Reference no: EM132548683

1. In order to increase sales from 7 units to 8 units, a single-price monopoly must drop the price from 7 TL to 6 TL per unit. What is marginal revenue in this range?

a) 6 TL
b) 1 TL
c) -1 TL
d) none of the above

2. If a profit-maximizing monopoly is producing at an output at which marginal cost exceeds marginal revenue, it

a) should raise price and lower output
b) should lower price and raise output
c) should lower price and lower output
d) is making losses

3. If the monopolist maximizes profits when marginal revenue equals marginal cost equals average total costs, economic profits must be

a) Negative
b) Positive
c) Zero
d) Cannot tell from the information given

4. Which of the following is a natural barrier to the entry of new firms in an industry?

a) licensing of professions
b) economies of scale
c) issuing a patent
d) a public franchise

5. Economic profits in the long run are

a) Possible for both pure monopoly and pure competition
b) Possible for a pure monopoly, but not for a pure competitor
c) Impossible for both pure monopoly and pure competition
d) Only possible when barriers to entry are nonexistent

6. Due to the network externalities in the game console market, we would expect this market to

a) overproduce game consoles.
b) be highly concentrated.
c) be efficient.
d) be serviced by a natural monopoly.

7. Why do price discriminating firms often offer lower prices to children and elderly?

a) They have a lower willingness to pay than other consumers.
b) Their demand for goods and services tends to be less elastic than other consumers.
c) Such a strategy lowers the costs of the firm.
d) These firms are more interested in equity than profit maximizing.