Quiz 1

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Points:
9/10
1
Consider a profit-maximizing monopoly pricing under the following
conditions. The profit-maximizing quantity is 40 units, the profit-maximizing
price is $160, and the marginal cost of the 40th unit is $120.  If the good were
produced in a perfectly competitive market, the equilibrium quantity would be
50, and the equilibrium price would be $150.  The demand curve and marginal
cost curves are linear. What is the value of the deadweight loss created by the
monopolist?
(1/1 Point)
$40
$100
$200
$400
2
Suppose most people regard emeralds, rubies, and sapphires as close
substitutes for diamonds. Then DeBeers, a large diamond company, has
(1/1 Point)
less incentive to advertise than it would otherwise have
less market power than it would otherwise have
more control over the price of diamonds than it would otherwise have
higher profits than it would otherwise have
3
Consumers' willingness to pay for a good minus the amount they actually pay
for it equals
(1/1 Point)
consumer surplus
Consumer benefit
Price discriminant
 Dead Weight loss
4
The economic inefficiency of a monopolist can be measured by the
(1/1 Point)
number of consumers who are unable to purchase the product because of its high price
excess profit generated by monopoly firms.
poor quality of service offered by monopoly firms.
Dead weight loss
5
With no price discrimination, the monopolist sells every unit at the same price.
Therefore
(0/1 Point)
marginal revenue is equal to price
marginal revenue is equal to average revenue
price is greater than marginal revenue
Both a and b are correct
6
One difference between a perfectly competitive firm and a monopoly is that a
perfectly competitive firm produces where
(1/1 Point)
marginal cost equals price, while a monopolist produces where price exceeds marginal cost
marginal cost equals price, while a monopolist produces where marginal cost exceeds price
price exceeds marginal cost, while a monopolist produces where marginal cost equals price
marginal cost exceeds price, while a monopolist produces where marginal cost equals price
7
Jane was a partner at a law firm earning $223,000 per year. She left the firm to
open her own law practice. In the first year of business she generated
revenues of $347,000 and incurred explicit costs of $163,000. Jane’s economic
profit from her first year in her own practice is
(1/1 Point)
-$39,000.
$124,000
$163,000
$184,000
8
Suppose a firm currently produces 225 units of output per day with 15
workers. The firm is able to produce 235 units of output with a 16th worker.
What is the marginal product of the 16th worker?
(1/1 Point)
10 units of output
 15 units of output
16 units of output
25 units of output
9

From the below diagram, the efficient scale of production occurs at which
quantity?

(1/1 Point)
A
B
C
D
10
For a large firm that produces and sells automobiles, which of the following
costs would be a variable cost?
(1/1 Point)
the $20 million payment that the firm pays each year for accounting services
the cost of the steel that is used in producing automobiles
the rent that the firm pays for office space in a suburb of St. Louis
All of the above are correct