Question 1

In the short run, which part of the marginal cost (MC) curve represents the supply curve for a perfectly competitive firm?

Accepted Answer

The part of MC above the average variable cost (AVC)

Question 2

Suppose a firm has a cost function $$C(q)=100+4q^2$. If the market price is p=10$, what is the profit-maximizing output level?

Accepted Answer

$$q=1.25$$

Question 3

Given the cost function $$C(q)=100+4q^2$ and market price p=10$, what is the firm's maximized profit?

Accepted Answer

$$-93.75$$

Question 4

If a firm’s supply curve is $$S(p)=0.125p$$, and there are 100 identical firms in the market, what is the market supply curve?

Accepted Answer

$$S(p)=500p$$

Question 5

In a competitive market, the demand and supply curves are $$Q(p)=12-p$$ and $$S(p)=3p$$ respectively. What is the equilibrium price?

Accepted Answer

$$p=3$$

Question 6

Suppose the market demand is $$Q(p)=200-5p$$ and the supply is perfectly elastic at $$p=10. $$What is the equilibrium output?

Accepted Answer

$$Q=150$$

Question 7

Refer to the graph with a price ceiling at $$16.7$$ and 20 units sold. What is the size of consumer surplus?

Accepted Answer

$$a+b+c$$

Question 8

Refer to the graph with a price floor at $$28.6$$ and 20 units sold. What is the size of deadweight loss?

Accepted Answer

$$e+f$$

Question 9

A monopolist faces the demand $$Q(p)=200-5p$$ and has total costs $$C(q)=10q. $$What is the profit-maximizing output?

Accepted Answer

$$q=75$$

Question 10

A monopolist faces the demand $$Q(p)=200-5p$$ and has total costs $$C(q)=10q. $$What is the profit-maximizing price?

Accepted Answer

$$p=25$$

Question 11

A monopolist maximizes profit by:

Accepted Answer

Setting marginal revenue equal to marginal cost at a $$q$$ for which $$p(q) \geq AVC(q)$$

Question 12

For a monopoly, marginal revenue is less than price because:

Accepted Answer

The firm must lower price if it wishes to sell more output

Question 13

A monopolist produces:

Accepted Answer

Less than the competitive outcome

Question 14

A monopolist sells at a price:

Accepted Answer

Higher than the competitive price

Question 15

A monopolist sells at a price:

Accepted Answer

Higher than its marginal cost at $$q^*$$

Question 16

When a firm charges each customer the maximum price that the customer is willing to pay, the firm:

Accepted Answer

Engages in first-degree price discrimination

Question 17

In a local grocery store, avocado is priced '$$1 each, 3 for 2$$'. This can be viewed as a practice of:

Accepted Answer

Second-degree price discrimination

Question 18

Suppose an accountant offers personalized prices for different customers for the same tax preparation service, based on each customer’s willingness to pay. This is an example of:

Accepted Answer

Perfect first-degree price discrimination

Question 19

Under first-degree price discrimination, which of the following is true?

Accepted Answer

Consumer surplus is zero

Question 20

A tennis coach charges $$15 per hour for children and 30 $$per hour for adults. This is an example of:

Accepted Answer

Third-degree price discrimination

Microeconomic Theory Homework 4 Study Guidance

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