Assignment
Question 1
The marginal cost curve above the minimum average variable cost
is the firm's short-run supply curve.
is equal to the firm's marginal revenue curve.
covers the area where a firm should shut down.
indicates points where the firm will realize an economic profit.
Question 2
A monopolist will have a marginal revenue curve that is
above the marginal cost curve.
below the demand curve.
identical to the marginal cost curve.
identical to the demand curve.
Question 3
If, in the short run, a perfectly competitive firm is producing at a point where total cost is greater than total revenue, then the firm should
set a lower price for its output.
set a higher price for its output.
continue to produce because accounting profits are positive.
continue to produce as long as P > AVC.
shut down because economic profits are negative.
Question 4
A firm in a monopolistically competitive industry faces a downward-sloping demand curve because
barriers to entry are high.
nonprice competition is missing.
the product is differentiated.
the product is homogeneous.
Question 5
Which of the following is NOT an essential characteristic of monopolistic competition?
a very elastic demand curve
short-run profits
relatively easy entry
differentiated products
a small number of sellers
Question 6
A competitive firm
has no supply curve.
must accept the price determined by the intersection of the market supply and demand curves.
has the ability to set its own price.
must base its competitive price on product differentiation.
can consider only its location in setting price.
Question 7
Along a downward-sloping monopoly demand curve,
marginal revenue is equal to zero when price is equal to zero.
marginal revenue decreases when price decreases.
elasticity of demand is constant.
marginal revenue is greater than price.
Question 8
Under which market structure do firms face the flattest (most elastic) demand curve?
perfect competition
monopolistic competition
oligopoly
monopoly
Question 9
Average revenue (AR)
does not appear in the model of perfect competition.
is greater than price when economic profits are present.
equals TR/Q.
occurs when MC = MR.
Question 10
When P = AR = MR = AC = MC,
normal profits are negative.
normal profits are zero.
economic profits are negative.
economic profits are zero.
economic profits are positive.