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Principles of Microeconomics – Spring 2021
Join Code: 840916
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22
GRADEBOOK
Unanswered
22
CHAT
Homework 4
Homework
Due in 6 day
Homework
Assignment
#4
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Q1
Homework
Unanswered
In perfect competition, firms
will be able to earn economic
profits in:
Select an answer and submit. For
keyboard navigation, use the
up/down arrow keys to select an
answer.
a
the short run, only.
b
the long run, only.
c
the short and in the
long runs.
d
neither the short or
in the long runs.
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Q2
Homework
Unanswered
An increase in demand in a
perfectly competitive,
increasing cost industry will
ultimately result in a price
that is ______________ the
original price
Select an answer and submit. For
keyboard navigation, use the
up/down arrow keys to select an
answer.
a
higher than
b
less than
c
equal to
d
either higher than or
equal to
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Q3
Homework
Unanswered
Consider two services
provided in perfectly
competitive markets. The
price of the most expensive
service costs 50 percent
higher than the price of the
less expensive service. Both
markets are in long-run
equilibrium. What could
possibly explain the higher
price?
Select an answer and submit. For
keyboard navigation, use the
up/down arrow keys to select an
answer.
a
the more expensive
service must have a
greater demand
than the less
expensive service
b
the more expensive
service must have a
higher minimum
average cost than
the less expensive
service
c
the more expensive
service must have
either a greater
demand or a higher
minimum average
cost than the less
expensive service
d
the more expensive
service must have
both a greater
demand and a
higher minimum
average cost than
the less expensive
service
the more expensive
e
service will not
necessarily have a
greater demand or a
higher minimum
average cost than
the less expensive
service
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Q4
Homework
Unanswered
Given the following data,
what should the perfectly
competitive firm do?
Current production = 1,000
Total costs = $15,000
Fixed costs = $6,000
Marginal cost = $10
Current price = $10
Select an answer and submit. For
keyboard navigation, use the
up/down arrow keys to select an
answer.
a
continue to produce
in the short and long
runs.
b
continue to produce
in the short run, but
close down in the
long run.
c
expand production
in the short run, but
close down in the
long run.
d
stop producing in
the short run and
leave the industry in
the long run.
e
stop producing in
the short run, but
produce in the long
run once its fixed
costs become
variable.
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Q5
Homework
Unanswered
Following a decrease in
demand, the perfectly
competitive industry has
adjusted to a short run
equilibrium. As the firm
moves back to a long run
equilibrium, the price will
______________ and the
typical firm’s production will
______________.
Select an answer and submit. For
keyboard navigation, use the
up/down arrow keys to select an
answer.
a
increase; decrease
b
decrease; decrease
c
increase; increase
d
decrease; increase
e
one cannot tell.
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Q6
Homework
Unanswered
The perfectly competitive
market price of bananas is
$0.79 per pound. Marcy sells
100 pounds of bananas. Her
total revenue for selling
bananas is
. Her
marginal revenue for selling
the 100th pound of bananas
is
.
Select an answer and submit. For
keyboard navigation, use the
up/down arrow keys to select an
answer.
a
$79.00; $79.00
b
$79.00; $0.79
c
$0.79; $79.00
d
$0.79; $0.79
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Q7
Homework
Unanswered
The following graph
represents the weekly
costs of production for a
small firm making o ice
chairs. If the short-run
market price for an o ice
chair is $60 per chair,
(roughly) how many
chairs should the firm
make to either maximize
profits or minimize
losses?
Select an answer and submit. For keyboard na
use the up/down arrow keys to select an answ
a
About 60 chairs per week in the s
run but the firm is making econo
losses.
b
About 60 chairs per week in the s
run and the firm is making zero
economic profit.
c
About 36 chairs per week in the s
run and the firm is making zero
economic profit.
d
About 80 chairs per week in the s
run and the firm is making posit
economic profits.
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Q8
Homework
Unanswered
The following graph
represents the weekly
costs of production for a
small firm making o ice
chairs in a perfectly
competitive market. If
the market price for
o ice chairs is currently
$100 per chair we expect
firms to
the
market and the market
price to
.
Select an answer and submit. For keyboard na
use the up/down arrow keys to select an answ
a
Exit; decrease.
b
Exit; increase.
c
Enter; increase.
d
Enter; decrease.
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Q9
Homework
Unanswered

We know a perfectly
competitive market is
allocatively e icient when:
Select an answer and submit. For
keyboard navigation, use the
up/down arrow keys to select an
answer.
a
The marginal benefit
provided to
consumers of the
equilibrium unit
produced is equal to
the marginal cost of
producing it.
The marginal benefit
b
provided to
consumers of the
equilibrium unit
produced is greater
than the marginal
cost of producing it.
c
The marginal benefit
provided to
consumers of the
equilibrium unit
produced is less
than the marginal
cost of producing it.
d
The marginal benefit
provided to
producers of the
equilibrium unit
produced is equal to
the marginal cost of
producing it.
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Q10
Homework
Unanswered
The following graph
shows cost information
for a firm in a perfectly
competitive industry. If
the firm is representative
of all firms in the
industry, what will be the
long-run equilibrium
price in the market?
