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10 points  

QUESTION 2
  1. A monopolist produces and sells 400 units at

a price of $37 per unit. The monopolist's marginal cost is equal to $15 and average cost is equal to $23. The monopolist's profit is:


  • 10 points  

    QUESTION 3
    1. Which of the following is true of pure monopolies?
    2. Monopolies earn positive economic profits in the long run.

    3. Monopolies produce output that is greater than the competitive level.
    4. Monopolies produce products that have a negligible marginal cost but a high fixed cost.
    5. Monopolies reduce welfare by engaging in excessive product differentiation.
    6. Answers monopolies earn positive economic profits in the long run and monopolies reduce welfare by engaging in excessive product differentiation are both correct.

    10 points  

    QUESTION 4
    1. Industry demand is given by P = 200 - 1.2Q. The long-run industry costs are such that: LAC = LMC = $80. Based on this information, the number of units bought/sold under pure monopoly in the long run is ____.
    2. Hint: Write your answer to two decimal places.


    10 points  

    QUESTION 5
    1. The basic objective of a cartel is to:
    2. maximize profit for the largest, most influential members.
    3. increase the total consumer surplus in the market.
    4. produce the highest output level possible.
    5. secure monopoly profits for its members.
    6.  successfully practice price discrimination in the market.

    10 points  

    QUESTION 6
    1. A monopoly earns positive economic profits in the long run because:
    2. there are barriers to entry in the market.

    3.  demand in a monopoly market is perfectly inelastic.
    4. it faces a kinked demand curve.
    5. it operates with constant returns to scale.
    6. it operates with an optimal plant size.

    10 points  

    QUESTION 7
    1. Cartels are inherently unstable because individual members:

    2. face horizontal demand curves.
    3. tend to produce above their quotas.
    4. are culturally and politically heterogeneous.
    5. produce highly differentiated products.
    6. have a low elasticity of supply.

    10 points  

    QUESTION 8
    1. Which of the following is true of a profit-maximizing competitive firm in the short run?
    2. The firm produces at the point where price is equal to marginal cost.

    3. The firm produces at the point where average cost is at its minimum point.
    4. The demand curve faced by each firm in the industry is downward sloping.
    5. The firm always makes a zero economic profit.
    6. The firm suffers a deadweight loss.

    10 points  

    QUESTION 9
    1. Industry demand is given by P = 200 - 0.9Q. The long-run industry costs are such that: LAC = LMC = $80. Based on this information, the number of units bought/sold under perfect competition in the long run is ____.
    2. Hint: Write your answer to two decimal places.

    10 points  

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