微观经济学11,12

I. Single choice questions1. Which of the following is NOT a condition of a perfect competition:a. Products produced by rival firms are perfect substitutes.b. Any individual firm cannot affect market supply.c. Unrestricted entry and exit.d. Industry sales are small.e. Each firm has complete knowledge about production and prices.2. In a perfectly competitive market.a. A firm must lower price to attract more customers.b. The additional revenue from selling one more unit of output is less than price.c. Demand facing the industry is perfectly elastic.d. All of the above.e. None of the above.3. For a price-taking firm, marginal revenuea. Is the addition to total revenue from producing one more unit of output.b. Decreases as the firm produces more output.c. Is equal to price at any level of output.d. Both a and b.e. Both a and c.The next three questions refer to the following:The graph on the left shows the short-run marginal cost curve for a typical firm selling in a perfectly competitive industry. The graph on the right shows current industry demand and supply.4. If the firm's demand and marginal revenue curves were drawn in the left-hand graph, what would be the elasticity of demand?a. Zero.b. -6.c. -0.6.d. Infinitely elastic.e. Unitary.5. What is the marginal revenue for the FIRM from selling the 250th unit of output?a. $10.b. $8.c. $6.d. $4.e. Zero.6. What output should the firm produce?a. 200.b. 250.c. 150.d. 300.7 When total fixed costs increase,a. The profit-maximizing level of output falls.b. The firm may be forced to shut down if total fixed costs get too high.c. Economic profit decreases.d. Both a and b.e. Both b and c.8. A competitive firm will maximize profit by producing the level of output at which:a. The last unit of output produced adds the same amount to total revenue as to total cost.b. The additional revenue from the last unit of output produced exceeds the additional cost of the last unit by the largest amount.c. The firm's total revenue exceeds total cost by the largest amount.d. Both a and b.e. Both a and c.9. Firm A and firm B both have total revenues of $200,000 and total costs of $250,000; firm A has total fixed costs of $40,000, while firm B has total fixed costs of $70,000. Which of the following statements are true in the short run?a. Firm A should operate.b. Firm B should operate.c. Firm A should shut down.d. Firm B should shut down.e. Both b and c.10. When a perfect competitive industry is in long-run equilibrium,a. Firms have no incentive to enter or exit the industry.b. Market price is equal to minimum long-run average cost.c. Each firm earns a normal return.d. Both a and c.e. All of the above.11. An industry is in long-run competitive equilibrium. The price of a substitute good increases.a. The product price will rise.b. New firms will enter the market.c. Firms will begin earning economic profit.d. a and b.e. All of the above.12. A typical firm in a perfectly competitive market made positive economic profits last period. This period,a. Market supply will increase.b. Market price will rise.c. The firm will produce more.d. The firm's profits will increase.13. Which of the following CANNOT be true at any output along a perfectly competitive firm'sshort-run supply curve?a. Average total cost is greater than marginal cost.b. Marginal cost is greater than average total cost.c. Average variable cost is greater than marginal cost.d. Marginal cost is greater than average variable cost.14. In a perfectly competitive market,a. A firm can attract more customers by lowering its price.b. A firm can sell as much as it wants at the existing market price.c. The additional revenue from selling one more unit of output is less than the market price.d. Both a and c.e. Both b and c.15. In a competitive industry the market-determined price is $12. A firm is currently producing 50 units of output; average total cost is $10, marginal cost is $15, and average variable cost is $7. In order to maximize profit, the firm should:a. Produce more because the firm is earning a profit of $100.b. Keep output the same because the firm is earning a profit of $100.c. Produce more because the next unit of output increases profit by $2.d. Produce less because the last unit of output decreased profit by $3.16. Consider the short-run supply curve for a perfectly competitive industry. In general, which of the following statements are true?a. The short-run industry supply is obtained by horizontally summing the supply curves of all the individual firms in the industry.b. The industry supply curve tends to be flatter (more