Question

Jacob is a manager of factory in the apple producing businesses, and the firm is expanding its size, while its average costs of production remain the same. The firm is operating in: A) Increasing-cost industry B) Decreasing-cost industry C) Productive efficient and allocative inefficient industry D) Constant-cost industry

Which of the following is consistent with a competitive market? A) A small number of firms. B) Exit of small firms when profits are high for large firms. C) Zero economic profit in the long run. D) Marginal revenue lower than price for each firm.

Which of the following is not a barrier to entry into a monopoly market? A) Economies of scale B) Bundling products C) Legal harassment. D) Monopoly profit

The price charged by a monopolist occurs at: A) The minimum of the average total cost curve. B) The price where MR = MC. C) A price on the demand curve above the intersection where MR = MC. D) A price on the average cost curve below the point where MR = MC

The perfect price discrimination in a monopoly market is the situation when:

            A) A firm is able to sell each unit of a good or service for highest price anyone is willing to pay.

            B)  A firm charges a higher price for the first unit purchased and a lower price for second, third, and other units purchased.

            C)  A firm selects and charges different customers different prices for the same product.

            D) A firm sells a product that could be resold.

Answer 1

1) Since the average costs of production remain the same, with expanding its size the firm is operating under a constant-cost industry. Here changes in output does not affect the average cost and average cost remains constant. Hence the answer is option (D).

2) Under a competitive market, there are large number of sellers, zero economic profit in the long run due to free entry and exit of firms and marginal revenue equals price. Hence the answer is option (C).