Transcript PC and Monopoly Graphs

PC and Monopoly Graphs
*Reference Graphs*
1. Refer to the above diagram. To maximize
profit or minimize losses this firm will
produce:
25%
1.
2.
3.
4.
25%
25%
2
3
25%
K units at price C.
D units at price J.
E units at price A.
E units at price B.
1
4
2. Refer to the above diagram. At the profitmaximizing output, total revenue will be:
25%
1.
2.
3.
4.
25%
25%
2
3
25%
0AHE.
0BGE.
0CFE.
ABGE.
1
4
3. Refer to the above diagram. At the profitmaximizing output, total fixed cost is equal
to:
25%
1.
2.
3.
4.
25%
25%
2
3
25%
0AHE.
0BGE.
0CFE.
BCFG.
1
4
4. Refer to the above diagram. At the profitmaximizing output, total variable cost is
equal to:
25%
1.
2.
3.
4.
25%
25%
2
3
25%
0AHE.
0CFE.
0BGE.
ABGH.
1
4
5. Refer to the above diagram. At the profitmaximizing output, the firm will realize:
25%
25%
25%
2
3
25%
1. a loss equal to BCFG.
2. a loss equal to ACFH.
3. an economic profit of
ACFH.
4. an economic profit of
ABGH.
1
4
6. Refer to the above diagram. To maximize
profits or minimize losses this firm should
produce:
1. E units and charge
price C.
2. E units and charge
price A.
3. M units and charge
price N.
4. L units and charge
price LK.
25%
1
25%
25%
2
3
25%
4
7. Refer to the above diagram. In
equilibrium total revenue will be:
25%
1.
2.
3.
4.
25%
25%
2
3
25%
NM times 0M.
0AJE.
0EGC.
0EHB.
1
4
8. Refer to the above diagram.
In equilibrium total cost will be:
25%
1.
2.
3.
4.
NM times 0M.
0AJE.
0CGC.
0BHE.
1
25%
25%
2
3
25%
4
9. Refer to the above diagram. In
equilibrium the firm will realize:
1. an economic
profit of ABHJ.
2. an economic
profit of ACGJ.
3. a loss of GH
per unit.
4. a loss of JH
per unit.
25%
1
25%
25%
2
3
25%
4
10. In equilibrium which of the following
conditions are common to both unregulated
monopoly and to pure competition?
25%
1.
2.
3.
4.
25%
25%
2
3
25%
MC = P
MC = ATC
MR = MC
P = MR
1
4
11. Refer to the above diagram for a pure
monopolist. If the monopolist is unregulated,
it will maximize profits by charging:
1.
2.
3.
4.
a price above P3 and
selling a quantity less
than Q3.
price P3 and producing
output Q3.
price P2 and producing
output Q2.
price P1 and producing
output Q1.
25%
1
25%
25%
2
3
25%
4
12. Refer to the above diagram for a pure monopolist.
Suppose a regulatory commission is created to determine a
legal price for the monopoly. If the commission seeks to
provide the monopolist with a "fair return," it will set price at:
25%
1.
2.
3.
4.
25%
25%
2
3
25%
P1.
P3.
P2.
P4.
1
4
13. Refer to the above diagram for a pure monopolist. If a
regulatory commission seeks to achieve the most efficient
allocation of resources to this line of production, it will set a
price of:
25%
1.
2.
3.
4.
25%
25%
2
3
25%
P1.
P3.
P2.
P4.
1
4
14. Refer to the above diagram for a pure monopolist. If a
regulatory commission sets price to achieve the most
efficient allocation of resources, it will have to:
25%
1.
2.
3.
4.
25%
25%
2
3
25%
tax the monopolist P3 P1 per unit to
prevent the monopolist from realizing an
economic profit.
subsidize the monopolist or the
monopolist will go bankrupt in the long
run.
subsidize the monopolist P1P4 per unit
to allow the monopolist to break even.
tax the monopolist P1P2 per unit to
prevent the monopolist from realizing an
economic profit.
1
4
15. If a purely competitive firm is producing
at some level less than the profit-maximizing
output, then:
25%
1.
2.
3.
4.
price is necessarily greater
than average total cost.
fixed costs are large relative
to variable costs.
price exceeds marginal
revenue.
marginal revenue exceeds
marginal cost.
1
25%
25%
2
3
25%
4