PE4 - Practice Exam 4 Multiple Choice Identify the letter...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Practice Exam 4 Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____ 1. Which of the following statements about a firm's market pricing of its product is true? a. Both competitive firms and monopolies are price makers. b. Both competitive firms and monopolies are price takers. c. A competitive firm is a price taker and a monopoly is a price maker. d. A competitive firm is a price maker and a monopoly is a price taker. ____ 2. A monopoly's marginal cost will most likely a. exceed its marginal revenue. b. be less than average fixed cost. c. be less than the market price of its goods. d. equal average total cost. ____ 3. A fundamental source of monopoly market power arises from a. availability of "free" natural resources, such as water or air. b. perfectly elastic demand. c. perfectly inelastic demand. d. barriers to entry. ____ 4. The defining characteristic of a natural monopoly is a. economies of scale over the relevant range of output. b. diseconomies of scale over the relevant range of output. c. marginal cost is U-shaped over the relevant range of output. d. marginal cost is constant over the relevant range of output. ____ 5. Authors are allowed to be monopolists in the sale of their books in order to a. satisfy literary advocacy groups that exercise their lobbying power. b. encourage authors to write more and better books. c. correct for the negative externalities that the internet and television impose. d. promote a society that thinks for themselves and learns from whichever books they please. ____ 6. If a monopolist faces a downward-sloping market demand curve, its a. marginal revenue is always less than the price of the units it sells. b. marginal revenue is greater than the price of the units it sells. c. average revenue is always less than marginal revenue. d. average revenue is less than the price of its product. ____ 7. The monopolist's profit-maximizing quantity of output is where a. average cost equals marginal revenue. b. marginal cost equals marginal revenue. c. price equals marginal revenue. d. All of the above are correct.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
____ 8. A monopolist is a price a. taker, and therefore has no demand curve. b. taker, and therefore has no supply curve. c. setter, and therefore has no demand curve. d. setter, and therefore has no supply curve. ____ 9. For a monopoly firm, which of the following equalities is true? a. price = average revenue b. price = marginal cost c. price = marginal revenue d. All of the above are correct. The figure reflects the cost and revenue structure for a monopoly firm. ____ 10. According to the figure, a profit-maximizing monopoly would have total revenues equal to a. P 0 x Q 1 . b.
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

Page1 / 14

PE4 - Practice Exam 4 Multiple Choice Identify the letter...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online