final_ans_vrsn1

# final_ans_vrsn1 - Name Rutgers University Department of...

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Name: Rutgers University Department of Economics Intermediate Microeconomics 01:220:203:12 Fall 2008 Final Examination Version 1 1. A monopoly market is one with a) One buyer and one seller. b) One buyer and many sellers. c) Many buyers and one seller. d) Many buyers and many sellers. Ans: C 2. A monopsony market is one with a) One buyer and one seller. b) One buyer and many sellers. c) Many buyers and one seller. d) Many buyers and many sellers. Ans: B 3. For a monopolist a) Selling price is greater than marginal revenue. b) Selling price is equal to marginal revenue. c) Selling price is less than marginal revenue. d) Selling price may be above or below marginal revenue; it depends on the price buyers are willing to pay. Ans: A 4. For a monopolist a) Selling price is greater than average revenue. b) Selling price is equal to average revenue. c) Selling price is less than average revenue. d) Selling price may be above or below average revenue; it depends on the price buyers are willing to pay.

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Ans: B 5. Suppose demand for a monopolist’s product is given by 300 6 P Q = - while the monopolist’s marginal cost is given by 3 MC Q = . The profit-maximizing quantity of output for this monopolist is a) 33.33 b) 100 c) 50 d) 20 Ans: D 6. Suppose demand for a monopolist’s product is given by 300 6 P Q = - while the monopolist’s marginal cost is given by 3 MC Q = . The profit-maximizing price for this monopolist is a) 100 b) 180 c) 60 d) 150 Ans: B 7. For a linear demand curve, when the monopolist operates in the ________ region of the demand curve, it can increase total revenue by __________ price. a) Elastic; raising. b) Elastic; lowering. c) Inelastic; lowering. d) Unitary elastic; raising. Ans: B 8. The inverse elasticity pricing rule tells us the monopolist’s optimal mark-up of price over marginal cost. In general, a) The more price elastic the monopolist’s demand, the smaller the mark-up will be. b) The less price elastic the monopolist’s demand, the smaller the mark-up will be. c) Price equals marginal revenue for the monopolist.
Marginal revenue equals average revenue for the monopolist. Ans: A 9. Suppose a monopolist faces a demand curve 4 50 Q P - = and that the monopolist has a constant marginal cost of 75. The monopolist’s profit- maximizing price is a) 25 b) 50 c) 75 d) 100 Ans: D 10. A monopolist will produce where a) Demand is elastic. b) Demand is perfectly elastic. c) Demand is inelastic. d) Demand is perfectly inelastic. Ans: A 11. Suppose a monopolist has a marginal cost of \$25 and charges a price of \$40. The monopolist’s Lerner Index is a) 0.60 b) 0.625 c) 0.375 d) 1.60 Ans: C 12. If a monopolist’s marginal cost shifts upward, a) Total revenue will remain unchanged. b)

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final_ans_vrsn1 - Name Rutgers University Department of...

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