Download S 11 Practice MC Test

AP Microeconomics
Section 11 Online Practice Test
Multiple Choice
Identify the choice that best completes the statement or answers the question.
1.
Output
Total Cost
0
$10
1
60
2
80
3
110
4
170
5
245
Table: Total Cost and Output
The table describes Bart's perfectly competitive ice cream-producing firm. If the market price is
$67.50, how many units of output will the firm produce?
a. one
b. two
c. three
d. four
e. five
Figure 58-1: Marginal Revenue, Costs, and Profits
2.(Figure 58-1: Marginal Revenue, Costs, and Profits) In the figure, if market price increases to $20,
marginal revenue ________ and profit-maximizing output ________.
a. increases; increases
b. increases; decreases
c. decreases; increases
d. decreases; decreases
e. remains constant; remains constant
Quantity
of Apples
(bushels)
VC
0
$ 0
1
40
2
70
3
80
4
130
5
190
6
260
7
340
8
430
Table 58-2: Lilly's Apple Orchard
3. (Table 58-2: Lilly's Apple OrcharD. Lilly is the price-taking owner of an apple orchard; its variable
costs are given in the table. Her orchard has fixed costs of $30. If the price of a bushel of apples is
$25, how many bushels will Lilly produce to maximize profit?
a. 0
b. 1
c. 2
d. 3
e. 4
Quantity
of Lots
Variable Costs
0
$0
10
200
20
300
30
500
40
750
50
1,100
Table 59-1: Variable Costs for Lots
4. (Table 59-1: Variable Costs for Lots) During the winter, Alexa runs a snow-clearing service, and
snow-clearing is a perfectly competitive industry. Her only fixed cost is $1,000 for a tractor. Her
variable costs per cleared lot, shown in the table, include fuel and hot coffee. What is Alexa's shutdown price in the short run?
a. $0
b. $15
c. $50
d. $42
e. $20
Figure 59-2: Prices, Cost Curves, and Profits
5. (Figure 59-2: Cost Curves and Profits) In the figure, if the market price is $18 @P2, this firm will:
a. minimize its losses by shutting down.
b. minimize its losses by continuing to produce.
c. break even.
d. earn an economic profit.
e. exit the market in the long run.
6.
In the figure, total cost at the profit-maximizing quantity of bushels is $________.
a. 3.50
b. 14
c. 56
d. 72
e. 4
7.
The figure shows cost curves for a firm operating in a perfectly competitive market. If the market
price is P4:
a. firms will leave the industry and the price will fall in the long run.
b. there will be economic profits and firms will enter the industry in the long run.
c. the market supply curve will shift to the left and price will fall in the long run.
d. the firm will produce q4.
e. the price will rise in the long run as economic profits fall to zero.
8. Economic profits in a perfectly competitive industry induce ________, and losses induce ________.
a. exit; entry
b. entry; entry
c. entry; exit
d. exit; exit
e. entry; shutdown
9. Suppose that the market for haircuts in a community is a perfectly competitive constant-cost industry
and that the market is initially in long-run equilibrium. Subsequently, an increase in population
increases the demand for haircuts. In the long run, we expect that:
a. more firms will enter the market, driving the price of haircuts up and the profits of
individual firms back down to zero.
b. more firms will enter the market, driving the price of haircuts down and the profits of
individual firms back down to zero.
c. firms will leave the market, driving the price of haircuts up and the profits of individual
firms up.
d. firms will leave the market, driving the price of haircuts up and the profits of individual
firms back down to zero.
e. more firms will enter the market, driving the price of haircuts down and the profits of
individual firms up.
10.
Quantity
of Appels
(bushels)
VC
0
$ 0
1
40
2
70
3
80
4
130
5
190
6
260
7
340
8
430
Table: Lilly's Apple Orchard
Lilly is the price-taking owner of an apple orchard; its variable costs are given in the table. Her
orchard has fixed costs of $30. If the price of a bushel of apples is $85, we would expect total
industry output to:
a. rise, and Lilly's output will rise in the long run.
b. fall, and Lilly's output will fall in the long run.
c. fall, while Lilly's output will rise in the long run.
d. rise, while Lilly's output will fall in the long run.
e. rise, while Lilly's output will remain unchanged in the long run.
