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Module 67 QuizMultiple ChoiceIdentify the choice that best completes the statement or answers the question.____1.In monopolistic competition:a.price leadership is an important factor in how prices are set.b.each firm produces an identical product to every other firm in the industry.c.firms are aware of their strategic interdependence.d.firms earn large economic profits in the long run.e.firms earn zero economic profits in the long run.____2.For the monopolistically competitive seafood market, the demand curve for any individual firm is ________, and there ________ producers of seafood.a.downward-sloping; are a fewb.upward-sloping; are manyc.vertical; are a fewd.downward-sloping; are manye.downward-sloping; one or two____3.Due to the existence of a large number of similar, but not identical, substitutes in most communities, the market for chiropractors is best considered:a.an oligopoly.b.perfect competition.c.monopolistic competition.d.a monopoly.e.an oligarchy.____4.Suppose a monopolistically competitive firm is producing the profit-maximizing level of output and is earning an economic profit in the short run. Then:a.price is less than average total costs.b.price is less than marginal cost.c.marginal revenue is greater than marginal cost.d.marginal revenue equals marginal cost.e.average total cost is at its minimum point.Figure 67-1: Monopolistic Competition I____5.(Figure 67-1: Monopolistic Competition I) Which of the panels in the figure shows a monopolistic competitor earning a loss in the short run?a.Panel ab.Panel bc.Panel cd.None of the panels show a loss in the short run.e.Both panels b and c.____6.(Figure 67-1: Monopolistic Competition I) Which of the panels in the figure shows a monopolistic competitor earning a profit in the short run?a.Panel ab.Panel bc.Panel cd.Both panels a and ce.None of the panels show a profit in the short run.____7.(Figure 67-1: Monopolistic Competition I) Which of the panels in the figure shows a monopolistic competitor producing where price is greater than marginal revenue?a.Panel ab.Panel bc.Panel cd.All of the panels show a monopolistic competitor producing where price is greater than marginal revenue.e.None of the panels show a monopolistic competitor producing where price is greater than marginal revenue.____8.(Figure 67-1: Monopolistic Competition I) Which of the panels in the figure shows a monopolistic competitor in long-run equilibrium?a.Panel ab.Panel bc.Panel cd.Panels a, b, and c.e.None of the panels show a monopolistic competitor producing in long-run equilibrium.Figure 67-2: Monopolistic Competition II____9.(Figure 67-2: Monopolistic Competition II) The accompanying figure shows the demand, marginal revenue, marginal cost, and average total cost curves for Pat's Pizza Parlor, a monopolistic competitor in the food-to-go industry. The optimal level of output for Pat's Pizza Parlor is ________ and the profit-maximizing price is ________.a.350; $3.50b.350; $7.00c.590; $5.60d.500; $5.50e.1,000; $0.50____10.(Figure 67-2: Monopolistic Competition II) The accompanying figure shows the demand, marginal revenue, marginal cost, and average total cost curves for Pat's Pizza Parlor, a monopolistic competitor in the food-to-go industry. When Pat's Pizza Parlor maximizes profit, profit will be approximately:a.$0.b.$350.c.$700.d.$900.e.$50.____11.(Figure 67-2: Monopolistic Competition II) The figure shows the demand, marginal revenue, marginal cost, and average total cost curves for Pat's Pizza Parlor, a monopolistic competitor in the food-to-go industry. In the long run, the demand curve facing Pat's Pizza Parlor will shift ________ as its competitors ________ the market.a.rightward; enterb.rightward; leavec.leftward; enterd.leftward; leavee.upward; enter____12.The monopolistic competitor in the figure is producing at the output level that maximizes profits (minimizes losses). The shaded rectangle depicts the level of:a.profit.b.loss.c.fixed cost.d.variable cost.e.total revenue.____13.The monopolistic competitor in the figure is producing at the output level that maximizes profits (minimizes losses). The shaded rectangle depicts the level of:a.profit.b.loss.c.fixed cost.d.variable cost.e.total cost.Figure 67-5: Profit Maximization in Monopolistic Competition____14.(Figure 67-5: Profit Maximization in Monopolistic Competition) In panel A, the profit-maximizing price and quantity are ________ and ________.a.S; Mb.P; Mc.P; Qd.T; Qe.S; Q____15.(Figure 67-5: Profit Maximization in Monopolistic Competition) In panel A, the firm in monopolistic competition may experience short-run economic profits as shown by:a.P - S.b.(P - S) times the quantity M.c.(P - S) times the quantity Q.d.(P*T) times the quantity Q.e.P*M.____16.(Figure 67-5: Profit Maximization in Monopolistic Competition) In panel B, the long-run equilibrium will result in:a.economic profits = 0.b.accounting profits = 0.c.a tangency of the ATC curve with the MR curve.d.a tangency of the MC curve with the demand curve.e.a level of output where ATC is minimized.____17.(Figure 67-5: Profit Maximization in Monopolistic Competition) In panel B, the profit-maximizing price is P2 and the ATC curve is tangent to the new demand curve. The portion of the ATC that lies to the right of the tangency and continues down to the intersection of MC with ATC indicates:a.that the firm is experiencing an economic loss.b.that the firm is earning an economic profit.c.overutilization.d.excess capacity.e.deadweight loss.____18.(Figure 67-5: Profit Maximization in Monopolistic Competition) If other firms see economic profits in the industry, they will enter it, and the demand curve for firms already in the industry will shift to the ________; in the long run, this will result in economic profit ________ and price ________.a.right; = 0; = ATCb.right; > 0; > ATCc.left; < 0; < ATCd.left; = 0; = ATCe.left; = 0; > ATC____19.(Figure 67-5: Profit Maximization in Monopolistic Competition) In monopolistic competition, long-run equilibrium is characterized by:a.P = ATC > MR = MC.b.P < MR.c.P = MR = MC = ATC.d.P = MR = MC.e.P > ATC = MR = MC.____20.(Figure 67-5: Profit Maximization in Monopolistic Competition). When the demand curve for a firm in monopolistic competition shifts, the marginal revenue curve:a.shifts in the same direction.b.shifts in the opposite direction.c.does not change in any way.d.does not shift, but gets steeper.e.shifts in the opposite direction and gets steeper. ................
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