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# ch15 - ch15 class name student ID Multiple Choice Identify...

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ch15 class name student ID Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. A concentration ratio a . measures the percentage of total output supplied by the four largest firms in the industry. b . reflects the level of competition in an industry. c . is related to the control that each firm has over price. d . All of the above are correct. ____ 2. Which of the following is an example of a monopolistically competitive industry? a . computer operating systems b . tennis balls c . movies d . cable television Table 16-1 Imagine a small town in which only two residents, Lisa and Mark, own wells that produce safe drinking wa- ter. Each week Lisa and Mark work together to decide how many gallons of water to pump. They bring the water to town and sell it at whatever price the market will bear. To keep things simple, suppose that Lisa and Mark can pump as much water as they want without cost so that the marginal cost of water equals zero. The weekly town demand schedule and total revenue schedule for water is shown in the table below: Quantity (in gallons) Price Total Revenue (and Total Profit) 0 \$120 \$0 100 110 11,000 200 100 20,000 300 90 27,000 400 80 32,000 500 70 35,000 600 60 36,000 700 50 35,000 800 40 32,000 900 30 27,000 1,000 20 20,000 1,100 10 11,000 1,200 0 0 ____ 3. Refer to Table 16-1. If Lisa and Mark operate as a profit-maximizing monopoly in the market for water, what price will they charge? a . \$20

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b . \$40 c . \$60 d . \$70 ____ 4. Refer to Table 16-1. If Lisa and Mark operate as a profit-maximizing monopoly in the market for water, how many gallons of water would be produced and sold? a
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ch15 - ch15 class name student ID Multiple Choice Identify...

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