Practice Test IV

Practice Test IV - Practice Test IV Multiple Choice...

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Practice Test IV Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____ 1. A firm that is the sole seller of a product without close substitutes is a. perfectly competitive. b. monopolistically competitive. c. an oligopolist d. a monopolist Figure 15-2 The figure below illustrates the cost and revenue structure for a monopoly firm. ____ 2. Refer to Figure 15-2 . The marginal revenue curve for a monopoly firm is depicted by curve a. A. b. B. c. C. d. D. Figure 15-3 The figure below illustrates the cost and revenue structure for a monopoly firm.
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____ 3. Refer to Figure 15-3 . A profit-maximizing monopoly's total revenue is equal to a. P 3 Q 2 . b. P 2 Q 4 . c. (P 3 - P 0 ) Q 2 . d. (P 3 - P 0 ) Q 4 . ____ 4. Due to the nature of the patent laws on pharmaceuticals, the market for such drugs a. always remains a competitive market. b. always remains a monopolistic market. c. switches from competitive to monopolistic once the firm's patent runs out. d. switches from monopolistic to competitive once the firm's patent runs out. ____ 5. As a monopolist increases the quantity of output it sells, the price consumers are willing to pay for the good a. is unaffected. b. decreases. c. increases. d. There is not enough information given in answer the question. ____ 6. A monopolist faces the following demand curve: Price Quantity Demanded $10 5 $9 10
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$8 16 $7 23 $6 31 $5 45 $4 52 $3 60 The monopolist has total fixed costs of $40 and a constant marginal cost of $5. At the profit-maximizing level of output, the monopolist's average total cost is a. $9.00 b. $7.50 c. $6.74 d. $5.82 ____ 7. After the patent runs out on a brand name drug, generic drugs, which have the same effect as the branded drug, enter the market. Because of this a. the price increases and total surplus decreases. b. the price decreases and total surplus decreases. c. the price decreases and total surplus increases. d. the price increases and total surplus increases. Table 15-4 Consider the following demand and cost information for a monopoly. Quantity Price Total Cost 0 $30 $3 1 $25 $7 2 $20 $12 3 $15 $18 4 $10 $25 ____ 8. Refer to Table 15-4 . The marginal revenue of the second unit is a. $10 b. $15 c. $20
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d. $25 ____ 9. The economic inefficiency of a monopolist can be measured by the a. number of consumers who are unable to purchase the product because of its high price. b. excess profit generated by monopoly firms. c. poor quality of service offered by monopoly firms. d. deadweight loss. ____ 10. Monopoly pricing prevents some mutually beneficial trades from taking place. These unrealized mutually be- neficial trades are a. of little concern to society. b.
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This note was uploaded on 05/01/2011 for the course ECON 2100 taught by Professor Darrinv.gulla during the Summer '08 term at Morehouse.

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Practice Test IV - Practice Test IV Multiple Choice...

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