This document contains 25 multiple choice questions from an economics quiz on topics related to perfect competition, monopoly, and price discrimination. The questions cover concepts like market structures, demand and supply curves, profit maximization, and price differentiation strategies. Sample questions ask about the impact of taxes on producers, conditions that define perfect competition, and factors that influence a monopolist's pricing decisions.
MBA: Managerial Economics - Supply and Demand Curve RelationshipKishan Kumar
This MBA Managerial Economics assignment explains in-depth on the Supply & Demand methodology. With clear illustrations of data, graphs & formula readers are able to grab the concept of the Supply & Demand curve with the effect of consumers behavior.
Cassies Quilts alters, reconstructs and restores heirloom quilts. C.docxzebadiahsummers
Cassie's Quilts alters, reconstructs and restores heirloom quilts. Cassie has just spent $800
purchasing, cleaning and reconstructing an antique quilt which she expects to sell for $1,500 once she is finished. After having spent $800, Cassie discovers that she would need some special period fabric that would cost her $200 in material and time in order to complete the task. Alternatively, she can sell the quilt "as is" now for $900. What is the marginal cost of completing the task? (Points : 1)
$200
$500
$1,000
$1,000 plus the value of her time
2. Where do economic agents such as individuals, firms and nations, interact with each other? (Points : 1)
in public locations monitored by the government.
in any arena that brings together buyers and sellers.
in any physical location people where people can physically get together for selling goods, such as shopping malls.
in any location where transactions can be monitored by consumer groups and taxed by the government.
3. Consider the following two factors:
These statements suggest that (Points : 1)
it is highly likely that the average person will lose her job due to outsourcing.
the likelihood that the average person will lose her job due to outsourcing is large small to losing her job due to other causes.
the likelihood that the average person will lose her job due to outsourcing is very small compared to losing her job due to other causes.
the US is not creating jobs fast enough to offset jobs lost due to outsourcing and other causes.
4. Cassie's Quilts alters, reconstructs and restores heirloom quilts. Cassie has just spent $800 purchasing, cleaning and reconstructing an antique quilt which she expects to sell for $1,500 once she is finished. After having spent $800, Cassie discovers that she would need some special period fabric that would cost her $200 in material and time in order to complete the task. Alternatively, she can sell the quilt "as is" now for $900. What should she do? (Points : 1)
She should cut her losses and sell the quilt now.
It does not matter what she does; she is going to take a loss on her project.
She should purchase the period fabric, complete the task and then sell the quilt.
She should not do anymore work on the quilt because she has already spent too much time on it and has not been paid for that time.
5. A grocery store sells a bag of potatoes at a fixed price of $2.30. Which of the following is a term used by economists to describe the money received from the sale of an additional bag of potatoes? (Points : 1)
marginal revenue
gross earnings
pure profit
marginal costs
net benefit
6. A successful market economy requires well defined property rights and (Points : 1)
balanced supplies of all factors of production.
an ind.
MBA: Managerial Economics - Supply and Demand Curve RelationshipKishan Kumar
This MBA Managerial Economics assignment explains in-depth on the Supply & Demand methodology. With clear illustrations of data, graphs & formula readers are able to grab the concept of the Supply & Demand curve with the effect of consumers behavior.
Cassies Quilts alters, reconstructs and restores heirloom quilts. C.docxzebadiahsummers
Cassie's Quilts alters, reconstructs and restores heirloom quilts. Cassie has just spent $800
purchasing, cleaning and reconstructing an antique quilt which she expects to sell for $1,500 once she is finished. After having spent $800, Cassie discovers that she would need some special period fabric that would cost her $200 in material and time in order to complete the task. Alternatively, she can sell the quilt "as is" now for $900. What is the marginal cost of completing the task? (Points : 1)
$200
$500
$1,000
$1,000 plus the value of her time
2. Where do economic agents such as individuals, firms and nations, interact with each other? (Points : 1)
in public locations monitored by the government.
in any arena that brings together buyers and sellers.
in any physical location people where people can physically get together for selling goods, such as shopping malls.
in any location where transactions can be monitored by consumer groups and taxed by the government.
