Biology Forums - Study Force

For a profit-maximizing monopolist, the price of a product is:
 a. always equal to marginal revenue.
 b. always greater than marginal revenue.
 c. always less than marginal revenue.
 d. always equal to the average total cost of production.

QUESTION 2

Which of the following statements about international trade restrictions is true?
 a. They ensure that only efficient producers survive.
  b. They ensure that countries specialize only in those products that they can produce most efficiently.
  c. They harm domestic consumers in the majority of cases.
  d. They typically benefit foreign producers at the expense of domestic consumers.
  e. They ensure that higher-quality goods are provided at lower prices.

QUESTION 3

Identify the difference between the short-run and the long-run.

QUESTION 4

A perfectly competitive firm produces 50 units of output, at equilibrium, in the short run. The total cost borne by the firm is 300 and the average revenue is 2 . Therefore, the firm:
 a. is just breaking even.
  b. is earning positive profits.
  c. is facing a positively sloped demand curve.
  d. is suffering losses.
  e. is experiencing diseconomies of scale.

QUESTION 5

Profit-maximizing monopolists choose a level of output such that:
 a. average total cost is minimized.
 b. price equals marginal revenue but exceeds average variable cost.
  c. price equals marginal cost but exceeds average variable cost.
 d. marginal revenue equals marginal cost.

QUESTION 6

Define opportunity cost.

QUESTION 7

When restrictions alter the pattern of international trade, the _____ benefit and the _____ suffer(s).
 a. domestic consumers; domestic producers
  b. domestic consumers; government
  c. domestic producers; domestic consumers
  d. foreign producers; domestic producers
  e. foreign producers; domestic consumers

[Answer to ques. #1]  b

[Answer to ques. #2]  c

[Answer to ques. #3]  The short run is defined as the length of time during which the decision maker can vary some inputs, although others remain fixed. In the long run all inputs are variable. Inputs are still substitutable in the short run: the firm can change its output level by changing only those inputs that are variable. Long-run substitution is more obvious: the firm can produce a given rate of output using labor intensive methods that use a high ratio of worker time to capital (machinery) services, or it can use the opposite mix, a capital intensive one.

[Answer to ques. #4]  d

[Answer to ques. #5]  d

[Answer to ques. #6]  Opportunity cost of any action is the most valuable alternative forgone by the decision maker. For example, the opportunity cost of self-financing your business is the return on your best alternative investment.

[Answer to ques. #7]  c

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