Test3_practicequestions(1)

44 45 apply to the below diagram g 0121345646450

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Unformatted text preview: C) slope of the demand curve. D) shape of the marginal cost curve. 42). If the demand for a firmʹs output is perfectly elastic, then the firm’s Lerner Index equals A) zero. B) one. C) infinity. D) one-half. #$!! &'!()*+'!,-./0'!1&*21!3&'!4'5(64!(64!7*13!7/0+'1!,(7-6.!(!5*6*8*9:;!<,!(!=!>>!8'0!/6-3! % 43) !A!7&(0.'4@!3&'!9*11!-6!2'9,(0'!0'1/93-6.!,0*5f3&'!3(?!-1each unit produced. If the price 3(? -1 monopoly incurs a marginal cost o ! $1 for ! demand equals -2.0, the monopoly maximizes profit by charging a price of A$!! B#>;! = A) C$1.00. ! $ !!=D!B;#>; B) E$1.50. ! $ !!=!@B#>; C) F$2.00. $ !!=!@#GB;#>;! A612'0H!!! ! C D) $3.00. !-**(%./!"*!+!0"1"#")2! !"#$%&!!! ()*+,( ' 34(/.$"1!5.+.4/&!!! ,(7$"4/!-8$.$"1! 6 Questions 44 - 45 apply to the below diagram: ! ! G$!! &'!()*+'!,-./0'!1&*21!3&'!4'5(64!(64!5(0.-6(9!7*13!7/0+'1!,*0!(!5*6*8*9:;!%&'! % 4'(42'-.&3!9*11!*,!3&-1!5*6*8*9:!'I/(91! A$!! ;! & C$!! ;! 7 E$!! !!!,;! 7 F$!! !!!4!!!'!!!,;! 7 A612'0H!!! ! E elasticity of 44. The above figure shows the demand and marginal cost curves for a monopoly. The deadweight loss of this monopoly equals A ) h. B ) c. C ) c + f. D ) c + d + e + f. 45. The above figure shows the demand and marginal cost curves for a monopoly. Under monopoly, consumer surplus equals A ) a + b. B ) a + b + c. C ) a + b + c + d + e + f. D) None of the above. 46. If the inverse demand curve a monopoly faces is p = 100 - 2Q, and MC is constant at 16, then the deadweight loss from monopoly equals A) $21. B) $441. C) $882. D) $1,764. 47. Which of the following total cost functions suggests the presence of a natural monopoly? A ) TC = 2Q B) TC = 100 + 2Q C) TC = 100 + 2Q2 D) All of the above. 48. A justification for patents is that without patents consumer surplus would be A) larger than with the patent. B) zero since the product would not be invented. C) only slightly smaller than with the patent. D) zero since the monopoly would be a revenue maximizer. 49. If the government attempts to force a natural monopoly to charge a price equal to marginal cost A) the natural monopoly will shut down. B) the natural monopoly will still make high profits. C) the natural monopoly’s marginal cost curve will shift up. D) total welfare is maximized. 50. The situation in which a person places greater value on a good as fewer and fewer people possess it is called A) Bandwagon Effect. B) Greater Value Effect. C) Snob Effect. D) Behavioral Effect. 51. The use of “introductory prices” suggests A) firms engaged in multi-period decision making. B) firms engaged in price gouging. C) firms engaged in anti-competitive behavior. D) firms engaged in single-period decision making. 52. Which of the following conditions must be true so that a firm can price discriminate? A) There are no other firms in the market. B) The good is a non-durable. "#!! !%&&'!()*+,-(!&.!,(/.(01!,/20...
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