Suppose a monopolist's demand curve lies below its average variable cost curve. The firm will:

Suppose a monopolist's demand curve lies below its average variable cost curve. The firm will:
 a. stay in operation in the short-run.
  b. earn an economic profit.
  c. earn an economic profit in the long run.
  d. shut down.

QUESTION 2

Suppose a consumer wants to obtain the highest possible satisfaction from goods purchased on a fixed budget. Which of the following must be equal for all goods?
 a. Total utility.
  b. Marginal utility.
  c. Average utility.
  d. Marginal utility per dollar.

QUESTION 3

To maximize its profits, a monopoly should produce the quantity where its marginal cost equals its:
 a. average total cost.
  b. average variable cost.
  c. demand.
  d. marginal revenue.

QUESTION 4

According to the utility model of consumer demand, the demand curve is downward-sloping because of the law of:
 a. diminishing marginal utility.
  b. diminishing consumer equilibrium.
  c. consumer equilibrium.
  d. diminishing utility maximization.

QUESTION 5

A monopoly will price its product:
 a. where total revenue is maximized.
  b. where total costs are minimized.
  c. at that point on the market demand curve corresponding to an output level in which marginal revenue equals marginal cost.
  d. at that point on the market demand curve which intersects the marginal cost curve.

QUESTION 6

Assume that an individual consumes only coffee and bagels and that the last cup of coffee yields 12 utils and the last bagel 6 utils. If the price of a cup of coffee is 1 and the price of the bagel is .50, we can conclude that the:
 a. consumer should consume more coffee and fewer bagels.
  b. price of coffee is too high relative to bagels.
  c. consumer should consume less coffee and more bagels.
  d. consumer is in equilibrium.