Quiz 7

If a firm converts a previously competitive industry into a monopoly without any changes in the cost curves, it will:

• reduce market-level output and raise price to generate more profit.

• keep market-level output the same but increase price to generate more profit.

• increase market-level output and price to generate more profit.

• reduce price and increase market-level output to keep potential competitors from entering the industry.

The total quantities of a good that people are willing and able to buy at alternative prices defines:

• marginal revenue.

• market demand.

• market supply.

• market equilibrium.

Market power exists if a firm can alter:

• A) market demand.

• B) market supply.

• C) market equilibrium.

• D) market price.

If the entire output of a market is produced by a single seller, the firm: is a monopoly, faces a perfectly vertical demand curve, is an oligopolist, is competitive.

• is a monopoly

• faces a perfectly vertical demand curve

• is an oligopolist

• is competitive

Total profit can be calculated as:

• average total cost multiplied by price

• total revenue divided by the quantity sold

• the difference between price and average total cost multiplied by the quantity sold

• price and average total cost added together and then multiplied by the quantity sold

The change in total revenue that results from a one-unit increase in quantity sold is

• total revenue.

• marginal revenue.

• marginal cost.

• marginal profit.

A patent

• requires a firm to share its innovations with others.

• is an illegal method to protect an innovative idea.

• is a government grant of exclusive ownership of an innovation.

• protects a perfectly competitive firm from competition.

If firms are earning positive economic profits

• All of these choices are correct.

• firms must be producing where marginal revenue equals marginal cost, regardless of industry structure.

• barriers to entry would permit those profits to persist.

• any entry by new firms would tend to erode those profits.