COST & PROFIT MAXIMIZATION 15.

A firm is selling its product wherein, the

market price is lower than the opportunity
1.Which of the following short-run cost
cost of the inputs used in its production.
curves declines continuously? Average
What could possibly happen in this case?
Fixed Cost
The firm will probably earn accounting
2.At the point where MR=MC, any further profit but may suffer from economic
increase in output would result to? an losses.
increase in cost per additional output.
PERFECT COMPETITION & MONOPOLY
3.If a firm produces nothing, which of the
1. The marginal revenue of a firm in a
following costs will be zero? Variable Cost
perfectly competitive industry is: equal to
4.The extra cost associated with producing the price of the product.
an additional unit of output is called:
2.Referring from the figure above, What
Average Marginal Cost
quantity can the monopolist maximize its
5.If a firm is generating more profit than its profit? 10
opportunity cost, it is earning: Economic
3.A patent generate monopoly power legally
profit
because it provides: an exclusive rights to
6.From the point of view of cost analysis, the inventor of the product.
which of the following illustrates that the firm
4.The shutdown point for a firm in a
has achieved its maximum production
competitive market is when: total revenue
capacity? When average total cost is at
is less than total cost.
its lowest
5.In a competitive industry, the individual
7.At which point does the constant return to
firms demand is elastic due to: many
scale located? (refer to the figure below) Q2-
competitors
Q3
6.The demand curve of a firm having
8.Economies of scale is achieved when:
monopoly power is the industry's
When the firm was able to maximize its
demand curve.
fixed input for the last additional
output. 7.In a perfectly competitive industry, a firm's
price is: equal to the market price
9.An increase in marginal cost is due to an
increase in: Variable Cost 8.When firms in a competitive industry is
incurring losses, in the long run some firms
10.At which point does the maximum
will: leave the industry and market price
efficiency scale located? (refer to the figure
will rise.
below) Q2-Q3
9.Which of the following is a characteristics
11.At quantity 10 output, average fixed cost
of a perfectly competitive industry? Many
is P5 and average variable cost is P7, using
sellers and many buyers.
these data, total cost at this level of output
is: 120 10.The following are characteristic of a
perfectly competitive market except: Sellers
12.While the firm is still building up its
generate economic profits in the long
capacity and is not yet producing any output,
run
Which cost is zero? Variable Cost
11.Which of the following is not a
13.Which of the following can be considered
characteristics of Monopoly? There are no
implicit cost? Salary forgone by the
barriers to entry
owner in doing business
12.Which of the following industry falls under
14.The marginal cost (MC) curve intersects
a competitive market? Vegetables.
at the minimum point of the: ATC
13. The price that a firm in a perfectly
competitive industry can charge is: same as
the market price
14. A firm in a perfectly competitive industry
earns an economic profit in the short run as
long as price is: greater than average
total cost
15.The following are ways or means creating
monopoly power except: Discount and
sales
16. The government sponsors and protect
natural monopoly because: the public can
enjoy a much lower price than having
two or more firms in the industry.
17.If a firm in a monopoly have an price
inelastic demand, increasing the price will
result to: an increase in revenue from
sales.
18.Assuming that Apung Pilang's carinderia
is under a perfectly competitive industry,
and she's earning zero economic profit, this
means she is: earning just enough to
cover for her opportunity cost.
19.A firm in a competitive market, which
continuously increases its output, will be able
to maximize profit at a point where the last
additional output: is equal to the last
additional input.
20. If a firm in a monopoly have an price
elastic demand, increasing the price will
result to: decreasing revenue from
sales.
21.A firm in a perfectly competitive industry
earning normal profit means: its total
revenue is equal to its total opportunity
cost.
MONOPOLISTIC COMPETITION &
OLIGOPOLY
1.The demand curve of firms under
monopolistic competition when compared to
perfect competition is? less elastic due to
its little market power.
2. The following are examples of product
differentiation under monopolistic
competition except? lowering price
3. A cartel is a collusive agreement among a
number of firms that is designed to? limit
output and raise prices
4. Natural monopoly applies to industry:
with economies of scale.
5. Which of the following is a characteristic of
oligopoly, but not of monopolistic
competition? The choices made by one
firm have a significant effect on other
firms.
6. What is common with monopolistic
competition and oligopoly? Use marketing
strategies to highlight their product.
7. In what situation firms in an oligopoly
result into, out of the dominant strategy
model? Firms not getting the maximum
benefit out of the situation.
8. The kinked demand curve illustrates that
competitors ______ match any price increase
but, ______ match ? will not / will
9. In the long run, there would be zero
economic profit under a monopolistically
competitive industry because of? no
barriers to entry
10. To achieve market power under
monopolistic competition market structure, a
firm has to:? produce a unique product or
establish a good brand.
11. The kinked demand curve in an oligopoly
market structure indicates that:? changing
product's price bring more uncertainties
from competitors than profit.
12. In a long-run situation under a
monopolistic competition, market structure,
price will: ? equal to average total cost.
13. When economic loss is experience by
firms in an industry under monopolistic
competition, some firms will: exit the
industry thus increasing demand and
profitability for the firms that remain.

14. What is the main factor that creates a

natural monopoly? Government franchise

15. Firms in a monopolistic competition has

some degree of market power due to:
product differentiation
16. What does the Game Theory illustrate?
Decisions of interdependent firms that
affects all participants based on the
result
17.Nash equilibrium illustrate that firms
making their best decision while taking into
consideration the competitor's decision, ends
up: both firms not maximizing profit
18.If firms in a monopolistic competition
earns economic profit, it is expected that:
other firms will enter the industry
resulting to zero economic profit.
19 The following holds true for oligopolies
except that: they consider price war to
corner market share.
20. Firms in monopolistic competition make
products that are: similar

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