Economics L0L3 November’28, 2008 ffi entry characterize markets

| November 24, 2016

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Quiz # 5
Economics L0L3
November’28, 2008

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entry characterize markets
A) that are perfectly competitive
B) that set price equal to minimum aYeragc variable cost
C) in which economic prolit must bo zero.
D) that moy be dominated by a monopoly.

1. B_arriers to

2. A natural monopoly exists when
A) the government protects the firm by granting an exclusive franchise.
B) production csn tako place wlth constant returns to scale.
C) there are no rivals in the market
D) one firm can supply the entire market and be the most efficient plant size.

3. The marginal rev’enue of the monopolist is
A) the change i[ total revenue for the snle of an additional unit of output
B) the price the monopolfut charges for the product,
C) the profit the motopolist earns in excess of the profit earned by a firm in a
competitive industry.
D) Usually greater than tho price, charged.

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4. The monopolistwill maximise tho profit of the flr-m by
A) prpducing the quantity where the marginal revenue equals the marginal cost,
and then selling that outpul for as [igh a price as the market will bean
B) produclng the quantity where the marginal cost equals the prico charged.
C) setting the price equal to the marginal cost of production.
D) charging.a price that is as high as the market can bear.
5. A single.price monqpolist will maximiso profits
A) price equals marginal cost
B) price equals marginal reYenue.
C) marginal revenue equals marginal cost.
I)) average revenue equals marginal cost.

if it produces at an output where

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6. Refer to the

figure

aboven

ilhat is the profit-maximising output level for this

monopolist?
A) I units per day’
B) 4 units per day.
C) 1 unit per day.
D) 6 units per day.
E) 2 units per day.

figure above. What price wiII the moncpoHst charge in order to
profit?
maximise
c)$7 D)$7.50 E)$10
B) $s
A) $6
7. Refer to the

8.

Activitywith the purpose of creating monopoly is
B. illegal in Canada
A) catled rent seeking.
C) known as price’discrimination. D. called a legal monopoly

9, The existence of brand names is an example of
B) bconomies of scope.
A) economies of
C) Product differentiation. D) illegal barriers to entry

scale’

10.

In moncpolistically competitive industries

A) nonprice competition is vigorous.
B) the range of choice over products is the same as in perfectly competitive
industries.
C) firms are insensitive to changes in consumer demand.
D) all firms make positive profits.

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