When a firm experiences continually declining average total costs. the firm is a

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12. When a firm experiences continually declining average total costs, a. the firm is a price taker society is better served by having one firm supply the product. the firm will earn higher profits than if average total costs are increasin All of the above are correct. b. d. 13. The profit-maximization problem for a monopolist differs from that of a competitive firm in which of th following ways? competitive firm maximizes profit at the point where marginal revenue equals marginal cost: a monopolist maximizes profit at the point where marginal revenue cxceeds marginal cost. A competitive firm maximizes profit at the point where average revenue equals marginal cost: a monopolist maximizes profit at the point where average revenue exceeds marginal cost. For a competitive firm, marginal revenue at the profit-maximizing level of output is equal to marginal revenue at all other levels of output; for a monopolist, marginal revenue at the profit-maximizing level of output is smaller than it is for larger levels of output For a profit-maximizing competitive firm, thinking at the margin is much more important than it is for a profit-maximizing monopolist b. c. d. Competitive firms differ from monopolies in which of the following ways 14. Competitive firms do not have to worry about the price effect lowering their total revenue Marginal revenue for a competitive firm equals price, while marginal revenue for a monopoly is less than the price it is able to charge. Monopolies must lower their price in order to sell more of their product, while competitive firms do not (i) (ii) (iii) a. (i) and (ii) only b. (ii) and (iii) only C. (i) and (ii) only d. (i), (ii), and (ii) 15. Suppose a firm has a monopoly on the sale of widgets and faces a downward-sloping demand curve. When selling the 100h widget, the firm will always receive a. less marginal revenue on the 100h widget than it received on the 99th widget. b. more average revenue on the 100h widget than it received on the 99th widget. c. more total revenue on the 100 widgets than it received on the first 99 widgets d. a lower average cost per unit at 100 units output than at 99 units of output Suppose a firm has a monopoly on the sale of a computer game and faces a downward-sloping demand curve When selling the 50th game, the firm will always receive a. less marginal revenue on the 50h game than it received on the 49th game b. more average revenue on the 50h game than it received on the 49th game c. more total revenue on the 50 game than it received on the first 49 game d. Both b) and c) are correct. 16.
16. choice a
in amount.)

13. choice b
(all of the statements offered are proper.)
(For a competitive company, P = AR = MR = MC as well as for a monopolist, AR
amount.)

14. choice d
(As ATC is decreasing so it’s a normal monopoly.)

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