Reference no: EM132294728

1. At the current level of output, the following data exists:

Price =$20

Marginal cost =$6

Average variable cost =$10

Average total cost =$13

What must be true at this level of output?

a. The firm should lower the price.

b. The firm should stay at the same level of output.

c. The firm should shut down.

d. The firm should increase output.

e. The firm should decrease output

2. Why do governments issue patents?

a. Patents foster economies of scale.

b. Inventors have a moral right to control their inventions.

c. Patents ensure that socially beneficial goods are affordable.

d. Firms benefit from the publicity associated with patents.

e. The prospect of large profits is an incentive to innovation.

3.If a monopolist is producing a quantity where marginal revenue is equal to $125 and the marginal cost is equal to $125, the monopolist should ________ to maximize profits.

a. increase production and lower the price

b. decrease production and increase the price

c. Continue producing at the current price

d. increase production and increase the price

e. decrease production and decrease the price

4.Deadweight loss exists in a monopoly because the monopolist

a. charges a price equal to marginal cost, which is higher than the price charged in a competitive market.

b. produces a quantity that is higher than the quantity produced in a competitive market.

c. makes a positive economic profit in the short run.

d. charges a price below marginal cost.

e. charges a price that is above marginal revenue.

5.What would cause a firm's production function to change?

a. expanding the size of the factories

b. increasing the quantity of labor and capital

c. increasing the quantity of capital

d. increasing the quantity of labor

e. the adoption of new technology