PracticeExam2

PracticeExam2 - NAME: _ PID#: _ Information for questions...

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NAME: _____________________ PID#: _____________________ Information for questions 1- 5. Figure 1 shows the market demand, marginal revenue, marginal cost, and average cost for a monopolist. 1. The profit maximizing monopolist faced with the situation in Figure 1 will charge a price of: a) 10 b) 14 c) 15 d) 17 e) 21 2. The quantity that the firm will produce is: a) 10 b) 12 c) 14 d) 16 e) 20 3. From Figure 1, one can tell from the graph that the monopolist will a) Earn an economic profit of 70 b) Have total revenue equal to 210 c) Have total cost equal to 140 d) a and c are both correct e) all of the above 4. If this market were perfectly competitive, the market quantity would be: a) 10 b) 12 c) 14 d) 16 e) 20 5. If the firm depicted in Figure 1 were a monopolistic competitor, what would be true in the long run for this market? a) The firms would make zero profit b) The Demand curve would shift inward c) New firms would enter d) Both a and c e) All of the above 6. If oligopolists engage in collusion and successfully form a cartel, the market outcome is a) the same as if it were served by a monopoly b) the same as if it were served by perfectly competitive firms c) the same as it would have been without the formation of the cartel d) better than it would have been under perfect competition e) worse than it would have been under a monopoly 7. If production of a good creates a beneficial externality, a perfectly competitive market will produce: a) less output than would maximize profit b) more output than would maximize profit c) the same level of output as a monopolist would produce Figure 1
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PracticeExam2 - NAME: _ PID#: _ Information for questions...

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