11. Compared to perfect competition:
a. monopoly produces more at a lower price.
b. monopoly produces where MR > MC, and a perfectly competitively firm produces where
P = MC.
c. monopoly may have economic profits in the long run, but in perfect competition economic
profits are zero in the long run.
d. perfect competition may have economic profits in the long run, but in monopoly economic
profits are zero in the long run.
e. monopoly produces where MR = MC, and a perfectly competitively firm produces where
P = MR > MC.
12. The ability of a monopolist to raise the price of a product above the competitive level by reducing the
output is known as:
a. product differentiation.
b. barrier to entry.
c. economies of scale.
d. patents and copyrights.
e. market power.
Figure 61-1: Profit-Maximizing Output and Price
13. (Figure 61-1: Profit-Maximizing Output and Price) Assume there are no fixed costs and AC = MC. In
the figure, at the profit-maximizing quantity of production for the monopolist, total revenue is
________, total cost is ________, and profit is ________.
a. $600; $200; $400
b. $1,600; $3,200; $1,600
c. $4,800; $3,200; $1,600
d. $4,800; $1,600; $3,200
e. $1,600; $800; $800
Figure 61-6: Short-Run Monopoly
14. (Figure 61-6: Short-Run Monopoly) The profit-maximizing output rule is satisfied by the intersection
at point:
a. G.
b. H.
c. J.
d. L.
e. I.
15.
The graph shows a monopoly firm that sells gadgets. If the firm is regulated such that the firm earns
zero economic profit, the firm will sell ________ units at a price of ________ per unit.
a. Q1; P1
b. Q2; P1
c. Q4; P3
d. Q3; P2
e. Q3; P3
Figure 62-1: Demand, Revenue, and Cost Curves
16. (Figure 62-1: Demand, Revenue, and Cost Curves) The figure shows the demand, marginal revenue,
marginal cost, and average total cost curves for Figglenuts-R-Us, a monopolist in the figglenut
market. Figglenuts-R-Us will sell ________ figglenuts and set a price of ________ to maximize
profits.
a. 70; $65
b. 100; $50
c. 120; $40
d. 150; $46
e. 70; $30
17. Suppose a perfectly competitive market is suddenly transformed into one that operates as a monopoly
market. We would expect:
a. price to rise, output to fall, consumer surplus to rise, producer surplus to rise, and
deadweight loss to fall.
b. price to rise, output to fall, consumer surplus to fall, producer surplus to fall, and
deadweight loss to rise.
c. price to rise, output to fall, consumer surplus to fall, producer surplus to fall, and
deadweight loss to fall.
d. price to fall, output to rise, consumer surplus to rise, producer surplus to fall, and
deadweight loss to fall.
e. price to rise, output to fall, consumer surplus to fall, producer surplus to rise, and
deadweight loss to rise.
18. Price discrimination leads to a ________ price in the market with a ________ demand.
a. higher; less elastic
b. higher; more elastic
c. higher; perfectly elastic
d. lower; less elastic
e. lower; perfectly inelastic
19. The main reason a monopoly engages in price discrimination is that:
a. it wants to discriminate against a particular ethnic group.
b. doing so creates a favorable public opinion toward the firm.
c. it wants to discourage potential competitors.
d. by charging a lower price to some people, it may succeed in discouraging efforts to
regulate it.
e. doing so increases its profits.
20.
Quantity
of Hats
Price
Demanded
per Hat
0
$30
1
28
2
26
3
24
4
22
5
20
6
18
7
16
8
14
Table: Prices and Demands
Prof. Dumbler has a monopoly on magic hats. He sells at most one hat to each customer, and the table
shows each customer's willingness to pay. The marginal cost of producing a hat is $18. Suppose
Dumbler can perfectly price discriminate. How many hats will he produce?
a. three
b. four
c. five
d. six
e. Seven