A profit-maximizing monopolist, if producing at all, chooses a level of output where:

A profit-maximizing monopolist, if producing at all, chooses a level of output where:
 a. total revenue is maximized.
 b. total cost is minimized.
 c. average total cost is minimized.
 d. marginal revenue equals marginal cost.

QUESTION 2

Protection of an infant industry should be withdrawn once that industry:
 a. charges the same price as foreign competitors.
  b. goes public on the stock exchange.
  c. raises a large amount of sales revenue.
  d. achieves sufficient size to compete with foreign firms.
  e. earns enough profit as a result of the subsidies to remain in business.

QUESTION 3

Assume that buyers are aware of the similarities between the products sold by two dairy farms. The dairy producers can still practice price discrimination through advertisement and salesmanship.
  Indicate whether the statement is true or false

QUESTION 4

In the short run, a firm attempting to minimize losses:
 a. must leave the industry in order to maximize opportunity costs.
  b. will produce as long as marginal cost equals marginal revenue.
  c. will produce as long as total revenue exceeds total variable cost.
  d. will produce as long as total revenue exceeds total fixed cost.
  e. will produce as long as competitors continue to produce.

QUESTION 5

A price-taking firm and a monopoly firm are alike in that:
 a. price equals marginal revenue for both.
 b. both maximize profits by choosing an output where marginal revenue equals marginal cost.
  c. price exceeds marginal cost at the profit-maximizing level of output for both.
 d. in the long run, both earn zero economic profits.

QUESTION 6

Nascent industries require adequate protection from foreign competition because:
 a. they experience economies of scale at the initial stages of production.
  b. they experience diseconomies of scale at high levels of output.
  c. the quality of the products of such industries are comparatively inferior than the products of their foreign competitors.
  d. they could undermine other developed industries by selling higher quality products at lower prices.
  e. their initial costs of production are considerably high and they incur losses.

QUESTION 7

In a perfectly competitive market, buyers are completely aware of the asking prices of sellers but sellers are unaware of the bids placed by buyers.
  Indicate whether the statement is true or false