A monopolist earns an economic profit only when:
a. average total cost equals than price.
b. marginal cost equals price.
c. marginal revenue equals price.
d. average total cost is less than price.
QUESTION 2Assume that an individual consumes only hotdogs and colas and that the last hotdog consumed yields 15 utils and the last cola 10 utils. If the price of a hotdog is 1 and the price of a cola is .50, we can conclude that the:
a. consumer should consume more hotdogs and less cola.
b. price of hotdogs is too high.
c. consumer should consume fewer hotdogs and more cola.
d. consumer is in equilibrium.
QUESTION 3A monopolist can earn an economic profit only when:
a. marginal cost equals marginal revenue.
b. marginal cost equals price.
c. average total cost is less than price.
d. all of these.
QUESTION 4Assume a consumer purchases a combination of goods X and Y such that MUx / Px = 20 units of utility per dollar and MUy / Py = 10 units of utility per dollar. To maximize utility, the consumers should buy:
a. neither X nor Y.
b. less of both X and Y.
c. more of both X and Y.
d. more of X and less of Y.
e. less of X and more of Y.
QUESTION 5Assume a monopolist's marginal cost and marginal revenue curves intersect and the demand curve passes above its average total cost curve. The firm will:
a. make an economic profit.
b. stay in operation in the short run, but shut down in the long run.
c. shut down in the short run.
d. lower the price.
QUESTION 6A consumer buys only food and clothing. If the quantity of food bought increases while that of clothing remains the same, the marginal utility of food will:
a. fall, but not as fast as the marginal utility of clothing falls.
b. rise, but not as fast as the marginal utility of clothing rises.
c. rise relative to the marginal utility of clothing.
d. fall relative to the marginal utility of clothing.
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