginal cost C) to produce a quantity such that marginal revenue equals marginal cost D) to produce a quantity that maximizes market share Answer: C Diff: 1 Page Ref: 434/434 Topic: Short-Run Profit Maximization Learning Outcome: Micro 15: Discuss the role of differentiation in monopolistic competition in comparison to other market conditions AACSB: Reflective Thinking 10 32) ...
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