REVIEW 3
Refer to Figure 15-4. What price will the monopolist charge in order to maximize profit?
a. X
b. Z
c. B
d. C
Refer to Figure 15-4. How much output will the monopolist produce in order to maximize
profit?
a. 0
b. N
c. O
d. P
Refer to Figure 15-4. What area measures the monopolist's profit?
a. (B − Z) × O
b. (C − X) × N
c. (B − Y) × O
d. 0.5[(B − Z) × (P − N)]
Refer to Figure 14-3. When market price is P7, a profit-maximizing firm's short-run profits can
be represented by the area
a. P7 × Q5.
b. P7 × Q3.
c. (P7 − P5) × Q3.
d. We are unable to determine the firm's profits because the quantity that the firm would
produce is not labeled on the graph.
Refer to Figure 14-3. In the short run, if the market price is higher than P4 but less than P6,
individual firms in a competitive industry will earn
a. positive profits.
b. zero profits.
c. losses but will remain in business.
d. losses and will shut down.
Refer to Figure 14-3. In the short run, if the market price is P4, individual firms in a competitive
industry will earn
a. positive profits.
b. zero profits.
c. losses but will remain in business.
d. losses and will shut down.
Refer to Figure 14-3. Firms would be encouraged to enter this market for all prices that exceed
a. P1.
b. P2.
c. P3.
d. P4.
Refer to Figure 14-3. When market price is P2, a profit-maximizing firm's losses can be
represented by the area
a. (P4 − P2) × Q2.
b. (P2 − P1) × (Q2 − Q1).
c. At a market price of P2, the firm earns profits, not losses.
d. At a market price of P2 the firm has losses, but the reference points in the figure don't
identify the losses.
Refer to Figure 15-5. Based upon the information shown, what price will Bearclaws charge to
maximize profits?
a. $7
b. $10.50
c. $14
d. $12
Refer to Figure 15-5. Based upon the information shown, how many units will Bearclaws
produce to maximize profits?
a. 70
b. 90
c. 105
d. 130
Refer to Figure 15-5. Based upon the information shown, what is total revenue for Bearclaws,
given that it maximizes profits?
a. $900.
b. $980.
c. $490.
d. $1,080.
Refer to Figure 15-5. Based upon the information shown, what are total costs for Bearclaws,
given that it maximizes profits?
a. $700.
b. $980.
c. $490.
d. $784.
Refer to Figure 15-5. Given that Bearclaws chooses the profit-maximizing price and quantity,
what profit level will it obtain?
a. $700.
b. $980.
c. $490.
d. $280.
Refer to Figure 16-3. The firm in this figure is monopolistically competitive and maximizing
profit. This firm
a. is operating in the long run.
b. is earning a short-run economic profit.
c. is incurring a short-run loss.
d. The answer cannot be determined from the information given.
Refer to Figure 16-3. At the profit-maximizing, or loss-minimizing, output level, how many
units of output will the firm in this figure produce?
a. 20
b. 30
c. 40
d. This firm will choose not to produce.
Refer to Figure 16-3. What price will the monopolistically competitive firm charge in this
market?
a. $400
b. $600
c. $700
d. $800
Refer to Figure 16-3. Assume the firm in the figure is currently producing 20 units of output
and charging $925. The firm
a. will increase its profits if it raises its price and reduces its production level.
b. will increase its profits if it lowers its price and expands its production level.
c. is maximizing profits.
d. will increase its profits if it raises its price and expands its production level.
Refer to Figure 16-3. The maximum total short-run economic profit for the monopolistically
competitive firm in this figure is
a. −$3,000.
b. $3,000.
c. $9,000.
d. $24,000.
Refer to Figure 16-3. Which of the following will occur in the long run in this industry?
a. Firms will exit this industry.
b. Firms will enter this industry.
c. This firm will continue to earn positive economic profits.
d. This firm will incur losses.
Refer to Figure 16-8. Assume a monopolistically competitive firm is currently producing the
profit-maximizing level of output. Which of the following represents the excess capacity of this
firm?
a. BJ
b. GH
c. LM
d. There is no excess capacity.
Refer to Figure 16-8. Which of the following best describes the profit-maximizing outcome for
the firm depicted here?
a. This firm is earning a short-run profit, but will earn zero profit in the long run.
b. This firm is incurring a short-run loss, but will earn zero profit in the long run.
c. This firm is earning zero profit in the short run, but will earn a positive profit in the
long run.
d. This firm is in long run equilibrium and will continue to earn zero profit.
Refer to Figure 16-8. If this firm were operating in a perfectly competitive market in the long
run, it would charge a price equal to point
a. I but in a monopolistically competitive market, the profit-maximizing price is C.
b. E but in a monopolistically competitive market, the profit-maximizing price is C.
c. C but in a monopolistically competitive market, the profit-maximizing price is G.
d. G but in a monopolistically competitive market, the profit-maximizing price is J.