Download S11 Practice Test Multiple Choice Identify the choice that best

S11 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
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
2. (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
3. (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 shut-down price in the short run?
a. $0
b. $15
c. $50
d. $42
e. $20
Figure 59-2: Prices, Cost Curves, and Profits
4. (Figure 59-2: Cost Curves and Profits) In the figure, if the market price is $18, 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.
5.
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.
6. 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.
7. 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 61-6: Short-Run Monopoly
8. (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.
9.
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
10.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.
11. 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
12. 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.