3. Consider the following two factors:
These statements suggest that (Points : 1)
it is highly likely that the average person will lose her job due to outsourcing.
the likelihood that the average person will lose her job due to outsourcing is large small to losing her job due to other causes.
the likelihood that the average person will lose her job due to outsourcing is very small compared to losing her job due to other causes.
the US is not creating jobs fast enough to offset jobs lost due to outsourcing and other causes.
4. Cassie's Quilts alters, reconstructs and restores heirloom quilts. Cassie has just spent $800 purchasing, cleaning and reconstructing an antique quilt which she expects to sell for $1,500 once she is finished. After having spent $800, Cassie discovers that she would need some special period fabric that would cost her $200 in material and time in order to complete the task. Alternatively, she can sell the quilt "as is" now for $900. What should she do? (Points : 1)
She should cut her losses and sell the quilt now.
It does not matter what she does; she is going to take a loss on her project.
She should purchase the period fabric, complete the task and then sell the quilt.
She should not do anymore work on the quilt because she has already spent too much time on it and has not been paid for that time.
5. A grocery store sells a bag of potatoes at a fixed price of $2.30. Which of the following is a term used by economists to describe the money received from the sale of an additional bag of potatoes? (Points : 1)
marginal revenue
gross earnings
pure profit
marginal costs
net benefit
6. A successful market economy requires well defined property rights and (Points : 1)
balanced supplies of all factors of production.
an ind.
1. The problem of scarcity is confronted by industrialized soc.docxjackiewalcutt
1. The problem of scarcity is confronted by:
industrialized societies only.
poor societies only.
societies governed by communist philosophies only.
all societies.
2. Margo spends $10,000 on one year's college tuition. The opportunity cost of spending one year in college for Margo is:
$10,000.
whatever she would have purchased with the $10,000 instead.
whatever she would have earned had she not been in college.
whatever she would have purchased with the $10,000 and whatever she would have earned had she not been in college.
3.
Use the following figure to answer questions 3-4:
Look at the above figure. If the economy is operating at point Y and its relevant production possibility frontier is curve 1, this means that:
the economy is at full employment and is efficient.
the economy is less than fully employed.
the economy is not efficient.
economic growth is not possible in the future.
4. Look at the above figure. The movement from curve 1 to curve 2 indicates:
a growing ability of the economy to produce capital and consumer goods.
going from unemployment to full employment.
a decrease in the factors of production.
a shift of the production possibility frontier toward producing fewer goods.
5. An increase in the price of hamburger would probably result in ________ in the demand for hamburger buns.
a decrease
an increase
no change
random fluctuations
6. After graduation from college, you might have an increase in your income from a new job. If, as a result, you decide that you will purchase more T-bone steak and less hamburger, then for you hamburger would be considered:
a normal good.
a substitute good.
a complementary good.
an inferior good.
7.
Use the following figure to answer question 7:
Look at the above figure. A factor that may have changed supply from S1 to S2 is:
better technology in the production of gasoline.
increased demand.
lower labor productivity in gasoline production.
increased prices of substitutes for gasoline.
8. Us the following to answer question 8:
Refer to the above table. If the price of chocolate-covered peanuts is $0.80, there is:
a surplus of 140 bags per month.
a shortage of 140 bags per month.
a surplus of 70 bags per month.
a shortage of 70 bags per month.
9. Use the following to answer question 9:
Look at the above figure. A temporary price of $2 in this market would result in:
a surplus of 4,000 bushels and we would expect prices to rise.
a shortage of 8,000 bushels and we would expect prices to rise.
a shortage of 10,000 bushels and we would expect prices to fall.
a surplus of 10,000 bushels and we would expect prices to fall.
10. In the market for tacos, you observe that the equilibrium price and quantity have increased. This can be caused onl ...
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• A monopolist often can raise its profits by charg-
ing different prices for the same good based on
a buyer's willingness to pay. This practice of
price discrimination can raise economic welfare
by getting the good to some consumers who
otherwise would not buy it. In the extreme case
of perfect price discrimination, the deadweight
loss of monopoly is completely eliminated, and
the entire surplus in the market goes to the
monopoly producer. More generally, when price
discrimination is imperfect, it can either raise or
1. Give an example of a government-created
monopoly. Is creating this monopoly necessarily
bad public policy? Explain.
