economics data bank

Question # 00004075 Posted By: spqr Updated on: 11/25/2013 12:45 PM Due on: 11/30/2013
Subject Economics Topic General Economics Tutorials:
Question

13.The following table provides information on the price, quantity, and average cost for a

monopoly. At what price will the firm maximize its profit?

Price Output ATC

\$5 0 ??

\$4 4 \$1.00

\$3 8 \$0.75

\$2 12 \$0.75

\$1 16 \$0.81

\$0 20 \$0.90

a.\$1

b.\$2

c.\$3

d.\$4

a.advertise on TV and earn \$3,000.

c.advertise on TV and earn \$8,000.

Table 1.The information in the table below shows the total demand for premium?channel

digital cable TV subscriptions in a small urban market. Assume that each digital cable TV

operator pays a fixed cost of \$200,000 (per year) to provide premium digital channels in the

market area and that the marginal cost of providing the premium channel service to a

household is zero.

Quantity Price (per year)

0 \$180

3,000 \$150

6,000 \$120

9,000 \$ 90

12,000 \$ 60

15,000 \$ 30

18,000 \$ 0

15.Refer to Table 1. Assume there are two profit?maximizing digital cable TV companies operating in this market. Further assume that they are not able to collude on the price and quantity of premium digital channel subscriptions to sell. What price will premium digital channel cable TV subscriptions be sold at when this market reaches a Nash equilibrium?

a.\$30

b.\$60

c.\$90

d.\$120

16.Refer to Table 1. Assume there are two profit?maximizing digital cable TV companies

operating in this market. Further assume that they are not able to collude on the price and

quantity of premium digital channel subscriptions to sell. How many premium digital channel cable TV subscriptions will be sold altogether when this market reaches a Nash equilibrium?

a.6,000

b.9,000

c.12,000

d.15,000

17.Refer to Table 1. Assume that there are two profit?maximizing digital cable TV companies operating in this market. Further assume that they are not able to collude on the price and quantity of premium digital channel subscriptions to sell. How much profit will each firm earn when this market reaches a Nash equilibrium?

a.\$25,000

b.\$90,000

c.\$160,000

d.\$215,000

18.A monopolist

a.has a supply curve that is upward?sloping, just like a competitive firm.

b.does not have a supply curve because the monopolist sets its price at the same

time it chooses the quantity to supply.

c.has a horizontal supply curve, just like a competitive firm.

d.does not have a supply curve because marginal revenue exceeds the price it

charges for its products.

19.One advantage of allowing a market for pollution permits to control the total amount of

pollution released in an area is that

a.the government knows exactly how much each firm is allowed to pollute.

b.government revenue from the sale of permits is greater than revenue from a

Pigovian tax.

c.the initial allocation of permits to firms does not affect the efficiency of the

market.

d.firms will work together to eventually eliminate pollution.

20.Suppose when a monopolist produces 75 units its average revenue is \$10 per unit, its marginal revenue is \$5 per unit, its marginal cost is \$6 per unit, and its average total cost is \$5 per unit. What can we conclude about this monopolist?

a.The monopolist is currently maximizing profits, and its total profits are \$375.

b.The monopolist is currently maximizing profits, and its total profits are \$300.

c.The monopolist is not currently maximizing profits; it should produce more units

and charge a lower price to maximize profits.

d.The monopolist is not currently maximizing profits; it should produce fewer units

and charge a higher price to maximize profits.

21.In a competitive market with identical firms,

a.an increase in demand in the short run will result in a new price above the

minimum of average total cost, allowing firms to earn a positive economic profit

in both the short run and the long run.

b.firms cannot earn positive economic profit in either the short run or long run.

c.firms can earn positive economic profit in the long run if the long?run market

supply curve is upward sloping.

d.free entry and exit into the market requires that firms earn zero economic profit

in the long run even though they may be able to earn positive economic profit in

the short run.

22.The supply curve of a perfect competitor in the short run is:

a.Marginal revenue curve.

b.Marginal cost curve.

c.Average revenue curve

d.Marginal cost curve above its average variable cost curve

23.A monopolistically competitive firm faces a demand curve, P=20?Q, and earns zero profit. The firm produces at a constant marginal cost of 2. What is the fixed cost for this firm?

a.18

b.64

c.81

d.Cannot be determined from the information given.

24.At 47 units of labor, a firm finds that average product of labor equals 39.6 and marginal product of labor equals 32.9. We can conclude that the average product curve at 47 units of labor is:

a.upward?sloping.

b.horizontal.

c.vertical.

d.downward?sloping.

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1. Solution: economics data bank

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