Mc Assignment #6

MC ASSIGNMENT #6

1) At the current level of output a firm's marginal cost equal 16 and marginal revenue equals 10. The firms

| | is producing the profit-maximizing amount. |

| | should produce more. |

| | should produce less. |

| | Not enough information. |

2) If the demand curve a monopoly faces is P = 100 - 2Q, then profit maximization

| | is achieved when 25 units are produced. |

| | is achieved by setting price equal to 25. |

| | is achieved only by shutting down in the short run. |

| | cannot be determined solely from the information provided. |

3) If the demand curve a monopoly faces is P = 100 - 2Q, and MC is constant at 16, then profit maximization

| | is achieved when 21 units are produced. |

| | is achieved by setting price equal to 21. |

| | is achieved only by shutting down in the short run. |

| | cannot be determined solely from the information provided. |

4) A monopolist faces the demand curve P = 500 – 5Q. Without knowing anything about costs, which of the following prices would definitely not be a profit-maximizing option for the monopolist?

| | 400 |

| | 300 |

| | 200 |

| | it is impossible to answer this without knowing about the cost structure. |

5) A monopolist

| | can raise its price without losing any sales because it is the only supplier in the market. |

| | can earn a greater than normal rate of return in the long run. |

| | always charges a price that is higher than marginal revenue. |

| | both a

and b |

| | both b

and c |

6) A firm with market power

| | can increase price without losing all sales. |

| | faces a downward-sloping demand curve. |

| | is the only seller in a market. |

| | both a

and b |

| | all of the above |

7) A monopoly firm faces a demand function P = 30 - 0.075Q and the corresponding MR function, MR = 30 - 0.15Q.

At any price above $______ demand is elastic.

| | $5 |

| |...