2. Define natural monopoly. What does the size of a
market have to do with whether an industry is a
natural monopoly?
Why is a monopolist's marginal revenue less
than the price of its good? Can marginal
revenue ever be negative? Explain.
Draw the demand, marginal-revenue, average-
total-cost, and marginal-cost curves for a
monopolist. Show the profit-maximizing level
of output, the profit-maximizing price, and the
amount of profit.
A publisher faces the following demand schedule
for the next novel from one of its. popular authors:
Price Quantity Demanded
$100
90
80
70
60
50
40
30
20
10
0
0 novels
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
1,000,000
'
CHAPTER 15 MONOPOLY 325
lower welfare compared to the outcome with a
single monopoly price.
• Policymakers can respond to the inefficiency of
monopoly behavior in four ways. They can use
the antitrust laws to try to make the industry more
competitive. They can regulate the prices that the
monopoly charges. They can turn the monopolist
into a government-run enterprise. Or if the market
failure is deemed small compared to the jnevitable
imperfections of policies, they can do nothing at all.
5. In your diagram from the previous question,
show the level of output that maximizes total
surplus. Show the deadweight loss from the
monopoly. Explain your answer.
6. Give two examples of price discrimination. In
each case, explain why the monopolist chooses
to follow this business strategy.
7. What gives the government the power to regulate
mergers between firms? From the standpoint of
the welfare of society, give a good reason and a
bad reason that two firms might want to merge.
8. Describe the two problems that arise when
regulators tell a natural monopoly that it must
set a price equal to marginal cost.
The author is paid $2 million to write the book,
and the marginal cost of publishing the book
is a constant $10 per book.
a. Compute total revenue, total cost, and profit
at each quantity. What quantity would a
profit-maximizing publisher choose? What
price would it charge?
b. Compute marginal revenue. (Recall that
MR = A.TR/ A.Q.) How does marginal
revenue compare to the price? Explain.
c. Graph th.
Question 1A factor of production whose quantity can be changed d.docxmakdul
Question 1
A factor of production whose quantity can be changed during a particular period is a:
marginal factor of production.
fixed factor of production.
incremental factor of production.
variable factor of production.
Question 2
Assuming that all other factors of production are held constant, marginal product is the change in ________ output resulting from a 1-unit change in _______ .
total; a variable input
total; a fixed input
total; average product
per unit; a fixed input
Question 3
Average variable cost is the ratio of:
total cost to the marginal cost.
total cost to the amount of variable input.
variable cost to the quantity of output.
marginal cost to the quantity of output.
Question 4
The curve labeled V represents the firm's _______ curve.
total cost
average total cost
marginal cost
average variable cost
Question 5
When an increase in the firm's output reduces its long-run average cost, it experiences:
economies of scale.
diseconomies of scale.
constant returns to scale.
variable returns to scale.
Question 6
A firm that is able to more efficiently utilize by-products as it increases production in the long run is an example of:
economies of scale.
diseconomies of scale.
labor-intensive production.
capital-intensive production.
Question 7
If your plant is operating in the positively-sloped portion of a long-run average cost curve, this could be the result of:
decreased input prices.
improved utilization of by-products.
specialization of resources.
limited decision-making capacity.
Question 8
Perfect competition is a model of the market that assumes all of the following EXCEPT:
a large number of firms.
firms face downward-sloping demand curves.
firms produce identical goods.
many buyers.
Question 9
The Case in Point on the Burkha Industry suggested that this industry:
might be an example of perfect competition although it did not feature easy entry and exit.
might be an example of perfect competition because it did feature easy entry and exit.
might not be an example of perfect competition although it did feature easy entry and exit.
might not be an example of perfect competition because it did not feature easy entry and exit.
Question 10
If a perfectly competitive firm sells 30 units of output at a price of $10 per unit, its marginal revenue is:
$10.
more than $10.
less than $10.
$300.
