Questions:
Question 1.Along a downward-sloping monopoly demand curve,
marginal revenue is greater than price.
elasticity of demand is constant.
marginal revenue decreases when price decreases.
marginal revenue is equal to zero when price is equal to zero.
Question 2.When P = AR = MR = AC = MC,
economic profits are positive.
economic profits are zero.
economic profits are negative.
normal profits are zero.
normal profits are negative.
Question 3.Anna Lopez sells timber in a perfectly competitive market. Incomes increase, and many people buy new homes; the market demand curve shifts to the right. In the short run, she should expect
the price of timber to remain unchanged.
profits to fall.
the price of timber to rise.
firms to leave the timber business.
Question 4.If a monopoly firm is selling its seventy-fifth unit of output at a price of $30, then in order for the firm to sell 80 units of output, it is likely that average revenue would have to be
$30.
greater than $30.
equal to marginal revenue.
less than $30.
equal to marginal cost.
Question 5.If a monopoly firm observes an increase in total revenue following a price increase, which of the following must be true?
MR > 0
MR < 0
MR = 0
MR = TR
Question 6.All but which one of the following are characteristics of monopolistic competition?
a large number of sellers
a homogeneous product
easy entry
a large number of close substitutes
easy exit
Question 7.A monopolist faces
a perfectly elastic demand curve.
a portion of the market demand curve.
an upward-sloping demand curve.
no demand curve, because demand is not important to the monopolist.
the market demand curve.
Question 8.Under which market structure do firms face the flattest (most elastic) demand curve?
perfect competition
monopolistic competition
oligopoly
monopoly
Question 9.A monopoly is
a single seller of a product with many close substitutes.
a single seller of a product with no close substitutes.
a single buyer of a product.
a common industry structure.
a market structure with a single seller and a single buyer.
Question 10.Monopolistic competition and oligopoly are examples of
monopoly.
perfect competition.
theories of consumer behavior.
imperfect competition.
the extreme cases on the market structure continuum.