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Mc 6- Firms with Market Power

In: Business and Management

Submitted By smileface26
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1. At the current level of output a firm's marginal cost equal 16 and marginal revenue equals 10. The firms A is producing the profit-maximizing amount. B should produce more. C should produce less. D Not enough information.

2. If the demand curve a monopoly faces is P = 100 - 2Q, then profit maximization A is achieved when 25 units are produced. B is achieved by setting price equal to 25. C is achieved only by shutting down in the short run. D cannot be determined solely from the information provided.

3. If the demand curve a monopoly faces is P = 100 - 2Q, and MC is constant at 16, then profit maximization A is achieved when 21 units are produced. B is achieved by setting price equal to 21. C is achieved only by shutting down in the short run. D cannot be determined solely from the information provided.

4. A monopolist faces the demand curve P = 500 – 5Q. Without knowing anything about costs, which of the following prices would definitely not be a profit-maximizing option for the monopolist? A 400 B 300 C 200 D it is impossible to answer this without knowing about the cost structure.

5. A monopolist A can raise its price without losing any sales because it is the only supplier in the market. B can earn a greater than normal rate of return in the long run. C always charges a price that is higher than marginal revenue. D both a and b E both b and c

6. A firm with market power A can increase price without losing all sales. B faces a downward-sloping demand curve. C is the only seller in a market. D both a and b E all of the above

7. A monopoly firm faces a demand function P = 30 - 0.075Q and the corresponding MR function, MR = 30 - 0.15Q.

At any price above $______ demand is elastic. A $5 B $10 C $15 D $20 E zero

8. As above, a monopoly firm faces a demand function P = 30 -...

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