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Micro Final Practice (Exam 3 Questions)
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Questions in this quiz (35)
1Assume a certain firm is producing Q = 1,000 units of output. At Q = 1,000, the firm's marginal cost equals $20 and its average total cost equals $25. The firm sells its output for $30 per unit.
At Q = 999, the firm's profits equal...- A$5,000.
- B$5,030.
- C$4,990.
- D$5,020
2Monopolistic competition is an inefficient market structure because...
- Ait has a deadweight loss, just as monopoly does.
- Blong-run profits are zero due to free entry.
- Cmarginal revenue equals marginal cost.
- DAll the answers are correct.
3A monopoly can earn positive profits because it...
- Acan set the price it charges for its output but faces a horizontal demand curve.
- Bcan sell unlimited quantities at any price it chooses.
- Ccan maintain a price such that total revenue will exceed total costs.
- Dtakes the market price as given and can sell unlimited quantities.
4The fundamental source of monopoly power is...
- Adecreasing average total cost.
- Bprofit.
- Ca product without close substitutes.
- Dbarriers to entry.
5Roger owns a small health store that sells vitamins in a perfectly competitive market. If vitamins sell for $12 per bottle and the average total cost per bottle is $11.50 at the profit-maximizing output level, then in the long run...
- Athe equilibrium price per bottle will rise.
- Baverage total costs will rise.
- Cmore firms will enter the market.
- Dsome firms will exit from the market.
6The average-fixed-cost curve...
- Ais constant.
- Bintersects marginal cost at the minimum of average fixed cost.
- Cis always decreasing.
- Dintersects marginal cost at the minimum of marginal cost.
7If a firm in a competition market doubles it number of units sold, total revenue for the firm will///
- Adouble.
- Bmay increase or decrease depending on the price elasticity of demand.
- Cincrease but by less than double.
- Dmore than double.
8What is the marginal cost of the 5th unit?
- A$68
- B$80
- C$55
- D$60
9Suppose that the organic-produce industry is composed of a large number of small firms. In recent years, these firms have suffered economic losses, and many sellers have left the industry. Economic theory suggests that these conditions will. ..
- Acause the remaining firms to collude so that they can produce more efficiently.
- Bcause the market supply to decline and the price of organic produce to rise.
- Ccause firms in the organic-produce industry to suffer long-run economic losses.
- Dshift the demand curve outward so that price will rise to the level of production cost.
10Suppose that a firm in a competitive market has the following cost curves (see picture)
If the market price is $4.00, the firm will earn...
- Azero economic profits in the short run.
- Bnegative economic profits and shut down.
- Cnegative economic profits in the short run but remain in business.
- Dpositive economic profits in the short run.
11What is the marginal revenue for the monopolist for the sixth unit sold?
- A$11
- B$5
- C$3
- D$17
12Which of the following statements is correct?
- AFirms with some degree of monopoly power are common, but firms with substantial monopoly power are rare.
- BFirms with some degree of monopoly power are rare, as are firms with substantial monopoly power.
- CFirms with some degree of monopoly power are rare, but firms with substantial monopoly power are common.
- DFirms with some degree of monopoly power are common, as are firms with substantial monopoly power.
13Which of the following is NOT a reason for the existence of a monopoly?
- Apatents
- Bdiseconomies of scale
- Ccopyrights
- Dsole ownership of a key resource
14A monopolist maximizes profits by...
- AA) producing an output level where marginal revenue equals marginal cost.
- BB) charging a price equal to marginal revenue and marginal cost.
- CC) charging a price where marginal cost equals average total cost.
- DBoth A and B are correct.
15Suppose a profit-maximizing firm in a competitive market produces rubber banks. When the market price for rubber bands rises above the minimum of its average variable cost, but still lies below the minimum of average total cost, in the short run the firm will...
- Araise the price of its product.
- Bearn both economic and accounting profits.
- Cshut down.
- Dexperience losses but will continue to produce rubber bands.
16Sonia opened a yoga studio where she teaches classes and sells yoga clothing. Fixed costs for Sonia's yoga studio include the cost of the...
(i) Tank tops
(ii) Wages paid to the other yoga instructors.
(iii) Lease on the studio space.
(iv) Insurance that the landlord requires Sonia to carry for the studio.- A(i) and (ii) only
- B(i) only
- C(iii) and (iv) only
- D(i), (ii), (iii), and (iv)
17One way in which monopolistic competition differs from oligopoly is that...
- Ain oligopoly markets there are only a few sellers.
- Ball firms in an oligopoly eventually earn zero economic profits.
- Cthere are no barriers to entry in oligopolies.
- Dstrategic interactions between firms are rate in oligopolies.
