Microeconomics Chapter 8 Quiz

Let us assume that ABC firm sells each product unit at $7, and the marginal cost incurred by the business is $4 per unit. For the given values, determine Lerner values.

• 0.43
• 0.45

• 0.35

• 0.54

A monopolist minimal profit by producing the quantity where MR=MC ?

• True

• False

Oligopoly is characterized by a few sellers offering similar products, whereas monopolistic competition is characterized by many sellers offering differentiated products.

• True

• False

A firm’s marginal cost has a minimum value of $2; its average variable cost has a minimum value of $4; and its average total cost has a minimum value of $5. Then the firm will shut down if the price of its product falls below

• $2

• $4

• $5

• There is not enough information given to answer the question

When price exceeds average variable cost in the short run, a competitive firm's MC curve is regarded as its supply curve because:

• Among the various cost curves, the marginal cost curve is the only one that slopes upward

• The position of the marginal cost curve determines the price for which the firm should sell its product

• The firm is aware that marginal revenue must exceed marginal cost in order for profit to be maximized

• The marginal cost curve determines the quantity of output the firm is willing to supply at any price.

A firm in a monopolistically competitive market is similar to a monopoly in the sense that:

(i) they both face downward-sloping demand curves.

(ii) they both charge a price that exceeds marginal cost.

(iii) free entry and exit determines the long-run equilibrium.

• (i) only

• (ii) only

• (i) and (ii) only

• (i), (ii), and (iii) only

An industry that is dominated by a few large firms is

• monopolistic competition.

• a monopoly.

• perfect competition.

• an oligopoly.

A single-price monopoly charges the same price

• even if the demand curve shifts.

• to all customers.

• even if its cost curves shift.

• and the price equals the firm’s marginal revenue.

Refer to the graph above. What is the profit-maximizing quantity?

• 500

• 700

• 850

• 1000

The market type which is known as perfect competition is __________.

• Highly competitive and companies find it challenging to earn economic profits in the long run

• Almost free from competition and companies earn large profits

• Marked by firms continuously trying to upgrade their products so that buyers prefer their products to that of their competitors’

• Dominated by fierce advertising campaigns