Question 11
The difference between total revenue and total cost is:
economic profit.
nominal revenue.
average revenue.
marginal revenue.
Question 12
If a perfectly competitive firm is producing a quantity that generates MC < MR, then profit:
is maximized.
can be increased by increasing production.
can be increased by decreasing production.
can be increased by increasing the price.
Question 13
In the short run, a perfectly competitive firm does not produce output and earns a negative economic profit if:
P = ATC.
P < AVC.
AVC > P > ATC.
AVC < P < ATC.
Question 14
If all fir ...
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The world of search engine optimization (SEO) is buzzing with discussions after Google confirmed that around 2,500 leaked internal documents related to its Search feature are indeed authentic. The revelation has sparked significant concerns within the SEO community. The leaked documents were initially reported by SEO experts Rand Fishkin and Mike King, igniting widespread analysis and discourse. For More Info:- https://news.arihantwebtech.com/search-disrupted-googles-leaked-documents-rock-the-seo-world/
Implicitly or explicitly all competing businesses employ a strategy to select a mix
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involves recognizing relationships between elements of the marketing mix (e.g.,
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(i.e., industry structure in the language of economics).
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Enterprise Excellence is Inclusive Excellence.pdfKaiNexus
Enterprise excellence and inclusive excellence are closely linked, and real-world challenges have shown that both are essential to the success of any organization. To achieve enterprise excellence, organizations must focus on improving their operations and processes while creating an inclusive environment that engages everyone. In this interactive session, the facilitator will highlight commonly established business practices and how they limit our ability to engage everyone every day. More importantly, though, participants will likely gain increased awareness of what we can do differently to maximize enterprise excellence through deliberate inclusion.
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Dr. William Harvey is a seasoned Operations Leader with extensive experience in chemical processing, manufacturing, and operations management. At Michelman, he currently oversees multiple sites, leading teams in strategic planning and coaching/practicing continuous improvement. William is set to start his eighth year of teaching at the University of Cincinnati where he teaches marketing, finance, and management. William holds various certifications in change management, quality, leadership, operational excellence, team building, and DiSC, among others.
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Sustainability has become an increasingly critical topic as the world recognizes the need to protect our planet and its resources for future generations. Sustainability means meeting our current needs without compromising the ability of future generations to meet theirs. It involves long-term planning and consideration of the consequences of our actions. The goal is to create strategies that ensure the long-term viability of People, Planet, and Profit.
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Eco 550 week 4 quiz 3
1. ECO 550 Week 4 Quiz 3
Click this link to get the tutorial:
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week-4-quiz-3/
Question 1
1. Assume that the world price of Good A is $8 per unit while its domestic price is $6, and the
marginal cost incurred by domestic producers for producing one unit of Good A is $5. If the
government imposes a tax of $3 per unit on domestic producers, which of the following
situations will be observed?
The tax will increase the price of Good A in the domestic market.
The tax will increase the world price of Good A.
The tax will decrease the profit earned by domestic producers.
The tax will decrease the price of Good A in the domestic market.
Question 2
1. The long-run supply curve of a perfectly competitive market is a:
an upward rising step function.
a downward sloping step function.
a vertical line at the market price.
a horizontal line at the market price.
Question 3
1. When the existing firms in a competitive industry have different operating costs:
the highest-cost firm in operation breaks even, while the low cost firms will earn profit.
the highest-cost firm in operation breaks even, while the low cost firms leave the industry.
the low cost firms earn a larger profit than the high-cost firms.
the highest-cost firms will incur a deadweight loss.
2. Question 4
1. Which of the following conditions define a perfectly competitive market?
The transaction costs are very high.
Information is available to participants at a high cost.
The product is homogenous.
There are limited number of buyers and sellers.
Question 5
1. If there are only a few producers of substitutes for Good X, a merger between producers of
Good X and any one of them could significantly _____ for Good X.
decrease the elasticity of demand.
increase the elasticity of supply.
decrease the elasticity of supply.
increase the elasticity of demand.
Question 6
1. Refer to Table 5-1. Suppose initially 3,200 units are demanded at a price of $3 per unit. What
will be the quantity of output supplied by each type of firm in the market?