18The Wacky Widget company has total fixed costs of $100,000 per year. The firm's average variable cost is $10 for 10,000 widgets. At that level of output, the firm's average total costs equal...
- A$25
- B$10
- C$20
- D$15
19A typical firm in the US economy would be classified as...
- Aa duopolist.
- Bimperfectly competitive.
- Can oligopolist.
- Dperfectly competitive.
20Suppose that a firm's long-run average total costs of producing small commuter jet airplanes increases as it produces between 2,000 and 4,000 airplanes. For this range of output, the firm is experiencing...
- Aconstant returns to scale.
- Bdiseconomies of scale.
- Cspecialization.
- Deconomies of scale.
21McDonald's restaurants has recently announced intentions to open a new restaurant in Smalltown, Indiana. Assume that the fast-food restaurant market in Smalltown is characterized by monopolistic competition.
As a result of the new McDonald's, residents of Smalltown are likely to benefit from...- AA) a product-variety externality.
- BB) a business stealing externality.
- CC) the fact that McDonald's will increase its production to achieve the efficient scale.
- DBoth B and C are correct.
22Which of the following statements is NOT correct?
- AMonopolistic competition is similar to perfect competition because both market structures are characterized by free entry.
- BMonopolistic competition is similar to perfect competition because both market structures are characterized by many sellers.
- CMonopolistic competition is similar to oligopoly because both market structures are characterized by barriers to entry.
- DMonopolistic competition is similar to monopoly because in each market structure the firm can charge a price above marginal costs.
23The story of the prisoners' dilemma shows why...
- Aoligopolies can fail to cooperate, even when cooperation is in their best interest.
- Bpredatory pricing is clearly not in society's best interest.
- Coligopolies can fail to act independently, even when independent decision-making is in their best interest.
- Deconomists are unanimous in condemning resale price maintenance, since it inevitably reduces competition.
24The prisoner's dilemma game...
- Ais a game in which neither player has a dominant strategy.
- Bprovides insight into why cooperation is individually rational.
- Cis a game in which exactly one of the two players has a dominant strategy.
- Dprovides insight into why cooperation is difficult.
25Tom's Tent Company has total fixed costs of $300,000 per year. The firm's average variable cost is $80 for 10,000 tents. At that level of output, the firm's average total costs equal. ..
- A$90
- B$110
- C$100
- D$80
26Teacher's Helper is a small company that has a subcontract to produce instructional materials for disabled children in public school districts. The owner rents several small rooms in an office building in the suburbs for $600 a month and has a leased computer equipment that costs $480 a month.
What is the marginal cost of creating the tenth instructional module in a given month?
- A$1,250
- B$2,500
- C$3,060
- D$900
27As the number of firms in a oligopoly market...
- Adecreases, the price charged by firms likely decreases.
- Bdecreases, the market approaches the competitive market outcome.
- Cincreases, the market approaches the competitive market outcome.
- Dincreases, the market approaches the monopoly outcome.
28If the monopoly firm is not allowed to price discriminate, then consumer surplus amounts to...
- A$0
- B$1,562.50
- C$6,250
- D$3,125
29In the transition from the short run to the long run, the number of firms in a competitive industry is...
- Aable to adjust to market conditions.
- Bdecreasing.
- Cfixed.
- Dincreasing at a constant rate.
30The intersection of a firm's marginal revenue and marginal cost curves determines the level of output at which...
- Atotal revenue is equal to variable cost.
- Btotal revenue is equal to total cost.
- Cprofit is maximized.
- Dtotal revenue is equal to fixed cost.
31A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $30, its average revenue is $60, and its average revenue is $60, and its average total costs is $34.
At Q = 500, the firm's marginal cost is...- A$34
- Bgreater than $34
- Cless than $30
- D$30
32What is the average total cost of producing 2 units of output?
- A$24
- B$48
- C$15
- D$19
33Which of the figures represents the marginal cost curve for a typical firm?
- AFigure 1
- BFigure 2
- CFigure 3
- DFigure 4
34The amount of money that a wheat farmer could have earned if he had planted barely instead of wheat is...
- AAn accounting cost.
- Ban explicit cost.
- Cforgone accounting profit.
- Dan implicit cost.
35To maximize total surplus, a benevolent social planner would choose which of the following outcomes?
- AQ = 30 and P = 30
- BQ = 30 and P = 60
- CQ = 60 and P = 30
- DQ = 45 and P = 45
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- Description
- Practice for the final in micro. includes only questions from exam 3.
- Author
- tran.melissa2015
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- English
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- History
- Created on 10 Dec 2015 · updated on 10 Dec 2016
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