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Question 1 A small island nation produces only boxes of macaroni and cheese, most of which it sells in the export market. The world price per box is...

Question 1
  1. A small island nation produces only boxes of macaroni and cheese, most of which it sells in the export market. The world price per box is $10, regardless of the quantity exported. The nation has three macaroni and cheese factories, each of which varies in efficiency and each has rising marginal costs. To profit the most as a country, what would this nation do?
           A. Produce only at the most efficient factory, but only if the marginal cost is well below $10.
           B. Produce only at the most efficient factory until the marginal cost is $10.
           C. Produce at each factory until the marginal cost rises to $10.
           D. Produce at each factory, but only as long as the marginal cost is well below $10.



Question 2
  1. Table: Three Firms
    Firm Quantity Produced
    Firm 1 100
    Firm 2 80
    Firm 3 50
       
    This table provides information on three firms in a competitive industry where the market price is $39; therefore, at these production levels:
           A. Firm 1's marginal cost exceeds Firm 3's marginal cost.
           B. the total cost of production is maximized by all three firms.
           C. Firm 2's marginal cost is $39.
           D. the marginal cost curves for all three firms are identical.


Question 3
  1. In a perfectly competitive market, each firm produces its last unit at:
           A. the same marginal cost.
           B. one of several marginal costs.
           C. a unique marginal cost.
           D. one of two marginal costs.



Question 4
  1. What happens in a competitive industry when more firms enter?
           A. Demand increases and the price rises, which in turn raises profits.
           B. Demand decreases and the price declines, which in turn lowers profits.
           C. Supply increases and the price rises, which in turn raises profits.
           D. Supply increases and the price declines, which in turn lowers profits.


Question 5
  1. Airlines price discriminate by offering both business-class and economy-class service on flights (it's not just the cost of the service that varies; the markup is higher on business class). If they wanted to ensure that everyone who could afford to travel business class did so, what might they do?
           A. lower the price of traveling economy class
           B. make the seats in economy class extra small and cramped, and serve terrible food
           C. make the seats in business class extra small and cramped, and serve terrible food
           D. hire more attractive flight attendants for all classes


Question 6
  1. A monopolist sells in two different markets and charges the same price of $10 in both markets. In Market A, the demand curve is described by Qd = 50 – 2P. In Market B, the demand curve is described by Qd = 60 – P. If the monopolist lowers prices by $1 in the market with the more elastic demand and raises prices by $1 in the market with the more inelastic demand curve, by how much does its total revenue change?

           A.

    $459

           B.

    $27

           C.

    $308

           D.

    $767


Question 7
  1. If P < AC in a given industry, then:
           A. the industry has the optimal amount of resources.
           B. there are too many resources in that industry.
           C. there are too few resources in that industry.
           D. it is not possible to determine whether the industry has the optimal amount of resources.


Question 8
  1. Natural monopolies:
           A. face market demand curves that are perfectly elastic.
           B. exist when one firm can produce the market output at a lower cost than two or more firms.
           C. generally experience large diseconomies of scale, leading to production inefficiencies and work stoppages.
           D. produce the optimal quantity of output, unlike other monopolies.




  


  





Top Answer

The way to approach this... View the full answer

6 comments
  • 9. Price discrimination is good if output: A. is no longer produced under price discrimination. B. stays the same under price discrimination. C. increases under price discrimination. D. falls under price discrimination.
    • davif987
    • Jul 19, 2016 at 9:41pm
  • Could you please answer this question, too?
    • davif987
    • Jul 19, 2016 at 9:41pm
  • And thank you so much for your help!
    • davif987
    • Jul 19, 2016 at 9:41pm
  • C. increases under price discrimination.
    • hinzai620
    • Jul 19, 2016 at 9:42pm
  • Thank you so much! :)
    • davif987
    • Jul 19, 2016 at 9:43pm
  • you're welcome :)
    • hinzai620
    • Jul 19, 2016 at 9:44pm

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Other Answers

4.  D. Supply increases and... View the full answer

7 comments
  • 5.B. make the seats in economy class extra small and cramped, and serve terrible food
    • sahdafsuvo7
    • Jul 19, 2016 at 9:38pm
  • 1. C. Produce at each factory until the marginal cost rises to $10.
    • sahdafsuvo7
    • Jul 19, 2016 at 9:39pm
  • 2.B. the total cost of production is maximized by all three firms.
    • sahdafsuvo7
    • Jul 19, 2016 at 9:39pm
  • 3. A. the same marginal cost.
    • sahdafsuvo7
    • Jul 19, 2016 at 9:40pm
  • 6. B. $27
    • sahdafsuvo7
    • Jul 19, 2016 at 9:41pm
  • 7.C. there are too few resources in that industry. (as average cost is very high)
    • sahdafsuvo7
    • Jul 19, 2016 at 9:41pm
  • 8.B. exist when one firm can produce the market output at a lower cost than two or more firms.
    • sahdafsuvo7
    • Jul 19, 2016 at 9:42pm

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