Question 10 The amount of output a monopolist produces is A

Question 10: The amount of output a monopolist produces is: A. Always more than its cost minimizing output level Always less than its cost minimizing output level C. Always the same as its cost minimizing output level D. More than, less than, or as much as its cost minimizing output levelX Question 11: A water company serves the residents of a city by pumping underground water company faces an increasing cost of extracting water as the reservoir is being used. The company should charge residents: . The water A. A higher price per cubic meter of water, once their consumption exceeds a specific amount B. A lower price per cubic meter of water, once their consumption exceeds a specific amount C. A higher price per cubic meter of water, once their consumption exceeds a specific amount. D. A lower price per cubic meter of water, once their consumption exceeds a specific This pricing strategy is the result of price discrimination This pricing strategy is the result of price discrimination This pricing strategy is the result of differences in production costs This pricing strategy reflects consumers\' diminishing willingness to pay for additional units amount. of water Question 12: Which of the following firms is most likely to be a monopoly? A. A local restaurant B A local electricity company C. A local drug store D. A local clothing store Question 13: In the short run, perfectly competitive firmsbut in the long run, perfectly competitive firms A. Can incur an economic loss; incur an economic loss B. Can incur economic losses; make an economic profit Can make an economic profit; make an economic profit Can incur an economic loss; make zero economic profit D

Solution

Ans

1 C is right. It equates mR=MC

2 C is right. Here price increases as costs increases

3 A local electricity company because of large starting costs

4 D is absolutely right. It earns no economic profit in long run but Normal profit