Question 1

In a competitive price-searcher market, the marginal revenue of the firm will always be

Accepted Answer

A)  a horizontal line. 
B)  greater than price. 
C)  less than price. 
D)  equal to price. 
A)  a horizontal line. 
B)  greater than price. 
C)  less than price. 
D)  equal to price.

Question 2

Suppose housing construction is a price-searcher market with low barriers to entry. Which of the following will be true for this market?

Accepted Answer

A)  The output of the housing construction firms will be produced inefficiently. 
B)  Consumers would be better off if there were fewer firms and less variety in the housing market. 
C)  If firms produced larger quantities but less variety, they could reduce the per-unit costs. 
D)  Consumers do not have to pay for variety in the housing construction market. 
A)  The output of the housing construction firms will be produced inefficiently. 
B)  Consumers would be better off if there were fewer firms and less variety in the housing market. 
C)  If firms produced larger quantities but less variety, they could reduce the per-unit costs. 
D)  Consumers do not have to pay for variety in the housing construction market.

Question 3

In order for effective price discrimination to occur, a seller must

Accepted Answer

A)  be a pure monopolist. 
B)  have large economies of scale and control over a key natural resource. 
C)  face a horizontal demand curve for its product. 
D)  have at least two distinguishable groups of consumers. 
A)  be a pure monopolist. 
B)  have large economies of scale and control over a key natural resource. 
C)  face a horizontal demand curve for its product. 
D)  have at least two distinguishable groups of consumers.

Question 4

A competitive price-searcher firm is currently producing 10 units of output. At this level of output the firm is charging a price equal to $10, has marginal revenue equal to $6, has marginal cost equal to $6, and has average total cost equal to $12. From this information we can conclude that

Accepted Answer

A)  the firm is currently earning zero profit. 
B)  the profits of the firm are negative. 
C)  firms are likely to enter this market in the long run. 
D)  the firm would earn more profit by reducing output. 
A)  the firm is currently earning zero profit. 
B)  the profits of the firm are negative. 
C)  firms are likely to enter this market in the long run. 
D)  the firm would earn more profit by reducing output.

Question 5

Predictions of severe shortages due to impending natural resource depletion

Accepted Answer

A)  are widely accepted by resource economists even though such predictions are a relatively new occurrence. 
B)  have been wrong in the past, but most resource economists believe that the threat of resource depletion is now far more severe than ever before. 
C)  are typically made without adequate recognition and consideration of resource price elasticities. 
D)  typically assume that price elasticities are greater than they really are. 
A)  are widely accepted by resource economists even though such predictions are a relatively new occurrence. 
B)  have been wrong in the past, but most resource economists believe that the threat of resource depletion is now far more severe than ever before. 
C)  are typically made without adequate recognition and consideration of resource price elasticities. 
D)  typically assume that price elasticities are greater than they really are.

Question 6

While the price of a resource may increase sharply during some periods, the structure of ____ accompanying the price increase makes depletion highly unlikely and provides the seeds for future reversal. (Fill in the blank)

Accepted Answer

A)  government programs 
B)  foreign competition 
C)  incentives 
D)  taxation 
A)  government programs 
B)  foreign competition 
C)  incentives 
D)  taxation

Question 7

As new firms enter a competitive price-searcher market, it can be expected that

Accepted Answer

A)  market price will increase. 
B)  the output of existing firms will increase. 
C)  profits of existing firms will increase. 
D)  market demand should decrease. 
E)  profits of existing firms will decrease 
A)  market price will increase. 
B)  the output of existing firms will increase. 
C)  profits of existing firms will increase. 
D)  market demand should decrease. 
E)  profits of existing firms will decrease

Question 8

Which of the following is a necessary condition for price discrimination to be profitable?

Accepted Answer

A)  All consumers must have identical preferences. 
B)  It must be easy to distinguish consumer groups with differing responses to higher prices. 
C)  The seller must face a horizontal demand curve for its product in at least one part of the market. 
D)  Both b and c are correct. 
A)  All consumers must have identical preferences. 
B)  It must be easy to distinguish consumer groups with differing responses to higher prices. 
C)  The seller must face a horizontal demand curve for its product in at least one part of the market. 
D)  Both b and c are correct.

Question 9

An important difference between the situation faced by a profit-maximizing competitive price-searcher firm in the short run and the situation faced by that same firm in the long run is that in the short run,

Accepted Answer

A)  price may exceed marginal revenue, but in the long run, price will equal marginal revenue. 
B)  price may exceed marginal cost, but in the long run, price will equal marginal cost. 
C)  price may exceed average total cost, but in the long run, price will equal average total cost. 
D)  there are many firms in the market, but in the long run, there are only a few firms in the market. 
A)  price may exceed marginal revenue, but in the long run, price will equal marginal revenue. 
B)  price may exceed marginal cost, but in the long run, price will equal marginal cost. 
C)  price may exceed average total cost, but in the long run, price will equal average total cost. 
D)  there are many firms in the market, but in the long run, there are only a few firms in the market.

