micro econ test 3

micro econ test 3 - ECON 1100 NAME fvr"rfi*lcj , EXAM...

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VERSION A ECON 1100 EXAM 3, SPRING 2010 NAME fvr"rfi*lcj , Saror il)# ts&g (Print Last Name, First Name) INSTRUCTIONS: Select,the Desl response to each item and bubble in the corresponding letter on your answer sheet. Each correct response is worth 3.75 points out of 150 possible points. "(l A monopoly: @ produces a product for which there are no close substitutes. \ is characterizedby free entry and exit. \. is characterizedby a perfectly elastic marginal revenue curve. q is characterizedby all of the above. \ Which of the following is not an example of a barrier to entry? \ Patents and copyrights b Government franchises and licenses c. Sole ownership ofkey resources @ The ability to produce a produce at a unit cost that is lower than price o i, 3t Due to the existence of barriers to entry, a _ can earn in the long run (assuming no change in cost conditions or market demand). a; monopolist; a normal profit s) monopolist; positive economic profits c. firm in a perfectly competitive industry; a normal profit d. firm in a perfectly competitive industry; positive economic profits * (4, For all firms, profits are maximized and losses are minimized in the short run at the level of output where: a. total revenue is equal to total cost. b. marginal revenue equals marginal cost so long as price exceeds AVC. O -atgioul revenue equals marginal cost so long as pri"" "*". .ds ATC. d. total revenue is maximized. t5.) The demand curve for a monopoly firm is: a- perfectly elastic. b. below the marginal revenue clrrve. 9., perfectly inelastic at the output where MR:MC. ($ the same as the industry, or market, demand curve for its product. t \ For a single-price monopoly, marginal revenue is less than price for each unit of output because H the firm: Y a. may experience short-run economic losses. \. faces substantial marketing competition from other firms in the industry. Gl must lower price on all units to sell a higher level of output. d. sells all of its output at the price that is equal to marginal cost.
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ECON 1100 EXAM 3, SPRING 2010 Refer to the graph below to answer the next two questions. P2 Pl Pg OG All \ \ \. s The a. b. 0 d. a. b. c. @ \ of the following statements regarding the firm depicted in the graph above are true except: the profit-maximizing output is Qo and the profit-maximizing price is P3. this firm is earning a short-run economic profit. total revenue at the profit-maximizing level of output is the area OP3Fee total fixed cost is the area OPz CQo. deadweight loss created by this monopoly is the area: 0P6AQ6. AFG. AFE. AEG. \ Price discrimination is related to elasticity because the firm can increase revenues: by charging all customers higher prices. by chargrng all customers lower prices.
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micro econ test 3 - ECON 1100 NAME fvr"rfi*lcj , EXAM...

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