Question 1

Examples of barriers to entry include

Accepted Answer

A) Price taking. 
B) Patents. 
C) Standardized products. 
D) Economic profits. 
A) Price taking. 
B) Patents. 
C) Standardized products. 
D) Economic profits.

Question 2

When an athletic shoe company is producing a level of output at which price is greater than MC,from society's standpoint the company is producing too

Accepted Answer

A) Much because society is giving up more to produce additional shoes than the shoes are worth. 
B) Much because society would be willing to give up more alternative goods in order to get additional shoes. 
C) Little because society is giving up more to produce additional shoes than the shoes are worth. 
D) Little because society would be willing to give up more alternative goods in order to get additional shoes. 
A) Much because society is giving up more to produce additional shoes than the shoes are worth. 
B) Much because society would be willing to give up more alternative goods in order to get additional shoes. 
C) Little because society is giving up more to produce additional shoes than the shoes are worth. 
D) Little because society would be willing to give up more alternative goods in order to get additional shoes.

Question 3

The price consumers pay for a product in a perfectly competitive market is an inaccurate reflection of opportunity cost.

Accepted Answer

A) True 
 B)False

Question 4

High profits in a particular industry indicate that consumers want more of that industry's goods.

Accepted Answer

A) True 
 B)False

Question 5

If price is below the long-run competitive equilibrium level,there will be

Accepted Answer

A) Greater demand. 
B) Positive economic profits. 
C) Greater output. 
D) Exit of firms from the market. 
A) Greater demand. 
B) Positive economic profits. 
C) Greater output. 
D) Exit of firms from the market.

Question 6

Marginal cost pricing in competitive markets results in all but which one of the following?

Accepted Answer

A) An efficient mix of goods and services being produced. 
B) Output being produced where price equals the opportunity cost of the last unit being produced. 
C) The information necessary for consumers to make rational choices between alternative goods and services. 
D) Maximization of consumer utility. 
A) An efficient mix of goods and services being produced. 
B) Output being produced where price equals the opportunity cost of the last unit being produced. 
C) The information necessary for consumers to make rational choices between alternative goods and services. 
D) Maximization of consumer utility.

Question 7

In Figure 23.3,diagram "a" presents the cost curves that are relevant to a firm's production decision,and diagram "b" shows the market demand and supply curves for the market.Use both diagrams to answer the following question: In Figure 23.3,the price at which a firm makes zero economic profits is

Accepted Answer

A) p1. 
B) p2. 
C) p3. 
D) p4. 
A) p1. 
B) p2. 
C) p3. 
D) p4.

Question 8

In a perfectly competitive market,when price is equal to the

Accepted Answer

A) Minimum short-run average total cost,it has reached the shutdown point. 
B) Minimum average variable cost,economic profit is zero. 
C) Marginal cost,accounting profit is maximized. 
D) Minimum average total cost,economic profit is zero. 
A) Minimum short-run average total cost,it has reached the shutdown point. 
B) Minimum average variable cost,economic profit is zero. 
C) Marginal cost,accounting profit is maximized. 
D) Minimum average total cost,economic profit is zero.

Question 9

Refer to Figure 23.6 for a perfectly competitive firm.Given the current market price,we expect to see

Accepted Answer

A) Entry into this industry. 
B) Exit from this industry. 
C) No change in the number of firms in this industry. 
D) Costs rise to absorb the profits earned by the firms in the industry. 
A) Entry into this industry. 
B) Exit from this industry. 
C) No change in the number of firms in this industry. 
D) Costs rise to absorb the profits earned by the firms in the industry.

Question 10

Technological improvements cause

Accepted Answer

A) ATC to shift down. 
B) The supply curve to shift to the left. 
C) MC to shift up. 
D) P to increase. 
A) ATC to shift down. 
B) The supply curve to shift to the left. 
C) MC to shift up. 
D) P to increase.

Question 11

If catfish farmers expect catfish prices to fall in the future,then right now

Accepted Answer

A) There will be a movement down along the market supply curve for catfish. 
B) There will be a movement up along the market supply curve for catfish. 
C) The market supply curve for catfish will shift to the left. 
D) The market supply curve for catfish will shift to the right. 
A) There will be a movement down along the market supply curve for catfish. 
B) There will be a movement up along the market supply curve for catfish. 
C) The market supply curve for catfish will shift to the left. 
D) The market supply curve for catfish will shift to the right.

Question 12

Which of the following is not a barrier to entry?

Accepted Answer

A) Patents. 
B) Well-established brand loyalty. 
C) Control of distribution outlets. 
D) Perfect information. 
A) Patents. 
B) Well-established brand loyalty. 
C) Control of distribution outlets. 
D) Perfect information.

Question 13

If long-run economic losses are being experienced in a competitive market,

Accepted Answer

A) More firms will enter the market. 
B) The market supply curve will shift to the right. 
C) Equilibrium price will rise as firms exit. 
D) Normal profit will fall to zero as firms enter. 
A) More firms will enter the market. 
B) The market supply curve will shift to the right. 
C) Equilibrium price will rise as firms exit. 
D) Normal profit will fall to zero as firms enter.