Question 10

Suppose that new demands greatly reduce the proved reserves of titanium to unexpectedly low levels, and it appears that the new demands will continue. If the market price is unregulated, we should expect that the price will

Accepted Answer

A)  rise sharply, calling forth added exploration and more effective (and more costly) recovery methods, resulting in additional new supplies of titanium. 
B)  rise sharply, calling forth new ways for manufacturers to conserve titanium and to find substitutes for it. 
C)  over time, bring the quantity supplied of titanium into balance with the quantity demanded. 
D)  do all of the above. 
A)  rise sharply, calling forth added exploration and more effective (and more costly) recovery methods, resulting in additional new supplies of titanium. 
B)  rise sharply, calling forth new ways for manufacturers to conserve titanium and to find substitutes for it. 
C)  over time, bring the quantity supplied of titanium into balance with the quantity demanded. 
D)  do all of the above.

Question 11

Figure 10-12        
-Refer to Figure 10-12. Panel (a) shows a profit-maximizing competitive price-searcher firm that is

Accepted Answer

A)  earning zero economic profit. 
B)  likely to exit the market in the long run. 
C)  producing its efficient scale of output. 
D)  not maximizing its profit. 
A)  earning zero economic profit. 
B)  likely to exit the market in the long run. 
C)  producing its efficient scale of output. 
D)  not maximizing its profit.

Question 12

A competitive price-searcher market is best described as

Accepted Answer

A)  many firms with some control over price, and some product differentiation. 
B)  many firms with no control over price, producing identical products. 
C)  a few firms with some control over price, producing highly differentiated products. 
D)  a few firms with no control over price, producing similar products. 
E)  a single firm producing all of the output for the industry, with strong control over price. 
A)  many firms with some control over price, and some product differentiation. 
B)  many firms with no control over price, producing identical products. 
C)  a few firms with some control over price, producing highly differentiated products. 
D)  a few firms with no control over price, producing similar products. 
E)  a single firm producing all of the output for the industry, with strong control over price.

Question 13

A price-searcher firm will expand output until

Accepted Answer

A)  marginal revenue falls to equal the rising marginal cost. 
B)  marginal revenue rises to equal the falling marginal cost. 
C)  marginal revenue falls below marginal cost. 
D)  marginal cost rises above marginal revenue. 
A)  marginal revenue falls to equal the rising marginal cost. 
B)  marginal revenue rises to equal the falling marginal cost. 
C)  marginal revenue falls below marginal cost. 
D)  marginal cost rises above marginal revenue.

Question 14

Which of the following is not a characteristic of a competitive price-searcher market?

Accepted Answer

A)  Each firm produces a differentiated product. 
B)  The entry barriers are high. 
C)  Each firm faces a downward-sloping demand curve. 
D)  The number of firms in the market is large. 
A)  Each firm produces a differentiated product. 
B)  The entry barriers are high. 
C)  Each firm faces a downward-sloping demand curve. 
D)  The number of firms in the market is large.

Question 15

The market for home-delivered pizza is extremely competitive in Introville, Utah, and prices continue to fall. Assume they have fallen so low that the 20 pizza delivery firms are all suffering economic losses. What will likely happen in the long run?

Accepted Answer

With all firms earning economic losses,

Question 16

A price-discriminating firm charges the lowest price to the group that

Accepted Answer

A)  has the most elastic demand. 
B)  purchases the largest quantity. 
C)  engages in the most arbitrage. 
D)  is least responsive to price changes. 
A)  has the most elastic demand. 
B)  purchases the largest quantity. 
C)  engages in the most arbitrage. 
D)  is least responsive to price changes.

Question 17

Which of the following is characteristic of a firm that is a competitive price searcher?

Accepted Answer

A)  The firm faces an upward-sloping demand curve. 
B)  The firm faces an inelastic demand curve. 
C)  The firm faces a horizontal demand curve. 
D)  The firm produces a differentiated product. 
A)  The firm faces an upward-sloping demand curve. 
B)  The firm faces an inelastic demand curve. 
C)  The firm faces a horizontal demand curve. 
D)  The firm produces a differentiated product.

Question 18

In a competitive price-searcher market, the firms will

Accepted Answer

A)  be able to choose their price, and the entry barriers into the market will be low. 
B)  be able to choose their price, and the entry barriers into the market will be high. 
C)  have to accept the market price for their product, and the entry barriers into the market will be low. 
D)  have to accept the market price for their product, and the entry barriers into the market will be high. 
A)  be able to choose their price, and the entry barriers into the market will be low. 
B)  be able to choose their price, and the entry barriers into the market will be high. 
C)  have to accept the market price for their product, and the entry barriers into the market will be low. 
D)  have to accept the market price for their product, and the entry barriers into the market will be high.

Question 19

Will the United States eventually run out of oil and have to reduce living standards?