The following table gives the average cost of production for three different categories of firms
producing the same product.
Table 5-1
Type of firms
No. of firms
Average Cost per unit
Equilibrium output
A
350
3. $3
10 units
B
400
$6
10 units
C
550
$10
10 units
Type A and Type B will jointly supply 3,000 units while Type C will supply 200 units.
Type A firms will supply 3,000 units, while the remaining 200 units will be supplied by Type B.
Type A firms will supply the entire 3,200 units, while Type B and Type C firms will not enter
the market.
Type A and Type B will each supply 1,600 units, Type C will not enter the market.
Question 7
1. If the long-run market supply curve is perfectly elastic, a decrease in variable cost will:
shift the supply curve upward to a higher market-clearing price level.
shift the supply curve downward to a lower market-clearing price level.
shift the supply curve to the right to a higher market-clearing output.
shift the supply curve to the left to a lower market-clearing output.
Question 8
1. Which of the following conditions define the short-run for any industry?
Firms do not incur a fixed cost.
4. Firms incur both fixed as well as variable costs.
Firms can easily enter and leave the market.
Firms can enter but cannot leave the market.
Question 9
1. Suppose beer producers in Munich became aware of the low price of one barrel of beer in the
domestic market relative to that in the United States. What will be the impact of this price
difference?
Beer production in Munich will decline.
Price of beer in the domestic market will increase.
Beer production in the U.S. will increase.
Beer consumption in the domestic market will increase.
Question 10
1. In a perfectly competitive market, the demand curve faced by each firm is:Answer
highly inelastic.
perfectly elastic.
perfectly inelastic.
less elastic.
Question 11
1. Assume that the government of a nation rations the crude oil available to car owners each
month which reduces the overall demand for petroleum. However, the nation continues to import
oil from the world market. Which of the following will be observed in the oil market?
The world price of petroleum would decline.
The domestic price of petroleum would decline.
The domestic price of petroleum would increase.
The world price of petroleum will remain unaffected.
5. Question 12
1. Suppose the cost of raw materials used by the cotton industry rises to a larger extent
compared to the increase in demand in the market. Which of the following situations will arise?
The incidence of the higher cost will fall completely on the consumers.
The incidence of the higher cost will fall completely on the high cost firms.
The incidence of the higher cost will fall completely on the low cost firms.
The incidence of the higher cost will fall partially on the consumers and partially on the sellers.
Question 13
1. Which of the following situations resulted from the North American Free Trade Agreement
(NAFTA)?
The cost of tortillas in Mexico decreased.
Corn export to the U.S. from Mexico declined.
Corn export to the U.S. from Mexico increased.
The cost of tortillas in the U.S. increased.
Question 14
1. Refer to Figure 5-3. What will be the shape of the long-run supply curve of land suitable for
corn farming?
In the figure given below, D1 and D2 represent the demand curves for land before and after the
ethanol program respectively. SRS is the short-run supply curve of land.
Figure 5-3
Answer
The long-run supply curve of land suitable for corn farming will be perfectly inelastic.
The long-run supply curve of land suitable for corn farming will be perfectly elastic.
The long-run supply curve of land suitable for corn farming will be less elastic than the short-run
supply curve.
The long-run supply curve of land suitable for corn farming will be more elastic than the short-
run supply curve.
6. Question 15
1. The short-run supply curve of a perfectly competitive industry with firms having identical
costs is:
a horizontal line at the market price.
a vertical line at the equilibrium output.
an upward rising curve.
a downward sloping step function.
Question 16
2. The demand curve faced by a perfectly competitive firm is:
downward sloping.
the same as the market demand curve.
horizontal.
perfectly inelastic.
Question 17
2. Refer to Table 6-2. Assume that the monopolist sells only health drinks to Group 1 and only
fruit juices to Group 2. What profit will the monopolist earn?
The following table gives the valuations of fruit juices and health drinks by two groups of
consumers in the city of Vanilla. A single producer of both products controls the entire market
for beverages in this city and is considering strategies to bundle one bottle of health drink with
one bottle of fruit juice. Assume that the marginal cost of supplying both varieties is $2 each.
