Monopoly and Monopolistic Competition
Monopoly and Monopolistic Competition
Monopoly and Monopolistic Competition
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Chapter 11 Quiz<br />
5. If price P, unit costs C, <strong>and</strong> quantity Q, are known, the markup of markup-cost pricing is<br />
A. (PQ - CQ)/Q.<br />
B. P - C/Q.<br />
C. (P - C)/Q.<br />
D. (P - C)/C.<br />
E. 1 - (P - C)/Q.<br />
6. Jack O. Trades produces joint products A <strong>and</strong> B with linear dem<strong>and</strong>s DA > DB. Jack's total<br />
marginal revenue curve changes slope at the quantity where (MRB is marginal revenue for B<br />
<strong>and</strong> MCB is marginal cost of B)<br />
A. MRB = MCB.<br />
B. DB = MCB.<br />
C. MRB = DB.<br />
D. MRB = 0.<br />
E. DB = 0.<br />
Note: On page 416 in the textbook, equation (11.6) defines the<br />
percentage markup as Markup = (price – cost)/cost; thus response<br />
D is the correct response here.<br />
Note: This is indicated in Figure 11.5 on page 425 of the<br />
textbook. When MRB = 0, the total marginal revenue curve<br />
for products A <strong>and</strong> B is equal to the marginal revenue curve<br />
for product A.<br />
<strong>Monopoly</strong> <strong>and</strong> <strong>Monopolistic</strong> <strong>Competition</strong> Page 14
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