Final Exam Multiple Choice Identify the choice that best completes the statement

Final Exam

Multiple Choice

Identify the choice that best completes the statement or answers the question.

____ 1. In the model of perfect competition, firms produce a:

a.	standardized product with considerable control over price.
b.	differentiated product with considerable control over price.
c.	standardized product with no control over price.
d.	differentiated product with no control over price.
e.	standardized or differentiated product with some control over price.

____ 2. In the model of perfect competition, there:

a.	are many firms producing differentiated products.
b.	are a few firms producing undifferentiated products.
c.	are a few firms producing differentiated products.
d.	are many firms producing undifferentiated products.
e.	is one firm producing a highly differentiated product.

____ 3. If the perfectly competitive market demand for gym shoes is given by Q_D = 100 – P and the market supply is given by Q_S = 10 + 2P, then the equilibrium price and quantity will be:

a.	P = 50 and Q = 50.
b.	P = 40 and Q = 90.
c.	P = 40 and Q = 60.
d.	P = 30 and Q = 70.
e.	P = 25 and Q = 75.

____ 4. In the model of perfect competition, firms maximize profits by producing where:

a.	the difference between marginal revenue and marginal cost is maximized.
b.	marginal revenue equals price.
c.	the difference between price and marginal cost is maximized.
d.	price equals marginal cost.
e.	the difference between price and marginal revenue is maximized.

____ 5. A representative firm with short-run total cost given by TC = 50 + 2q + 2q² operates in a competitive industry where the short-run market demand and supply curves are given by Q_D = 1,410 – 40P and Q_S = –390 + 20P. Its short-run profit-maximizing level of output is:

a.	0 units.
b.	1 unit.
c.	2 units.
d.	5 units.
e.	7 units.

____ 6. The following diagram represents the market for paperback books. Which area represents producer surplus?

a.	A.
b.	B.
c.	C.
d.	D.
e.	None of the above.

____ 7. If a monopolist faces a constant-elasticity demand curve given by Q = 202,500P^–3 and has total costs given by TC = 10Q, its profit-maximizing level of output is:

a.	50.
b.	60.
c.	75.
d.	100.
e.	120.

____ 8. At the profit-maximizing level of output for the monopolist:

a.	total revenue is equal to total cost.
b.	total costs are minimized.
c.	total revenue is maximized.
d.	marginal revenue is equal to marginal cost.
e.	average revenue is equal to average cost.

____ 9. Bathworks has exclusive rights to sell its perfumes. The demand for its perfumes faced by Bathworks is given by Q = 250 – 0.5P. Bathworks’s costs are given by TC = 50Q + 5.5Q². Its maximum monopoly profit is:

a.	$6,750.
b.	$7,050.
c.	$7,500.
d.	$7,750.
e.	$8,750.

____ 10. Cal’s Cab Company (CCC) has a taxi monopoly in Wen Kroy. The demand for taxi services in Wen Kroy is given by Q = 1,500 – P. CCC’s costs are given by TC = 100 – Q² + 5Q³. Its maximum monopoly profit is:

a.	$0.
b.	$5,500.
c.	$6,600.
d.	$7,700.
e.	$9,900.

____ 11. The optimal level of output and price for the profit-maximizing monopolist in the following figure would be:

a.	Q = 30 and P = $35.
b.	Q = 60 and P = $20.
c.	Q = 30 and P = $20.
d.	Q = 100 and P = $35.
e.	none of the above.

____ 12. Price discrimination is defined as:

a.	selling a product at the same price to each and every consumer.
b.	selling a product at more than one price.
c.	selling a product at its marginal cost plus a markup.
d.	selling more than one version of a product.
e.	producing goods and services for sale within the firm.

____ 13. If the monopolist shown in the following figure could practice first-degree price discrimination, the consumer surplus would be:

a.	$0.
b.	$225.
c.	$450.
d.	$900.
e.	$1,200.

____ 14. If the monopolist shown in the following figure could practice first-degree price discrimination, the producer surplus would be:

a.	$0.
b.	$225.
c.	$450.
d.	$900.
e.	$1,200.

____ 15. When a firm requires a customer to buy additional products in order to buy one of its products, this is known as a(n):

a.	bundling contract.
b.	price differentiation.
c.	oligopolistic device.
d.	two-part tariff.
e.	maximizing device.

____ 16. The reservation prices, in dollars, for three classes of demanders (A, B, and C) for three restaurants (1, 2, and 3) are given in the following table. What is the maximum revenue that can be generated by setting a separate price for each of the three restaurants?

a.	$59.
b.	$75.
c.	$81.
d.	$89.
e.	None of the above.

____ 17. The reservation prices, in dollars, for three classes of demanders (A, B, and C) for three restaurants (1, 2, and 3) are given in the following table. What is the maximum revenue that can be generated by setting a bundled price for the three restaurants?

a.	$46.
b.	$52.
c.	$63.
d.	$72.
e.	$84.

____ 18. A firm has a division that produces X, whose total costs are TC = 10 + Q² (where Q is the quantity of X). The marketing division adds its own total costs of 5 + 3Q. In the competitive external market for X, the wholesale price is $10. The transfer price of X should be:

a.	$2.
b.	$5.
c.	$10.
d.	$12.
e.	$15.

____ 19. A market where there are only a few sellers is known as:

a.	perfectly competitive.
b.	monopolistically competitive.
c.	oligopolistic.
d.	monopolistic.
e.	cartelized.

____ 20. In the model of oligopoly, there:

a.	are many firms producing differentiated products.
b.	is one firm producing undifferentiated products.
c.	are a few firms producing differentiated or undifferentiated products.
d.	are many firms producing undifferentiated products.
e.	is one firm producing a highly differentiated product.