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1.4 If the price is set at R10, the market will A. experience a surplus (excess supply) of 50. B. experience a surplus (excess supply) of 40. C. experience a shortage (excess demand) of 40. D. experience a shortage (excess demand) of 10. E. still be in equilibrium. If the price elasticity of demand is 1.6 and a firm increases the price of its product by 10%, it would expect its total revenue to 1.5 A. decrease by 16%. B. increase by 16%. C. increase by 6%. D. remain constant. E. decrease by 6%. 1.6 Nash equilibrium can be defined as the competitive outcome where A. all firms set prices equal to average cost and all firms make economic profit. B. each firm sets a price equal to marginal cost and each firm makes economic profit. C. each firm sets a price higher than marginal cost and each firm makes economic profit. D. each firm sets a price lower than marginal cost and each firm makes economic profit. E. firms set a price lower than average cost and all firms make economic profit. 1.7 Which statement is incorrect? A. The quantity that the monopolist produces for sales on the market is substantially less than that supplied by a perfectly competitive industry. B. Monopolists make excess profits in the long run. C. The price fixed by a monopolist is lower than the price of perfect competition. D. A monopoly could utilise economies of scale. E. Under monopolistic competition, economic profit can be earned in the short run.

1.4 If the price is set at R10, the market will A. experience a surplus (excess supply) of 50. B. experience a surplus (excess supply) of 40. C. experience a shortage (excess demand) of 40. D. experience a shortage (excess demand) of 10. E. still be in equilibrium. If the price elasticity of demand is 1.6 and a firm increases the price of its product by 10%, it would expect its total revenue to 1.5 A. decrease by 16%. B. increase by 16%. C. increase by 6%. D. remain constant. E. decrease by 6%. 1.6 Nash equilibrium can be defined as the competitive outcome where A. all firms set prices equal to average cost and all firms make economic profit. B. each firm sets a price equal to marginal cost and each firm makes economic profit. C. each firm sets a price higher than marginal cost and each firm makes economic profit. D. each firm sets a price lower than marginal cost and each firm makes economic profit. E. firms set a price lower than average cost and all firms make economic profit. 1.7 Which statement is incorrect? A. The quantity that the monopolist produces for sales on the market is substantially less than that supplied by a perfectly competitive industry. B. Monopolists make excess profits in the long run. C. The price fixed by a monopolist is lower than the price of perfect competition. D. A monopoly could utilise economies of scale. E. Under monopolistic competition, economic profit can be earned in the short run.

Exploring Economics
Exploring Economics
8th Edition
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:Robert L. Sexton
Chapter7: Market Efficiency And Welfare
Section: Chapter Questions
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1.4 If the price is set at R10, the market will A. experience a surplus (excess supply) of 50. B. experience a surplus (excess supply) of 40. C. experience a shortage (excess demand) of 40. D. experience a shortage (excess demand) of 10. E. still be in equilibrium. 1.5 If the price elasticity of demand is 1.6 and a firm increases the price of its product by 10%, it would expect its total revenue to A. decrease by 16%. B. increase by 16%. C. increase by 6%. D. remain constant. E. decrease by 6%. 1.6 Nash equilibrium can be defined as the competitive outcome where A. all firms set prices equal to average cost and all firms make economic profit. B. each firm sets a price equal to marginal cost and each firm makes economic profit. C. each firm sets a price higher than marginal cost and each firm makes economic profit. D. each firm sets a price lower than marginal cost and each firm makes economic profit. E. firms set a price lower than average cost and all firms make economic profit. 1.7 Which statement is incorrect? A. The quantity that the monopolist produces for sales on the market is substantially less than that supplied by a perfectly competitive industry. B. Monopolists make excess profits in the long run. C. The price fixed by a monopolist is lower than the price of perfect competition. D. A monopoly could utilise economies of scale. E. Under monopolistic competition, economic profit can be earned in the short run.
Transcribed Image Text:1.4 If the price is set at R10, the market will A. experience a surplus (excess supply) of 50. B. experience a surplus (excess supply) of 40. C. experience a shortage (excess demand) of 40. D. experience a shortage (excess demand) of 10. E. still be in equilibrium. 1.5 If the price elasticity of demand is 1.6 and a firm increases the price of its product by 10%, it would expect its total revenue to A. decrease by 16%. B. increase by 16%. C. increase by 6%. D. remain constant. E. decrease by 6%. 1.6 Nash equilibrium can be defined as the competitive outcome where A. all firms set prices equal to average cost and all firms make economic profit. B. each firm sets a price equal to marginal cost and each firm makes economic profit. C. each firm sets a price higher than marginal cost and each firm makes economic profit. D. each firm sets a price lower than marginal cost and each firm makes economic profit. E. firms set a price lower than average cost and all firms make economic profit. 1.7 Which statement is incorrect? A. The quantity that the monopolist produces for sales on the market is substantially less than that supplied by a perfectly competitive industry. B. Monopolists make excess profits in the long run. C. The price fixed by a monopolist is lower than the price of perfect competition. D. A monopoly could utilise economies of scale. E. Under monopolistic competition, economic profit can be earned in the short run.
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