Question 14

For a competitive market in the long run,

Accepted Answer

A) Economic losses induce firms to shut down. 
B) Economic profits induce firms to enter until profits are normal. 
C) Accounting profit is zero. 
D) Economic profit is positive. 
A) Economic losses induce firms to shut down. 
B) Economic profits induce firms to enter until profits are normal. 
C) Accounting profit is zero. 
D) Economic profit is positive.

Question 15

Refer to Figure 23.4 for a perfectly competitive market and firm.Which of the following is likely to occur in the market in the long run,ceteris paribus?

Accepted Answer

A) An increase in demand. 
B) A decrease in demand. 
C) An increase in supply. 
D) A decrease in supply. 
A) An increase in demand. 
B) A decrease in demand. 
C) An increase in supply. 
D) A decrease in supply.

Question 16

Refer to Figure 23.4.In the long run,which of the following would not be expected?

Accepted Answer

A) A decrease in market supply. 
B) An increase in total revenue for the remaining firms. 
C) An increase in output for the remaining firms. 
D) A decrease in MR for the remaining firms. 
A) A decrease in market supply. 
B) An increase in total revenue for the remaining firms. 
C) An increase in output for the remaining firms. 
D) A decrease in MR for the remaining firms.

Question 17

In Figure 23.3,diagram "a" presents the cost curves that are relevant to a firm's production decision,and diagram "b" shows the market demand and supply curves for the market.Use both diagrams to answer the following question: In Figure 23.3,at a price of p2 in the long run

Accepted Answer

A) Firms will enter the market. 
B) Economic profits equal zero. 
C) Firms will exit the market. 
D) P = AVC. 
A) Firms will enter the market. 
B) Economic profits equal zero. 
C) Firms will exit the market. 
D) P = AVC.

Question 18

Competitive market pressures were a driving force in the spectacular growth of the computer industry.

Accepted Answer

A) True 
 B)False

Question 19

The market structure of the computer industry

Accepted Answer

A) Was originally a monopoly. 
B) Was originally perfectly competitive. 
C) Has become more competitive over time. 
D) Has become less competitive over time. 
A) Was originally a monopoly. 
B) Was originally perfectly competitive. 
C) Has become more competitive over time. 
D) Has become less competitive over time.

Question 20

Which of the following is characteristic of a perfectly competitive market?

Accepted Answer

A) Long-run economic profit. 
B) High barriers to entry. 
C) Identical products. 
D) A small number of firms. 
A) Long-run economic profit. 
B) High barriers to entry. 
C) Identical products. 
D) A small number of firms.

Exam 23: Competitive Markets

Examples of barriers to entry include

When an athletic shoe company is producing a level of output at which price is greater than MC,from society's standpoint the company is producing too

The price consumers pay for a product in a perfectly competitive market is an inaccurate reflection of opportunity cost.

High profits in a particular industry indicate that consumers want more of that industry's goods.

If price is below the long-run competitive equilibrium level,there will be

Marginal cost pricing in competitive markets results in all but which one of the following?

In Figure 23.3,diagram "a" presents the cost curves that are relevant to a firm's production decision,and diagram "b" shows the market demand and supply curves for the market.Use both diagrams to answer the following question: In Figure 23.3,the price at which a firm makes zero economic profits is

In a perfectly competitive market,when price is equal to the

Refer to Figure 23.6 for a perfectly competitive firm.Given the current market price,we expect to see

Technological improvements cause

If catfish farmers expect catfish prices to fall in the future,then right now

Which of the following is not a barrier to entry?

If long-run economic losses are being experienced in a competitive market,

For a competitive market in the long run,

Refer to Figure 23.4 for a perfectly competitive market and firm.Which of the following is likely to occur in the market in the long run,ceteris paribus?

Refer to Figure 23.4.In the long run,which of the following would not be expected?

In Figure 23.3,diagram "a" presents the cost curves that are relevant to a firm's production decision,and diagram "b" shows the market demand and supply curves for the market.Use both diagrams to answer the following question: In Figure 23.3,at a price of p2 in the long run

Competitive market pressures were a driving force in the spectacular growth of the computer industry.

The market structure of the computer industry

Which of the following is characteristic of a perfectly competitive market?

Economics: the Core Issues

The Useconomy: a Global View

Supply and Demand

The Role of Government

National Income Accounting

Unemployment

Inflation

The Business Cycle

Aggregate Demand

Self-Adjustment or Instability

Fiscal Policy

Deficits and Debt

Money and Banks

The Federal Reserve System

Monetary Policy

Supply-Side Policy: Short-Run Options

Growth and Productivity: Long-Run Possibilities

Theory Versus Reality

Consumer Choice

Elasticity

The Costs of Production

The Competitive Firm

Monopoly

Oligopoly

Monopolistic Competition

Natural Monopolies: Deregulation

Environmental Protection

The Farm Problem

The Labor Market

Labor Unions

Financial Markets

Taxes: Equity Versus Efficiency

Transfer Payments: Welfare and Social Security

International Trade

International Finance

Global Poverty

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