Quiz_130 - 51 RefertoFigure13-4.-maximizingprice A $12 B $13 C $14 51 D $16 Answer D Diff:1 PageRef:435-436\/435-436 Topic Short- LearningOutcome Micro15:

Quiz_130 - 51 RefertoFigure13-4.-maximizingprice A $12 B...

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Unformatted text preview: 51) Refer to Figure 13-4. What is the firmʹs profit-maximizing price? A) $12 B) $13 C) $14 51) D) $16 Answer: D Diff: 1 Page Ref: 435-436/435-436 Topic: Short-Run Profit Maximization Learning Outcome: Micro 15: Discuss the role of differentiation in monopolistic competition in comparison to other market conditions AACSB: Analytic Skills 52) Refer to Figure 13-4. At the profit-maximizing output level the firm will A) earn a profit of $88. B) break even. C) earn a profit of $60. D) earn a profit of $176. 52) Answer: A Diff: 2 Page Ref: 435-436/435-436 Topic: Short-Run Profit Maximization Learning Outcome: Micro 15: Discuss the role of differentiation in monopolistic competition in comparison to other market conditions AACSB: Analytic Skills 53) Refer to Figure 13-4. Based on the diagram, one can conclude that A) some existing firms will exit the market. B) the industry is in long-run equilibrium. C) new firms will enter the market. D) firms achieve productive efficiency. 53) Answer: C Diff: 1 Page Ref: 435-436/435-436 Topic: Short-Run Profit Maximization Learning Outcome: Micro 15: Discuss the role of differentiation in monopolistic competition in comparison to other market conditions AACSB: Analytic Skills Figure 13-5 54) Refer to Figure 13-5. Which of the graphs in the figure depicts a monopolistically competitive firm that is minimizing its losses? A) Panel A B) Panel B C) Panel C D) Panel A and Panel C Answer: C Diff: 1 Page Ref: 435-436/435-436 Topic: Short-Run Profit Maximization Learning Outcome: Micro 15: Discuss the role of differentiation in monopolistic competition in comparison to other market conditions AACSB: Analytic Skills 16 54) 55) Refer to Figure 13-5. Which of the graphs in the figure depicts a monopolistically competitive firm that is earning economic profits? A) Panel A B) Panel B C) Panel C D) Panel A and Panel B 55) Answer: D Diff: 1 Page Ref: 435-436/435-436 Topic: Short-Run Profit Maximization Learning Outcome: Micro 15: Discuss the role of differentiation in monopolistic competition in comparison to other market conditions AACSB: Analytic Skills TRUE/FALSE. Write ʹTʹ if the statement is true and ʹFʹ if the statement is false. 56) A monopolistically competitive firm should lower its price if its marginal revenue exceeds its marginal cost. Answer: True 56) False Diff: 1 Page Ref: 435-436/435-436 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 57) If a perfectly competitive firm maximizes short-run profits, its marginal revenue will be positive and less than its price. Answer: True 57) False Diff: 1 Page Ref: 435-436/435-436 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 58) A profit-maximizing monopolistically competitive firm produces and sells an allocatively efficient quantity of output. Answer: True 58) False Diff: 1 Page Ref: 435-436/435-436 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 59) Unlike a perfectly competitive firm, a monopolistic competitor does not have a short -run shut-down point. Answer: True False Diff: 1 Page Ref: 435-436/435-436 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 17 59) SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. Figure 13-6 60) Refer to Figure 13-6. Suppose the above graph represents the relationship between the average total cost of producing notebook computers and the quantity of notebook computers produced by Dell. On a graph, illustrate the demand, MR, MC, and ATC curves which would represent Dell maximizing profits at a quantity of 100,000 per month and identify the area on the graph which represents the profit. 60) Answer: Diff: 2 Page Ref: 436-437/436-437 Topic: Short-Run Profit Maximization Learning Outcome: Micro 15: Discuss the role of differentiation in monopolistic competition in comparison to other market conditions AACSB: Analytic Skills 61) Central Grocery in New Orleans is famous for its muffaletta, a large round sandwich filled with deli meats and topped with a tangy olive salad. Suppose the following table represents cost and revenue data for Central Grocery. Fill in the columns for TR, MR, MC, ATC, and profit. If Central Grocery wants to maximize profits, what price should it charge for a muffaletta, what quantity should it sell, and what will be the amount of its total profit? Muffalettas Sold per Day 0 1 2 3 Price (P) $15 14 13 12 Total Revenue (TR) Marginal Revenue (MR) Total Marginal Average Cost (TC) Cost (MC) Total Cost (ATC) $12 18 20 21 18 Profit 61) 4 5 6 7 8 9 10 11 10 9 8 7 6 5 Answer: Muffalettas Sold per Day 0 1 2 3 4 5 6 7 8 9 10 Price (P) $15 14 13 12 11 10 9 8 7 6 5 Total Revenue (TR) $0 14 26 36 44 50 54 56 56 54 50 23 26 30 35 42 52 78 Marginal Revenue (MR) -- $14 12 10 8 6 4 2 0 -2 -4 Total Marginal Average Cost (TC) Cost (MC) Total Cost (ATC) $12 -- -- 18 $6 $18.00 20 2 10.00 21 1 7.00 23 2 5.75 26 3 5.20 30 4 5.00 35 5 5.00 42 7 5.25 52 10 5.70 78 16 7.80 To maximize profits, Central Grocery should produce the quantity where MR = MC, which is 6 muffalettas. The price is therefore $9, and the total profit is $54 - 30 = $24. Diff: 2 Page Ref: 435-436/435-436 Topic: Short-Run Profit Maximization 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. 62) Tonyʹs Italian Ice is a monopolistically competitive firm. If Tonyʹs earns a profit in the short run, which of the following is most likely to occur? A) New firms that sell Italian ice will enter the market and Tonyʹs cost curves will shift to the left. B) New firms that sell Italian ice will enter the market and Tonyʹs demand curve will shift to the right. C) New firms that sell Italian ice will enter the market and Tonyʹs demand curve will shift to the left. D) New firms that sell Italian ice will enter the market and Tonyʹs demand curve will become more inelastic. Answer: C Diff: 2 Page Ref: 437-438/437-438 Topic: Monopolistic Competition in the Long Run Learning Outcome: Micro 15: Discuss the role of differentiation in monopolistic competition in comparison to other market conditions AACSB: Reflective Thinking 19 62) ...
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