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Economics MCQs

Managerial Economics

Quiz # 2, MCQs





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  1. 1)

    In the short run, a monopolist will shut down if it is producing a level of output where marginal revenue is equal to short-run marginal cost and price is


    • A) greater than average total cost
    • B) less than average total cost
    • C) greater than average variable cost
    • D) less than average variable cost

  2. 2)

    A natural monopoly refers to a monopoly that is defended from direct competition by


    • A) economies of scale over a broad range of output
    • B) a government franchise
    • C) control over a vital input
    • D) a patent or copyright

  3. 3)

    When a perfectly competitive industry is in long-run equilibrium, all firms in the industry


    • A) earn zero economic profits
    • B) produce a level of output where short-run marginal cost is equal to short-run average total cost
    • C) produce a level of output where long-run marginal cost is equal to long-run average cost
    • D) All of the above are correct

  4. 4)

    The short-run supply curve of a perfectly competitive firm


    • A) is equal to that portion of the short-run marginal cost curve that is above the average variable cost curve
    • B) is equal to that portion of the short-run marginal cost curve that is above the average total cost curve
    • C) is equal to that portion of the short-run average total cost curve that is above the average variable cost curve
    • D) None of the above is correct.

  5. 5)

    The long-run supply curve of a perfectly competitive firm


    • A) is equal to that portion of the long-run marginal cost curve that is above the relevant short-run average variable cost curve
    • B) is equal to that portion of the long-run marginal cost curve that is above the relevant short-run average total cost curve
    • C) is equal to that portion of the long-run average total cost curve that is above the relevant short-run average variable cost curve
    • D) None of the above is correct

  6. 6)

    A depreciation of the U.S. dollar relative to foreign currencies will make


    • A) foreign imports less expensive in the United States
    • B) U.S. exports less expensive in foreign countries
    • C) the demand for U.S. exports decrease
    • D) All of the above are correct

  7. 7)

    The value of the U.S. dollar on the foreign exchange market will tend to


    • A) increase if there is an increase in the demand for U.S. exports by foreign countries
    • B) decrease if there is an increase in the demand for foreign imports by the United States
    • C) decrease if monetary authorities intervene on the foreign exchange market by selling U.S. dollars for foreign currencies
    • D) All of the above are correct

  8. 8)

    A monopolized market is in long-run equilibrium when


    • A) zero economic profit is earned by the monopolist
    • B) production takes place where price is equal to long- run marginal cost and long-run average cost
    • C) production takes place where long-run marginal cost is equal to marginal revenue and price is not below long- run average cost
    • D) All of the above are correct

  9. 9)

    Which of the following types of firms is likely to be a monopolistic competitor?


    • A) A local telephone company
    • B) An automobile manufacturer
    • C) A restaurant
    • D) All of the above are likely to be monopolistic competitors

  10. 10)

    A monopolist produces 14,000 units of output and charges $14 per unit. Its marginal revenue is $8, its marginal cost is $7 and rising, its average total cost is $10, and its average variable cost is $9. The monopolist should


    • A) increase output, which will result in an increase in the firm's positive economic profit
    • B) increase output, which will reduce the firm's economic losses
    • C) shut down, which will reduce the firm's economic losses
    • D) decrease output, which will result in an increase in the firm's positive economic profit