elastic) than the horizontal sum of all the industrial firms' supply curves.c. Short-run supply for a perfectly competitive industry is flat for constant cost industries.d. Both a and b.e. None of the above are true in general.The next four questions refer to the following figure:The graph on the left shows long-run average and marginal cost for a typical firm in a perfectly competitive industry. The graph on the right shows demand and long-run supply for an increasing-cost industry.17. What output will the firm produce?a. 250.b. 300.c. 350.d. 400.18. How much profit will the firm earn?a. Zero.b. $2,600.c. $3,100.d. $3,750.e. $6,000.19. If this were a constant-cost industry, what would be the price when the industry gets to long-run competitive equilibrium?a. Between $35 and $20.b. $35.c. $20.d. Below $20.e. Above $35.20. If this were an increasing cost industry, what would be the price when the industry gets to long-run competitive equilibrium?a. Between $35 and $15.b. $35.c. $15.d. Below $15.e. Above $35.21. A firm with market powera. Can increase price without losing all sales.b. Faces a downward-sloping demand curve.c. Is the only seller in a market.d. Both a and b.e. All of the above.22. One method of measuring the extent of a firm's market power isa. The Lerner index.b. Price elasticity of demand for the firm's product.c. Income elasticity of demand for the firm's product.d. Both a and b.e. All of the above.23. A monopolistic competitor is similar to a monopolist in thata. Both have market power.b. Both earn positive economic profit in the long run.c. Both produce the output at which long-run average cost is at a minimum.d. a and b.e. All of the above.24. A monopoly is producing a level of output at which price is $80, marginal revenue is $40, average total cost is $100, marginal cost is $40, and average fixed cost is $10. In order to maximize profit, the firm shoulda. Produce more.b. Keep output the same.c. Produce less.d. Shut down.The next 3 questions refer to the following figure:The above graph shows the demand and cost conditions facing a price-setting firm.25. When output is 50 units, what will happen to total revenue if the firm sells another unit of output?a. Total revenue will increase $13.50.b. Total revenue will increase $11.00.c. Total revenue will increase $9.00.d. Total revenue will increase $6.00.e. None of the above.26. The firm will produce _____ units of output and charge a price of _____.a. 40, $8.b. 50, $9.c. 60, $10.d. 50, $6.e. None of the above.27. What is the maximum amount of profit the firm can earn?a. -$180.b. -$80.c. $60.d. $120.e. None of the above.28. A monopolist which suffers losses in the short run willa. Continue to operate as long as total revenue covers fixed cost.b. Raise price in order to eliminate losses.c. Exit in the long run if there is no plant size that will result in economic profit that is greater than or equal to zero.d. Both a and b.e. Both a and c.29. Suppose that a profit-maximizing monopolist has a plant of the optimal size and is producinga level of output at which price is $30, average total cost is $55, and average fixed cost is $40. The firm shoulda. Operate in the short run.b. Shut down in the short run.c. Exit the market in the long run.d. Continue to operate in the long run.e. Both a and c.30. If a monopolistically competitive market is in long-run equilibrium, each firma. Charges a price which is higher than long-run marginal cost.b. Earns economic profits.c. Produces that level of output at which long-run average cost is minimum.d. All of the above.e. None of the above.31. A monopolistic competitor is producing a level of output at which price is $200, marginal revenue is $100, average total cost is $210, marginal cost is $100, and average variable cost is $180. In order to maximize profit, the firm shoulda. Increase output.b. Keep output the same.c. Decrease output.d. Shut down.The next 6 questions refer to the following:A firm with market power faces the following estimated demand and average variable cost functions:where is quantity demanded, P is price, M is income, and is the price of a related good. The firm expects income to be $40,000 and to be $2. Total fixed cost is $100,000.32. What is the estimated demand function for the firm?a. = 71,000 - 500P.b. = 39,000 - 200P.c. = 39,000 - 500P.d. = 40,000 - 200P.33. What is the estimated marginal revenue function for the firm?a. MR = 48 - 0.002Q.b. MR = 78 - 0.002Q.c. MR = 78 - 0.004Q.d. MR = 48 - 0.004Q.34. What is the profit-maximizing choice of output?a. 8,000 units.b. 10,000 units.c. 12,000 units.d. 16,000 