11. Economies of scale:
a. means that per unit costs decrease as output increases in the long run.
b. are caused by loss of team spirit as a firm expands in size.
c. is the result of mismeasurement of opportunity costs.
d. occur when per unit costs increase as one input is added to production.
12. Kellogg's, the breakfast food people, comprise one of four corporations that control about 92 percent of its market for breakfast food. Kellogg's would be considered:
a. a perfect competitor.
b. a monopolist.
c. an oligopolist.
d. to be engaged in monopolistic competition.
13. Ruby's Beauty College of Grand Forks, Nebraska, is one of many local beauty colleges each specializing in different haircutting techniques. Ruby's Beauty College would be considered:
a. a perfect competitor.
b. a monopolist.
c. an oligopolist.
d. a monopolistic competitor.
14. Monopolistic competition is characterized by:
a. interdependent pricing and output decisions.
b. significant barriers to entry.
c. many firms producing differentiated products.
d. firms facing a perfectly elastic demand curve.
15. A major difference between a monopolistically competitive firm and a:
a. perfectly competitive firm is that the competitive firm faces a downward sloping demand curve while the monopolistically competitive firm sells a standardized product.
b. perfectly competitive firm is that the competitive firm sells a differentiated product, whereas the monopolistically competitive firm sells a standardized product.
c. monopolist is the monopolist produces where marginal revenue equals marginal cost, and the monopolistically competitive firm where price equals marginal cost.
d. monopolist in long-run equilibrium is that the monopolist's average total cost curve can lie below its price, whereas the monopolistically competitive firm's average total cost curve will be tangent to its demand curve.
16. Which of the following firms would most likely be operating within an oligopolistic industry?
a. A farm.
b. A public utility company.
c. A tire manufacturer.
d. A restaurant.
17. Regarding MC and MR:
a. If MR > MC, the monopolist gains profit by decreasing output.
b. If MR < MC, the monopolist gains profit by increasing output.
c. If MR = MC, the monopolist is breaking even.
d. If MR = MC, the monopolist is maximizing profit.
18. Patents:
a. serve the public interest in that it is more efficient for a single supplier to supply the market than for many suppliers to do so.
b. are illegal if the owner of the patent charges the public a high price.
c. create monopolies.
d. discourage inventors from thinking up new products.
19. In order to maximize profits (or minimize losses) a firm should produce at the output level which:
a. maximizes per unit profit.
b. maximizes total revenue.
c. minimizes total cost.
d. marginal revenue equals marginal cost.
20. The shutdown point:
a. is when the firm will be better off if it shuts down than it will be if it stays in business.
b. always means bankruptcy.
c. is when price< ATC.
d. is when price = fixed cost.