Accepted Answer

A)  No, because increases in the price of oil provide incentives to conserve oil, discover more oil, and discover more alternatives to oil. 
B)  No, because the government has subsidized alternative forms of energy such as wind and solar. 
C)  No, because government programs to mandate energy-efficient cars and public transportation will save oil. 
D)  Yes; even though technology has recently helped find more oil, this trend cannot continue. 
A)  No, because increases in the price of oil provide incentives to conserve oil, discover more oil, and discover more alternatives to oil. 
B)  No, because the government has subsidized alternative forms of energy such as wind and solar. 
C)  No, because government programs to mandate energy-efficient cars and public transportation will save oil. 
D)  Yes; even though technology has recently helped find more oil, this trend cannot continue.

Question 20

Forests in the United States, starting from the time the colonists arrived,

Accepted Answer

A)  have always expanded. 
B)  have only shrunk in size. 
C)  have changed little. 
D)  shrank as they were logged and cleared for farms, then rebounded, especially in the twentieth century. 
A)  have always expanded. 
B)  have only shrunk in size. 
C)  have changed little. 
D)  shrank as they were logged and cleared for farms, then rebounded, especially in the twentieth century.

In a competitive price-searcher market, the marginal revenue of the firm will always be

Suppose housing construction is a price-searcher market with low barriers to entry. Which of the following will be true for this market?

In order for effective price discrimination to occur, a seller must

A competitive price-searcher firm is currently producing 10 units of output. At this level of output the firm is charging a price equal to $10, has marginal revenue equal to $6, has marginal cost equal to $6, and has average total cost equal to $12. From this information we can conclude that

Predictions of severe shortages due to impending natural resource depletion

While the price of a resource may increase sharply during some periods, the structure of ____ accompanying the price increase makes depletion highly unlikely and provides the seeds for future reversal. (Fill in the blank)

As new firms enter a competitive price-searcher market, it can be expected that

Which of the following is a necessary condition for price discrimination to be profitable?

An important difference between the situation faced by a profit-maximizing competitive price-searcher firm in the short run and the situation faced by that same firm in the long run is that in the short run,

Suppose that new demands greatly reduce the proved reserves of titanium to unexpectedly low levels, and it appears that the new demands will continue. If the market price is unregulated, we should expect that the price will

Figure 10-12 -Refer to Figure 10-12. Panel (a) shows a profit-maximizing competitive price-searcher firm that is

A competitive price-searcher market is best described as

A price-searcher firm will expand output until

Which of the following is not a characteristic of a competitive price-searcher market?

The market for home-delivered pizza is extremely competitive in Introville, Utah, and prices continue to fall. Assume they have fallen so low that the 20 pizza delivery firms are all suffering economic losses. What will likely happen in the long run?

A price-discriminating firm charges the lowest price to the group that

Which of the following is characteristic of a firm that is a competitive price searcher?

In a competitive price-searcher market, the firms will

Will the United States eventually run out of oil and have to reduce living standards?

Forests in the United States, starting from the time the colonists arrived,

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Gaining From International Trade

Filters

Exam 10: Price-Searcher Markets With Low Entry Barriers

In a competitive price-searcher market, the marginal revenue of the firm will always be

Suppose housing construction is a price-searcher market with low barriers to entry. Which of the following will be true for this market?

In order for effective price discrimination to occur, a seller must

A competitive price-searcher firm is currently producing 10 units of output. At this level of output the firm is charging a price equal to $10, has marginal revenue equal to $6, has marginal cost equal to $6, and has average total cost equal to $12. From this information we can conclude that

Predictions of severe shortages due to impending natural resource depletion

While the price of a resource may increase sharply during some periods, the structure of ____ accompanying the price increase makes depletion highly unlikely and provides the seeds for future reversal. (Fill in the blank)

As new firms enter a competitive price-searcher market, it can be expected that

Which of the following is a necessary condition for price discrimination to be profitable?

An important difference between the situation faced by a profit-maximizing competitive price-searcher firm in the short run and the situation faced by that same firm in the long run is that in the short run,

Suppose that new demands greatly reduce the proved reserves of titanium to unexpectedly low levels, and it appears that the new demands will continue. If the market price is unregulated, we should expect that the price will

Figure 10-12 -Refer to Figure 10-12. Panel (a) shows a profit-maximizing competitive price-searcher firm that is

A competitive price-searcher market is best described as

A price-searcher firm will expand output until

Which of the following is not a characteristic of a competitive price-searcher market?

The market for home-delivered pizza is extremely competitive in Introville, Utah, and prices continue to fall. Assume they have fallen so low that the 20 pizza delivery firms are all suffering economic losses. What will likely happen in the long run?

A price-discriminating firm charges the lowest price to the group that

Which of the following is characteristic of a firm that is a competitive price searcher?

In a competitive price-searcher market, the firms will

Will the United States eventually run out of oil and have to reduce living standards?

Forests in the United States, starting from the time the colonists arrived,

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Gaining From International Trade

Filters