units.e. 0 units, the firm shuts down.35. What price should the firm charge in order to maximize profit?a. $42.50.b. $48.c. $50.d. $62.e. $70.36. The firm should ______________ because _______________.a. shut down, P = $62 < TVC = $229.50.b. operate, P = $62 > A VC = $17.50.c. operate, P = $62 > A VC = $22.d. operate, P = $60.50 > A VC = $25.50.37. What is the firm's profit?a. $147,000.b. $120,000.c. $220,000.d. $335,000.38. In order to maximize profit, a firm that produces its output in two plants will produce the level of total output at which the last unit of output produced adds the same amount to total revenue as to thea. First plant's total cost.b. Second plant's total cost.c. Firm's total cost.d. Both a and b.39. A firm is producing 10,000 units of output in two plants, A and B, and each plant is producing 5,000 units of output. The marginal cost in plant A is $10 and the marginal cost in B is $6. To reduce the cost of producing 10,000 units the firm shoulda. Produce more in A and less in B.b. Produce less in A and more in B.c. Produce it all in B because B is the lower cost plant.d. Do nothing since the output in each plant is equal.40. In order to maximize profit, the firm shoulda. Keep the allocation between plants unchanged.b. Produce all its output in the Taiwan plant.c. Produce all its output in the California plant.d. Switch some output from the California to the Taiwan plant.e. Switch some output from the Taiwan to the California plant.II. Fill in blanks1. A perfectly competitive firm's demand is ____________ elastic and equal to ____________ which is equal to ____________.2. A perfectly competitive firm in the short run willa. Produce the output at which _____________________ equals __________________ and make an economic profit if price exceeds __________________.b. Produce the output at which __________________ equals __________________ and make a loss if price is between __________________ and __________________.c. Shut down if price is below ________________________ and make a loss of __________________.3 A competitive firm estimates its average variable cost function to be .The firm's total fixed cost is $3,500.a. The marginal cost function associated with this average variable cost function isSMC =__________________________.b. A VC reaches its minimum at ______ units of output. Minimum AVC is _________.c. Suppose the price of the product is P = $125. The firm should produce _________ units of output. The firm earns a profit (loss) of __________________.d. Suppose the price of the product is P = $115. The firm should now produce _________ units of output. Its profit (loss) will be _________.e. Suppose the price of the product falls to P = $100. The firm should produce _________ units of output. Its profit (loss) will be ____________.4. Fill in the blanks:a. A monopoly can raise its price without ______________________, because it has ________________________.b. Two related ways to measure the extent of a firm's market power are ______________________________ and ___________________________________.c. Monopolistically competitive firms will have their economic profit competed away in the long run because of ____________________________________________________________. They will however earn ____________________ in the long run.d. A firm with market power will produce at a loss in the short run only if _____________________________. If this condition is met and the firm does produce at a loss, the firm will lose ____________ (more, less) than its total fixed costs. In the long run, this firm will leave the industry if _______________________________.5. The following figure shows the average revenue product (ARP) and marginal revenue product curves of monopoly for its only variable input, labor.a. If the wage is $30, the firm will hire _________ workers.b. If the wage is $10, the firm will hire __________ workers. Total revenue is ________ (hint: ARP = P(Q/L), total variable cost is ________. If total fixed cost is $550, the firm earns a profit of ________.c. If the wage is $60, the firm will hire _________ workers.6. A firm produces its output in two plants, A and B.a. To maximize its profit, the firm should produce the output at which ______ equals ______. It sets the price given by ______.b. It should allocate this output between the two plants so that ______ equals ______.c. If marginal cost in plant A is $20 and the marginal cost in plant B is $15, the firm should reduce output in ______ and increase output in ______. As it continues this reallocation ______ will increase and ______ will decrease.。