2025 ECO UNIT 3 CH 10, BE Homework 8 (1/2),
Economics Exam, Econ 414 Final Chapter 14, Fin 321
Midterm 2, Macro Final Exam, Econ chapter 14 & 16,
ManEcon - Chapter 14 quiz, quiz 4, ECON TEST 3,
Managerial Economics Chapter 12 Test Bank
All of the following are possible ways to avoid price wars EXCEPT:
a. customer segmentation with revenue management
b. growing the market
c. reference prices and framing effects
d. to not start one
e. All of the ways are correct - ANSWER-e. All of the ways are correct
You are the manager of a monopoly that faces a demand curve described by P = 230 − 20Q. Your
costs are C = 5 + 30Q. The profit-maximizing output for your firm is: - ANSWER-5
The primary difference between monopolistic competition and perfect competition is: -
ANSWER-the ease of entry and exit into the industry.
Both the ease of entry and exit into the industry and the number of firms in the market are
correct.
the number of firms in the market.
,--> None of the answers is correct.
Economies of scale exist whenever: - ANSWER-average total costs decline as output increases.
You are the manager of a firm that produces output in two plants. The demand for your firm's
product is P = 78 − 15Q, where Q = Q1 + Q2. The marginal costs associated with producing in
the two plants are MC1 = 3Q1 and MC2 = 2Q2. What price should be charged to maximize
profits? - ANSWER-$40.5
Differentiated goods are a feature of a: - ANSWER-monopolistically competitive market.
Which of the following is true under monopoly? - ANSWER-P > MC
If a monopolistically competitive firm's marginal cost increases, then in order to maximize
profits, the firm will: - ANSWER-reduce output and increase price.
In the long run, monopolistically competitive firms: - ANSWER-have excess capacity.
You are the manager of a firm that produces output in two plants. The demand for your firm's
product is P = 78 − 15Q, where Q = Q1 + Q2. The marginal costs associated with producing in
the two plants are MC1 = 3Q1 and MC2 = 2Q2. How much output should be produced in plant 1
in order to maximize profits? - ANSWER-1
You are the manager of a monopoly that faces a demand curve described by P = 85 − 5Q. Your
costs are C = 20 + 5Q. The profit-maximizing price is: - ANSWER-45
,What is a competitive price-searcher market with low entry barriers? - ANSWER-monopolistic
competition
What are the characteristics that define monopolistic competition?
i) few sellers
ii) low entry barriers
iii) sell differentiated, but similar products - ANSWER-ii, iii
A firm will close if marginal revenue is (greater/less) than average variable cost. - ANSWER-less
A firm will close if total revenue is (greater/less) than total variable cost. - ANSWER-less
The firm will keep producing as long as marginal revenue is (greater/less) than marginal cost -
ANSWER-greater
There is a supply and demand curve in competitive price-searchers. (T/F)? - ANSWER-false, only
a firm supply and demand curve
In the competitive price searcher market, the firm has (some/no) control over price. - ANSWER-
some
In a competitive price-searcher market, the firm can raise prices so they're greater than their
average variable cost. (T/F)? - ANSWER-true
If a price searcher is producing at a level of output such that its marginal cost is $6 and its
marginal revenue is $4, the firm should (increase/decrease) price and (increase/decrease)
output. - ANSWER-increase; decrease
, What will occur if profits exist in the short run in a competitive price-searcher market? -
ANSWER-New firms will enter and steal some of the profits. Thus, the demand for your firm's
products will decrease and your demand curve will shift left.
If there are firms earning economic profit in a price-searcher market, new firms will (enter/exit)
causing the market price to (increase/decrease). - ANSWER-enter; decrease
What will occur if losses exist in the short run in a competitive price-searcher market? -
ANSWER-Existing firms will have to leave because they cannot cover their average variable cost.
Thus, the demand for your (and other remaining) firm's products will increase and your demand
curve will shift right.
If there are firms suffering economic losses in a price-searcher market, firms will (enter/exit)
causing the remaining firms' demand curves to (increase/decrease). - ANSWER-exit; increase
What happens to profits in the long-run? - ANSWER-As firms enter and exit the industry, the
firm's demand curve shifts until zero economic profit exists. Remember that when there is zero
economic profit, we can still have positive accounting profit.
At zero profit there is - ANSWER-no more entry or exit.
When a competitive price-searcher market is in long-run equilibrium, firms will charge a price
that is equal to (AVC, ATC, MC). - ANSWER-ATC
Who is someone who makes decisions based on uncertainty, discovery, and business judgment?
