Microeconomics Answers

Lesedi is a producer in a monopoly industry. Her demand curve, total revenue curve, marginal
revenue curve and total cost curve are given as follows:
Q = 160 – 4P TR = 40Q – 0.25(Q x Q) MR = 40 – 0.5Q TC = 4Q MC = 4

How much output will Lesedi produce?
1. 0
2. 22
3. 56
4. 72

For a monopolist, changes in demand will lead to changes in …
1. price, with no change in output.
2. output, with no change in price.
3. both price and quantity.
4. None of the above is true

The monopolist has no supply curve because …
1. the quantity supplied at any particular price depends on the monopolist’s demand
curve.
2. the monopolist’s marginal cost curve changes considerably over time.
3. the relationship between price and quantity depends on both marginal cost and
average costs.
4. there is a single seller in the market.

Because of the relationship between a perfectly competitive firm’s demand curve and its
marginal revenue curve, the profit maximisation condition of the firm can be written as …
1. P = MC
2. P = MR
3. P = AC
4. AR = MR

Every firm maximises profit when …
1. average revenue equals average cost.
2. average revenue equals average variable cost.
3. total costs are minimised.
4. marginal revenue equals marginal cost.

Marginal revenue, shown graphically, is the …
1. slope of a line from the origin to a point on the total revenue curve.
2. slope of a line from the origin to the end of the total revenue curve.
3. slope of the total revenue curve at a given point.
4. vertical intercept of a line tangent to the total revenue curve at a given point.

The consumption of chicken changes from 10 kg per month to 5 kg per month due to a
salary increase of R500 from R2 000 initially received monthly. What is the income
elasticity of the demand for chicken?
1. – 2
2. 0.67
3. 1
4. 1.33

The market supply curves and market demand curves for books are given as follows:
Supply curve: P = 0.000002Q Demand curve: P = 11 – 0.00002Q
The short-run marginal cost curve: MC = 0.1 + 0.0009Q
Assuming all firms in the market are identical, how many firms are producing books?
1. 5 firms
2. 50 firms
3. 500 firms
4. Given the information provided, it cannot be determined.

The market supply curves and market demand curves for books are given as follows:
Supply curve: P = 0.000002Q Demand curve: P = 11 – 0.00002Q
The short-run marginal cost curve: MC = 0.1 + 0.0009Q

At the above short-run equilibrium level, the firm is …
1. making a profit of R1 000 000
2. making a loss of R1 000 000
3. making zero economic profit

The market supply curves and market demand curves for books are given as follows:
Supply curve: P = 0.000002Q Demand curve: P = 11 – 0.00002Q
The short-run marginal cost curve: MC = 0.1 + 0.0009Q
The short-run equilibrium level of output is …
1. 1
2. 1 000
3. 10 000
4. 10 0000