202PS12 - Problem Set 12 Econ 202 (03, 04, and 05) Spring...

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Problem Set 12 Econ 202 (03, 04, and 05) Spring 2003 (Dr. Tin-Chun Lin) 1. Which of the following is a difference between a monopolist and a firm in perfect competition? For the monopolist: (A) The marginal revenue curve is downward-sloping. (B) Marginal revenue equals price. (C) Economic profits are zero in the long run. (D) The marginal revenue curve lies above the demand curve. (Answer: (A)) 2. At the point where the marginal revenue equals zero for a monopolist facing a downward- sloping straight-line demand curve, total revenue is: (A) Greater than 1. (B) At a maximum. (C) Less than 1. (D) Equal to zero. (Answer: (B)) 3. Both a perfectly competitive firm and a monopolist: (A) Always earn an economic profit. (B) Maximize profit by setting marginal cost equal to marginal revenue. (C) Maximize profit by setting marginal cost equal to average total cost. (D) Are price takers. (Answer: (B)) 4. What would a profit maximizing do if she is currently producing where MC < MR? (A) Increase output until MC = MR.
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202PS12 - Problem Set 12 Econ 202 (03, 04, and 05) Spring...

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