Q1. State whether the following is true or false and why: (1) Monopolists can charge whatever price they want and maximize profit since they are

Q1. State whether the following is true or false and why:

(1) Monopolists can charge whatever price they want and maximize profit since they are price

makers.

 T/F:

Why?

(2) A firm that has a monopoly on a certain good must worry about the actions of other firms who sell close substitutes.

T/F

Why?

(3) Average Total Cost is the change in output over the change in quantity produced. 

T/F

Why?

(4) Perfectly competitive firms will receive normal economic profit in the long run regardless of

the decisions they make. 

T/F

Why?

(5) The market for wheat is an example of a perfectly competitive market. 

T/F

Why?

(6) A firm has a marginal revenue function: MR(q) = 4q + 5. This firm is in a perfectly competitve market.

T/F

Why?

Q2. The marginal revenue and marginal cost functions for a monopolist firm that mines diamonds are given by: