Microeconomics Chapter 10 End of Chapter Questions - Custom Scholars
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# Microeconomics Chapter 10 End of Chapter Questions

question
A profit maximizing monopoly will produce where which of the following is true
Marginal revenue is less than price, marginal revenue is equal to the marginal cost, marginal revenue is positive
question
Imagine two firms with identical cost structures that do not exhibit economies of scale at high levels of production. One is competing in a perfectly competitive market and one is a monopoly. In the long run which of the following is true?
The monopoly will charge a higher price than the perfectly competitive firm
question
If a monopoly faces a demand curve that is downward sloping, the marginal revenue will be which of the following?
Must be less than price
question
An increase in fixed costs for a monopoly will do which of the following?
Fixed costs will not affect production or pricing decisions, but they do increase the overall cost, thus lowering profits
question
A decrease in variable costs will cause the monopoly to do what?
Decrease the price
question
A monopoly produces a level of output where demand is______
Elastic
question
Copyrights on movies, books, and music act as a barrier to entry in order to give people what?
Incentives to create
question
A movie theater price discriminates by charging children and seniors lower prices than adults because their demand is ________
Elastic
question
A monopoly will not necessarily be technically efficient because which of the following is true?
Barriers to entry will keep firms from entering
question
A monopoly will always charge a price that is_______ marginal cost
Greater than
question
The supply curve in a perfectly competitive market is the sum of all of the individual firms marginal cost curve. What is the supply curve for a monopoly?
A monopoly does not have a supply curve
question
When comparing a monopoly and a perfectly competitive market where the costs are the same, the monopoly will produce a_______quanity.
Lower
question
A monopoly producing where marginal revenue equals marginal cost will do which of the following?
It cannot increase quantity and make a greater profit, it is producing at the highest profit possible in their market, it is producing where the additional revenue is just equal to the additional cost for each output
question
Calculate marginal revenue in the following case: Price is \$100 and 20 units are sold, then price drops to \$99 and 21 units are sold
79.0

(marginal revenue = change in revenue/change in quantity)
Revenue increases from \$2,000 (\$10020) to \$2079 (\$9921) and quantity changes by 1. The change in revenue can also be broken down into a decrease in revenue from \$20 from reducing the price from \$100-\$99 for the original 20 units, along with an increase in revenue of \$99 from the additional unit sold at that price. together, this means that the change in revenue is \$79 (\$99-\$20) because the revenue gained from selling that additional good is greater than the loss in revenue from reducing the price.
question
Monopoly would never produce where marginal revenue is negative because which of the following is true?
marginal cost is always positive
question
The market demand in a monopoly market differs (or not) from the demand the monopoly itself faces by_____
The monopoly is the only firm in the market, so it does not differ
question
If you monopoly is not producing at the profit maximizing quantity, then it must be the case that which of the following is true?
Marginal cost is greater than marginal revenue, marginal revenue is greater than marginal cost, marginal revenue is negative
question
which situation would be labeled a "natural monopoly"?
A firm has large economies of scale, and is that able to sell the good for a lower price than what is there are many firms
question
If a monopoly increases the quantity above the profit maximization level which of the following will be true?
Marginal revenue will be lower than before, marginal cost will be greater than marginal revenue, price would decrease
question
Monopolies will price discriminate if which of the following is true?
Atthe current price, one group of consumers is elastic while another group is not as responsive (inelastic)
1 of 20
question
A profit maximizing monopoly will produce where which of the following is true
Marginal revenue is less than price, marginal revenue is equal to the marginal cost, marginal revenue is positive
question
Imagine two firms with identical cost structures that do not exhibit economies of scale at high levels of production. One is competing in a perfectly competitive market and one is a monopoly. In the long run which of the following is true?
The monopoly will charge a higher price than the perfectly competitive firm
question
If a monopoly faces a demand curve that is downward sloping, the marginal revenue will be which of the following?
Must be less than price
question
An increase in fixed costs for a monopoly will do which of the following?
Fixed costs will not affect production or pricing decisions, but they do increase the overall cost, thus lowering profits
question
A decrease in variable costs will cause the monopoly to do what?
Decrease the price
question
A monopoly produces a level of output where demand is______
Elastic
question
Copyrights on movies, books, and music act as a barrier to entry in order to give people what?
Incentives to create
question
A movie theater price discriminates by charging children and seniors lower prices than adults because their demand is ________
Elastic
question
A monopoly will not necessarily be technically efficient because which of the following is true?
Barriers to entry will keep firms from entering
question
A monopoly will always charge a price that is_______ marginal cost
Greater than
question
The supply curve in a perfectly competitive market is the sum of all of the individual firms marginal cost curve. What is the supply curve for a monopoly?
A monopoly does not have a supply curve
question
When comparing a monopoly and a perfectly competitive market where the costs are the same, the monopoly will produce a_______quanity.
Lower
question
A monopoly producing where marginal revenue equals marginal cost will do which of the following?
It cannot increase quantity and make a greater profit, it is producing at the highest profit possible in their market, it is producing where the additional revenue is just equal to the additional cost for each output
question
Calculate marginal revenue in the following case: Price is \$100 and 20 units are sold, then price drops to \$99 and 21 units are sold
79.0

(marginal revenue = change in revenue/change in quantity)
Revenue increases from \$2,000 (\$10020) to \$2079 (\$9921) and quantity changes by 1. The change in revenue can also be broken down into a decrease in revenue from \$20 from reducing the price from \$100-\$99 for the original 20 units, along with an increase in revenue of \$99 from the additional unit sold at that price. together, this means that the change in revenue is \$79 (\$99-\$20) because the revenue gained from selling that additional good is greater than the loss in revenue from reducing the price.
question
Monopoly would never produce where marginal revenue is negative because which of the following is true?
marginal cost is always positive
question
The market demand in a monopoly market differs (or not) from the demand the monopoly itself faces by_____
The monopoly is the only firm in the market, so it does not differ
question
If you monopoly is not producing at the profit maximizing quantity, then it must be the case that which of the following is true?
Marginal cost is greater than marginal revenue, marginal revenue is greater than marginal cost, marginal revenue is negative
question
which situation would be labeled a "natural monopoly"?
A firm has large economies of scale, and is that able to sell the good for a lower price than what is there are many firms
question
If a monopoly increases the quantity above the profit maximization level which of the following will be true?
Marginal revenue will be lower than before, marginal cost will be greater than marginal revenue, price would decrease
question
Monopolies will price discriminate if which of the following is true?
Atthe current price, one group of consumers is elastic while another group is not as responsive (inelastic)

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