T
i
d
b i
Type your numeric answer and submit
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Q11
Homework
Unanswered
Which of the following are
characteristics of a true
monopoly market?
I. Possibility for normal
profits in the long run
II. Possibility for economic
profits in the long run
III. No close substitutes to the
good/service
IV. Legal, technological, or
other barriers to market
entry
Select an answer and submit. For
keyboard navigation, use the
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answer.
a
II only
b
I, III, and IV
c
II and IV
d
I, II, III, and IV
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Q12
Homework
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Unanswered
A natural monopoly is a
market in which:
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answer.
a
Patent protection
guarantees the
existence of the
monopoly
b
Firms occasionally
enter the market but
cannot last and
eventually exit
c
A firm enjoys a
governmentsanctioned
monopoly in a
market with low
fixed costs and high
variable costs
d
Consumers benefit
from the existence of
the monopoly, so
long as the
monopoly is wellregulated
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Q13
Homework
Unanswered
Evaluate the following
statement by an antitrust
lawyer. “Monopolies always
want to charge the highest
price the market will bear.”
Select an answer and submit. For
keyboard navigation use the
keyboard navigation, use the
up/down arrow keys to select an
answer.
a
Both a monopoly
and a competitive
firm charge the
highest price the
market will bear.
b
It is more accurate in
describing a
perfectly
competitive firm’s
behavior.
c
It is accurate in
describing a
monopoly’s
behavior.
d
Neither firm will
charge the highest
price the market will
bear.
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Q14
Homework
Unanswered
In the short run, a copyright
on a good will mean that the
producing firm will likely
produce:
Select an answer and submit. For
keyboard navigation, use the
up/down arrow keys to select an
answer.
a
more than the
allocatively e icient
amount of output.
less than the
b
allocatively e icient
amount of output.
c
the allocatively
e icient amount of
output.
d
One cannot tell. It
depends upon the
size of the external
benefits associated
with the good.
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Q15
Homework
Unanswered
A profit-maximizing
monopoly will be able to
earn economic profits in
which of the following?
Select an answer and submit. For
keyboard navigation, use the
up/down arrow keys to select an
answer.
a
only if there is
su icient demand
b
only if there are
barriers to entry
c
only if there are
barriers to entry and
su icient demand
d
Profit-maximizing
monopolies will earn
economic profits in
all circumstances.
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Q16
Homework
Unanswered
A monopolist produces a
level of output that can be
described as follows. The
output is:
Select an answer and submit. For
keyboard navigation, use the
up/down arrow keys to select an
answer.
a
where marginal
revenue is greater
than marginal cost;
and too little for
allocative e iciency.
b
where marginal
revenue is less than
marginal cost; and
too much for
allocative e iciency.
c
where marginal
revenue is equal to
marginal cost; and
too much for
allocative e iciency.
d
where marginal
revenue is equal to
marginal cost; and
too little for
allocative e iciency.
e
Where price is
greater than
marginal revenue;
but an amount that
will be allocatively
e icient.
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Q17
Homework
Unanswered
A monopoly will be
economically e icient if it
produces where the marginal
cost
Select an answer and submit. For
keyboard navigation, use the
up/down arrow keys to select an
answer.
a
is at a minimum.
b
equals the average
cost.
c
is greater than the
average cost.
d
is less than the
average cost.
e
none of the above is
true.
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Q18
Homework
Unanswered
What will happen if a
monopoly raises its price?
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keyboard navigation, use the
up/down arrow keys to select an
answer.
a
Quantity demanded
will increase
b
Quantity demanded
will stay the same
c
Quantity demanded
will fall to zero
d
Quantity demanded
will fall, but not
necessarily to zero
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Q19
Homework
Unanswered
What are the optimal
condition for a monopoly to
develop and survive?
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keyboard navigation, use the
up/down arrow keys to select an
answer.
a
There is only one
firm in the market.
b
The barrier to entry
is very high.
c
The good produced
by the monopoly
firm has no close
substitution.
d
All of the above.
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Q20
Homework
Unanswered
When a monopoly is
producing profit-maximizing
quantity, what is the
relationship between
marginal cost and price?
Select an answer and submit. For
keyboard navigation, use the
up/down arrow keys to select an
answer.
a
Marginal cost is
greater than the
price
b
Marginal cost is
equal to the price
c
Marginal cost is less
than the price.
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Q21
Homework
Unanswered
The graph illustrates an
unregulated, profitmaximizing monopolist.
To maximize the pro ,
the firm will produce
what quantity and sell it
at what price?
Select an answer and submit. For keyboard na
use the up/down arrow keys to select an answ
a
Q5; P4
b
Q4; P2
c
Q3; P5
d
Q1; P1
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Q22
Homework
Unanswered
The graph illustrates an
unregulated, profitmaximizing monopolist.
Assuming the firm
produces the profitmaximizing level of
output, it will earn total
revenue equal to ___
Select an answer and submit. For keyboard na
use the up/down arrow keys to select an answ
a
Q1xP1
b
Q3xP5
c
Q3xP3
d
Q5xP4
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