- ANSWER-an entrepreneur
How do entrepreneurs affect economic progress? - ANSWER-By discovering new products and
services that create wealth
Economics Exam, Econ 414 Final Chapter 14, Fin 321
Midterm 2, Macro Final Exam, Econ chapter 14 & 16,
ManEcon - Chapter 14 quiz, quiz 4, ECON TEST 3,
Managerial Economics Chapter 12 Test Bank
All of the following are possible ways to avoid price wars EXCEPT:
a. customer segmentation with revenue management
b. growing the market
c. reference prices and framing effects
d. to not start one
e. All of the ways are correct - ANSWER-e. All of the ways are correct
You are the manager of a monopoly that faces a demand curve described by P = 230 − 20Q. Your
costs are C = 5 + 30Q. The profit-maximizing output for your firm is: - ANSWER-5
The primary difference between monopolistic competition and perfect competition is: -
ANSWER-the ease of entry and exit into the industry.
Both the ease of entry and exit into the industry and the number of firms in the market are
correct.
the number of firms in the market.
,--> None of the answers is correct.
Economies of scale exist whenever: - ANSWER-average total costs decline as output increases.
You are the manager of a firm that produces output in two plants. The demand for your firm's
product is P = 78 − 15Q, where Q = Q1 + Q2. The marginal costs associated with producing in
the two plants are MC1 = 3Q1 and MC2 = 2Q2. What price should be charged to maximize
profits? - ANSWER-$40.5
Differentiated goods are a feature of a: - ANSWER-monopolistically competitive market.
Which of the following is true under monopoly? - ANSWER-P > MC
If a monopolistically competitive firm's marginal cost increases, then in order to maximize
profits, the firm will: - ANSWER-reduce output and increase price.
In the long run, monopolistically competitive firms: - ANSWER-have excess capacity.
You are the manager of a firm that produces output in two plants. The demand for your firm's
product is P = 78 − 15Q, where Q = Q1 + Q2. The marginal costs associated with producing in
the two plants are MC1 = 3Q1 and MC2 = 2Q2. How much output should be produced in plant 1
in order to maximize profits? - ANSWER-1
You are the manager of a monopoly that faces a demand curve described by P = 85 − 5Q. Your
costs are C = 20 + 5Q. The profit-maximizing price is: - ANSWER-45
,What is a competitive price-searcher market with low entry barriers? - ANSWER-monopolistic
competition
What are the characteristics that define monopolistic competition?
i) few sellers
ii) low entry barriers
iii) sell differentiated, but similar products - ANSWER-ii, iii
A firm will close if marginal revenue is (greater/less) than average variable cost. - ANSWER-less
A firm will close if total revenue is (greater/less) than total variable cost. - ANSWER-less
The firm will keep producing as long as marginal revenue is (greater/less) than marginal cost -
ANSWER-greater
There is a supply and demand curve in competitive price-searchers. (T/F)? - ANSWER-false, only
a firm supply and demand curve
In the competitive price searcher market, the firm has (some/no) control over price. - ANSWER-
some
In a competitive price-searcher market, the firm can raise prices so they're greater than their
average variable cost. (T/F)? - ANSWER-true
If a price searcher is producing at a level of output such that its marginal cost is $6 and its
marginal revenue is $4, the firm should (increase/decrease) price and (increase/decrease)
output. - ANSWER-increase; decrease
, What will occur if profits exist in the short run in a competitive price-searcher market? -
ANSWER-New firms will enter and steal some of the profits. Thus, the demand for your firm's
products will decrease and your demand curve will shift left.
If there are firms earning economic profit in a price-searcher market, new firms will (enter/exit)
causing the market price to (increase/decrease). - ANSWER-enter; decrease
What will occur if losses exist in the short run in a competitive price-searcher market? -
ANSWER-Existing firms will have to leave because they cannot cover their average variable cost.
Thus, the demand for your (and other remaining) firm's products will increase and your demand
curve will shift right.
If there are firms suffering economic losses in a price-searcher market, firms will (enter/exit)
causing the remaining firms' demand curves to (increase/decrease). - ANSWER-exit; increase
What happens to profits in the long-run? - ANSWER-As firms enter and exit the industry, the
firm's demand curve shifts until zero economic profit exists. Remember that when there is zero
economic profit, we can still have positive accounting profit.
At zero profit there is - ANSWER-no more entry or exit.
When a competitive price-searcher market is in long-run equilibrium, firms will charge a price
that is equal to (AVC, ATC, MC). - ANSWER-ATC
Who is someone who makes decisions based on uncertainty, discovery, and business judgment?
- ANSWER-an entrepreneur
How do entrepreneurs affect economic progress? - ANSWER-By discovering new products and
services that create wealth
