For a perfectly competitive firm,
a. P = MR at all output levels
b. P = MR at the profit-maximizing quantity only
c. P > MR at all output levels
d. P < MR at the profit-maximizing quantity only
e. P < MR at all output levels
QUESTION 2A profit-maximizing monopoly will always produce at the minimum point of its average total cost (ATC) curve.
a. True
b. False
QUESTION 3Most local phone companies
a. face a horizontal demand curve
b. are regulated
c. are called public utilities
d. have tremendous economies of scale
e. are natural monopolies
QUESTION 4A perfectly competitive firm's profit per unit of output equals
a. price minus average variable cost
b. price minus marginal cost
c. total revenue minus total cost
d. price times quantity
e. price minus average total cost
QUESTION 5Monopolists always earn positive short-run economic profit.
a. True
b. False
QUESTION 6The average cost curve for a natural monopoly is downward sloping where it intersects the market demand curve.
a. True
b. False
QUESTION 7Average revenue for a perfectly competitive firm is equal to
a. price times output
b. marginal revenue
c. total revenue/marginal revenue
d. output/total revenue
e. zero
QUESTION 8If a monopolist is producing a rate of output at which market demand is inelastic,
a. it may or may not be maximizing its short-run profit
b. reducing output would reduce both total revenue and total cost
c. reducing output would increase both total revenue and total cost
d. reducing output would increase total revenue and reduce total cost
e. increasing output will increase its short-run economic profit
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