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Exercise Final2

This document contains a multiple choice quiz about concepts in microeconomics including perfect competition, elasticity, costs and revenue. It also includes two graphs with questions about costs of production at different output levels assuming perfect competition. Key points covered are: characteristics of perfect competition include price taking firms and equality of marginal revenue and average revenue; total revenue decreases in non-perfect competition; price elasticity of demand is calculated as the percentage change in quantity divided by the percentage change in price; efficiency is achieved when marginal cost equals marginal revenue.

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ragheb hanfi
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52 views2 pages

Exercise Final2

This document contains a multiple choice quiz about concepts in microeconomics including perfect competition, elasticity, costs and revenue. It also includes two graphs with questions about costs of production at different output levels assuming perfect competition. Key points covered are: characteristics of perfect competition include price taking firms and equality of marginal revenue and average revenue; total revenue decreases in non-perfect competition; price elasticity of demand is calculated as the percentage change in quantity divided by the percentage change in price; efficiency is achieved when marginal cost equals marginal revenue.

Uploaded by

ragheb hanfi
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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First:

Multiple choice

1. In the case of perfect competition:
a) Producer is considered as price maker.
b) Market price is decided by producer decision
c) Average revenue equals marginal revenue
d) All of the above
2. In the case of non-perfect competition:
a) Total revenue is constant.
b) Total revenue is increasing at constant rate.
c) Total revenue is decreasing.
d) None of the above.
3. The price elasticity of demand is equal to
a) The percentage change in quantity demanded divided by the percentage change
in price.
b) The value of the slope of the demand curve.
c) The change in quantity demanded divided by the change in price.
d) The percentage change in price divided by the percentage change in quantity
demanded.
4. If the quantity demanded for gasoline increased by 10% after a decrease in its price
by 20%, this means that:
a) Ed < |-1|
b) Ed =|-1|
c) Ed >|-1|
d) ED > 0
5. Efficiency is achieved if:
a) MC = MR
b) MC = AR
c) MC = ATC
d) MC = AVC
6. Which of the following cost function reaches its minimum first:
a) ATC
b) MC
c) AVC
d) AFC
7. Total revenue in the case of non-perfect competition:
a) Is increasing at constant rate
b) Decreasing at constant rate
c) Increasing at increasing rate
d) Increasing at decreasing rate
8. Which of the following revenue function can have negative values:
a) MR
b) TR
c) AR
d) None of the above.

Answers:
1C 5C
2D 6B
3A 7D
4A 8A


Second: Study the following graph and answer the questions below:


$ MC

ATC

20 AVC
18

15
13




Q
100 120
Assuming perfect
competition and market price is $13 per unit, measure the following:

1. Equilibrium quantity of production. 100 units


2. Average variable and average total cost and average constant cost at equilibrium.
(AVC = 15; ATC = 20; AFC = 5)

3. Total cost and total revenue at equilibrium (TC = 100 x 20 = 2000; TR = 100 x
13 =1300)
4. Profit or losses at equilibrium (losses = TR- TC = 1300 – 2000 = - 700)

Third: Study the following graph an answer the following questions:


TC

600

200

Q
40

a) Measure the variable cost of the 40 units of production. $400


b) Measure the average variable cost of 40 units of production. $100
c) Measure the average constant cost of the 40 units of production. $5

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