Table 6-2
$35
$10
$31
$14
Question 18
7. 2. A monopolist can:
produce as much or as little as it wants without affecting price.
decide the price that will be charged in the market.
provide discounts below market price to attract more customers.
price its products by considering the possible reactions of future competitors
or firms that produce close substitutes for its output.
Question 19
2. In the small country of Talisman, the liquor industry is monopolized by a single producer
Best Drinks Inc. Best Drinks charges high end customers like 5-star hotels a much higher price
than it charges local pubs. Identify the correct statement from the following.
Best Drinks is aware of the variations in the valuation of its products by different consumer
segments.
Best Drinks minimizes cost by charging different consumers different prices.
Charging different prices for different consumers increases consumer surplus.
Best Drinks charges different prices because its sole objective is sales maximization.
Question 20
2. Which of the following statements is true regarding the difference between a monopolist and
a perfectly competitive firm?
Competitive price is higher than the price charged by a monopolist.
Supply of output is higher in case of a monopoly than if the market is competitive.
A monopoly can choose its price while a competitive firm is a price taker.
A market characterized by competition has a higher deadweight loss.
Question 21
2. Which of the following is a possible explanation for the fall in prices after an industry is
monopolized by combining a group of competitors?
A monopolist faces a downward sloping demand curve. Hence, output expansion leads to lower
prices.
8. A reduction in price increases producer surplus. Hence a monopolist may reduce the price of his
product.
A monopolist may reduce prices to make it difficult for other firms to compete.
A monopolist can increase profits by reducing price when its cost of production declines due to
increased size of the new firm. The fall in price is less than the decline in cost.
Question 22
2. The practice of charging different prices on the basis of varying customer preferences is
known as:
arbitrage.
discounting.
price discrimination.
rationing.
Question 23
2. Tying products can be a profitable strategy for facilitating price discrimination only when:
the demands for the goods are unrelated.
the supply of one of the tied products is low.
the demands for the goods are related.
the market for one of the goods is competitive.
Question 24
2. The peak of the total revenue curve is achieved at the point where:Answer
marginal revenue is the highest.
price is the highest.
marginal revenue is zero.
marginal cost is zero.
Question 25
9. 2. Refer to Figure 6-4. What price will the monopolist charge when its marginal cost shifts from
C to C’?
The following figure depicts the demand, marginal revenue (MR), and marginal cost (MC) for a
monopolist.
Figure 6-4
$20
$16
$15
$9
Question 26
2. Refer to Figure 6-1. Which of the following conclusions can be drawn from this figure?
The following figure shows the demand, marginal revenue, and marginal cost curves for a profit
maximizing monopolist.
Figure 6-1
The monopolist produces at the point where marginal cost is zero.
The monopolist incurs a fixed marginal cost of OC’.
The monopolist charges a price of OP’ and total revenue is OP’D’Q’.
The consumer surplus enjoyed by customers is PC’D”.
Question 27
2. Refer to Figure 6-2. What is the consumer surplus under monopoly?
A group of firms in competitive market produced 20 units of a good when the market price was
$2. They incurred no marginal cost. Eventually they realized the benefits they could get by
teaming up and acting as a monopolist. The following figure shows the demand curve and
marginal revenue curve for this profit maximizing monopolist.
Figure 6-2
$96
$48
10. $36
$72
ANS: B PTS: 1 DIF: Easy NAT: Analytic
Question 28
2. Monopolies exist for each of the following reasons, EXCEPT:
competitors are legally unable to challenge them.
they have control over resources with very few good substitutes.
it is sometimes inefficient to have competition in certain markets.
it increases both producer and consumer surplus.
Question 29
2. X-inefficiency implies:
the practice of using less than the optimal amount of inputs for production.
the practice of using the lowest quantity of input to produce maximum output.
always producing less than the optimal amount of output.
excessive use of inputs relative to best-practice methods.
Question 30
2. When a monopolist’s marginal cost of production is zero:
the deadweight loss is reduced.
production is lower than if marginal cost were positive.
the price charged is higher than if marginal cost were positive.
maximizing profit is same as maximizing revenue.