Question 1 Assume that the cost of producing T-shirts is given by TC=100 + 3q+q2 . Which of the following is true at all levels of production? Answer MC≤AFC MC=ATC MC≥AVC AFC is constant. None of the above are true. 1 points
Question 2 Assume that the cost of producing T-shirts is given by TC=30 + 2q. The average total cost of producing when producing 6 shirts is equal to: Answer 2. 7. 12. 36. 42. 1 points
Question 3 In the short run, for a single firm in perfect competition, the point at which diminishing marginal returns begins is the point at which the marginal cost curve: Answer Is highest. Is a minimum. Is upward sloping. Is downward sloping. None of the above as diminishing marginal returns refers to marginal physical product. 1 points
Question 4 Assume that a competitive firm maximises short run profits by producing a positive quantity of output. Which of the following is true at that level of output: Answer p=MC MR=MC p≥AVC Both a and b are correct a, b, c are all correct
Question 5 Consider the cost curves for a competitive firm in the diagram below. At which of the following prices will the firm produce in the short run but shut down in the long run? Answer $0. $4. $8. $10. $11. 1 points
Question 6 A competitive industry currently consists of N= 20 identical firms. An individual firm’s total cost function is given by TC = 0.5q2 + 200. Market demand is given by Q = 4000-5P. In the short run, how much will each firm produce in the equilibrium? Answer q = 160 q = 200 q ~ 666 q = 3200 None of the above 1 points
Question 7 A competitive industry currently consists of N= 20 identical firms. An individual firm’s total cost function is given by TC = 0.5q2 + 200. Market demand is given by Q = 4000-5P. In the long run, how much will each firm produce in equilibrium? Answer q = 0 q =8 q = 20 q = 200 None of the above 1 points
Question 8 Consider a competitive where each firm’s total cost function is given by TC = 0.5q2 + 200. Market demand is given by Q = 4000-5P. In the long run, consumer surplus will be equal to: Answer 64,000 800,000 1,521,000 None of the above. Additional information on the number of firms is needed to answer this question. 1 points
Question 9 A competitive industry currently consists of N= 50 identical firms. An individual firm’s total cost function is given by TC = 0.5q2 + 200. Market demand is given by Q = 4000-5P. Which of the following is true? Answer The firm will shut down in the short run and exit the market in the long run. The firm will shut down in the short run, but stay in the market in the long run. The firm will produce a positive amount in the short run and increase production in the long run. The firm will produce a positive amount in the short run and decrease production in the long run. There is not enough information to answer this question. 1 points
Question 10 At present, a typical firm in a perfectly competitive market has the following total cost function: TC = 100+q2 . If the industry exhibits external economies in the long the industry supply curve: Answer Will slope upwards. Will slope downwards. Will be perfectly elastic. Will be perfectly inelastic. There is not enough information to answer this question. 1 points
Question 11 Consider a single price monopolist that has the demand curve and cost curves indicated in the following diagram. The monopolist maximises total profit by selling _____ units at a price of _____: Answer 100; 50 75; 50 50; 75 50; 100 None of the above 1 points
Question 12 A monopolist faces a demand curve given by Q=120-3p and has constant marginal (and average cost) of 10. The monopolist maximises profit by setting price equal to: Answer 10 25 32.5 45 None of the above Question 13 Consider a single price monopolist that has the demand curve and cost curves indicated in the following diagram. What is consumer surplus at the monopoly output? Answer 150 300 1,200 5,000 None of the above 1 points
Question 14 Consider a single price monopolist that has the demand curve and cost curves indicated in the following diagram. If a per unit tax of $40 is imposed on the monopolist, equilibrium price will increase by: Answer 0 10 20 40 None of the above 1 points
Question 15 Assume the demand curve is linear. Further average and marginal cost is constant and positive. Under first degree price discrimination if a monopolist is producing a positive level of output which of the following statements is true? Answer The firm chooses a level of output where marginal revenue is equal to marginal cost. Consumer surplus is equal to zero. Price is equal to marginal revenue for every unit sold. There is no deadweight loss compared to the competitive situation. All of the statements a, b, c and d are true. 1 points
Question 16 Assume that individuals are homogeneous and that each has a demand curve of the following form for bottles of wine: p=100-5q where p is price bottle and q is bottle per month. Assume the firm has a constant marginal cost of $10. Assume that a new firm called the Wine Club is offering individuals a special membership package. The profit maximising two-part tariff results in the Wine Club selling ______ bottles and receiving total revenue of ________ from each consumer: Answer 9: 180 10: 180 18: 990 10: 990 18: 810 [Hint: Profit will be maximised when price is set equal to MC, so 18 units are sold, and all consumer surplus is extracted using the fixed fee. Total revenue is equal to 810 (the fixed fee) plus the revenue from sales of 18*10=180] 1 points
Question 17 Consider the market for movies in which there are two types of consumers (students and non-students) with demand curves given by the following: Student: q=40-2p Non students: q=40-p If the marginal cost (and average cost) of movies is constant and equal to 10, then third degree price discriminating monopolist would sell movies to students at a price of _____ and non-students at a price of _____. Answer $10; $10 $15; $25 $20; $10 $20; $25 None of the above 1 points
Question 18 Consider the valuation placed on two movies (Spring Breakers and The Great Gatsby) by two Theatres located in Newtown and Miranda. Each theatre chooses the movie that maximises its consumer surplus, or in the event it buys a bundle, purchases it only if the bundle provides positive surplus: If the film distributor is a monopolist and has zero marginal and average cost for distributing the movies, which of the following strategies will maximise profits? Answer Charge $12,000 for Spring Breakers and $6,000 for The Great Gatsby Charge $15,000 for Spring Breakers and $8,000 for The Great Gatsby Charge $12,000 for Spring Breakers and $6,000 for The Great Gatsby Bundle the films and sell them together at a price of $20,000 Bundle the films and sell them together at a price of $21,000 Please check the question above as I have changed the wording and numbers 1 points
Question 19 Which of the following statements is true? Answer In perfect competition and monopolistic competition price is equal to marginal revenue. In perfect competition and monopolistic competition firms maximise profit by choosing a point where marginal revenue is equal to marginal cost. In perfect competition and monopolistic competition firms earn zero economic profit in the short run. a and b are correct. a, b and c are all correct. 1 points
Question 20 In the long run a monopolistically competitive firm: Answer Earns positive economic profit. Chooses output where price equals average cost. Has marginal revenue equal to price . Face a perfectly elastic demand curve because they earn zero economic profit. c and d are both correct.