<p>Quiz 6 – KEY</p><p>1. The primary goal of a firm in a capitalistic market is to maximize profits. </p><p>2. The monopolist's marginal revenue curve is downward sloping and twice as steep as demand. </p><p>3. A firm will shut down if price is everywhere less than average variable cost</p><p>4. From the graph above, the amount of positive economic profits earned by this monopolist is illustrated by the area outlined by points</p><p>P2CFP3.</p><p>5. Which of the following is NOT a characteristic of a monopoly? A monopolist is a price-taker.</p><p>6. Which of the following conditions would prevent price discrimination? the inability to identify those customers willing to pay more </p><p>7. In the short run, a typically monopolistically competitive firm will earn all of the above are possible</p><p>8. The monopolistic competitor faces a downward-sloping demand curve and therefore is a price searcher. </p><p>9. A monopolistically competitive firm is producing at an output level in the short run where average total cost is $3.50, price is $3.00, marginal revenue is $1.50, and marginal cost is $1.50. This firm is operating with an economic loss in the short run. </p><p>10. The economic inefficiency of a monopolist can be measured by the deadweight loss.</p><p>11. Competition is legally prohibited when barriers to entry are artificial barriers. </p><p>12. From the above table, the profit-maximizing single-price monopolist should produce (this question requires some calculations) 5 units. </p><p>13. From the above table, the profit-maximizing single-price monopolist's maximum profit is (this question requires some calculations) $145. </p><p>14. In maximizing profits, a monopolist will charge a price that is less than marginal cost. </p><p>15. Which of the assumptions in the theory of perfect competition assures us that economic profit will be zero in the long-run? free entry and exit of firms in the market </p><p>16. The perfectly competitive firm produces at the output level where price equals marginal cost. </p><p>17. The firm may earn positive economic profits in the long-run if there are barriers to entry. </p><p>18. You notice that the price of butter rises and then falls. The best explanation for this is that: demand for butter increased causing price to rise, which attracted other firms to enter the market causing supply to increase, which caused the price to go back down.</p><p>19. A monopolistically competitive firm maximizes profits by producing at the point where marginal revenue equals marginal cost. </p>