Question 1

Entrepreneurs will increase their efforts to develop economical alternative energy sources

Accepted Answer

A)  if current energy supply decreases and prices rise. 
B)  if current energy supply is ample and prices are low. 
C)  only if current supply runs out and a full-scale crisis ensues. 
D)  if the government imposes price controls that keep energy prices from rising. 
A)  if current energy supply decreases and prices rise. 
B)  if current energy supply is ample and prices are low. 
C)  only if current supply runs out and a full-scale crisis ensues. 
D)  if the government imposes price controls that keep energy prices from rising.

Question 2

Firms that are price searchers

Accepted Answer

A)  will eventually find and charge the highest price at which consumers will purchase any units. 
B)  face inelastic demand curves for their products. 
C)  do not confront rival sellers like price takers do. 
D)  face a downward-sloping demand curve. 
A)  will eventually find and charge the highest price at which consumers will purchase any units. 
B)  face inelastic demand curves for their products. 
C)  do not confront rival sellers like price takers do. 
D)  face a downward-sloping demand curve.

Question 3

Use the figure to answer the following question(s).
Figure 10-9  
-What price should a competitive price-searcher firm charge with the cost and demand conditions depicted in Figure 10-9 if it wants to maximize its profit?

Accepted Answer

A)  $12 
B)  $16 
C)  $20 
D)  $24 
A)  $12 
B)  $16 
C)  $20 
D)  $24

Question 4

Suppose that a price-discriminating firm divides its market into two segments. If the firm sells its product for a price of $22 in the market segment where demand is relatively less elastic, the price in the market segment whose customers' demand is more elastic will be

Accepted Answer

A)  $22. 
B)  greater than $22. 
C)  less than $22. 
D)  $22 plus average fixed costs 
A)  $22. 
B)  greater than $22. 
C)  less than $22. 
D)  $22 plus average fixed costs

Question 5

Which of the following is not a necessary condition for effective price discrimination?

Accepted Answer

A)  The firm must face a downward-sloping demand curve. 
B)  There must be at least two distinguishable groups of consumers. 
C)  The producer must be a pure monopolist. 
D)  The seller must be able to prohibit buyers from easily reselling the product to other potential buyers. 
A)  The firm must face a downward-sloping demand curve. 
B)  There must be at least two distinguishable groups of consumers. 
C)  The producer must be a pure monopolist. 
D)  The seller must be able to prohibit buyers from easily reselling the product to other potential buyers.

Question 6

In the long run the prices charged by a firm in a competitive price-searcher market will be

Accepted Answer

A)  high enough to provide profits to the firm. 
B)  so low that many firms will drop out of the industry. 
C)  equal to marginal cost. 
D)  equal to average cost, including the opportunity cost of capital. 
A)  high enough to provide profits to the firm. 
B)  so low that many firms will drop out of the industry. 
C)  equal to marginal cost. 
D)  equal to average cost, including the opportunity cost of capital.

Question 7

In order to be successful in a competitive market economy, an entrepreneur must

Accepted Answer

A)  provide buyers at least as much satisfaction per dollar spent as the buyer could get elsewhere. 
B)  supply consumers with goods and services valued less highly than the resources necessary to produce them. 
C)  take resources from other producers, thus reallocating wealth but not creating new wealth. 
D)  gain government grants and subsidies. 
A)  provide buyers at least as much satisfaction per dollar spent as the buyer could get elsewhere. 
B)  supply consumers with goods and services valued less highly than the resources necessary to produce them. 
C)  take resources from other producers, thus reallocating wealth but not creating new wealth. 
D)  gain government grants and subsidies.

Question 8

An important variable that is left out of economic models is

Accepted Answer

A)  implicit costs. 
B)  excess profits. 
C)  entrepreneurship. 
D)  the opportunity cost of resources. 
A)  implicit costs. 
B)  excess profits. 
C)  entrepreneurship. 
D)  the opportunity cost of resources.

Question 9

Evaluate the following statement: "Competitive price-searcher markets are inefficient relative to purely competitive markets since prices are higher and firms don't produce an output rate that minimizes average total cost. As a result, government action should be undertaken to remedy this situation."

Accepted Answer

Competitive price-searcher markets do ha

Question 10

Why do the airlines charge less for passengers who stay over Saturday night and purchase their tickets two weeks in advance?

Accepted Answer

The airlines are practicing a form of pr

Question 11

How does the invisible hand ensure that an economy will not run out of a renewable resource?

Accepted Answer

A)  As resources run low, consumers will naturally decrease their demand for those resources. 
B)  Government will begin to regulate scarce resources as an effective means of rationing those resources. 
C)  If there is demand for those resources, producers will continue increasing supply regardless of price. 
D)  Price increases due to the diminishing supply of a resource will both curb consumption and provide incentive for producers to expand supply. 
A)  As resources run low, consumers will naturally decrease their demand for those resources. 
B)  Government will begin to regulate scarce resources as an effective means of rationing those resources. 
C)  If there is demand for those resources, producers will continue increasing supply regardless of price. 
D)  Price increases due to the diminishing supply of a resource will both curb consumption and provide incentive for producers to expand supply.

Question 12

Use the figure to answer the following question(s).
Figure 10-3  
-What is the maximum economic profit this firm depicted in Figure 10-3 will be able to earn?

Accepted Answer

A)  zero 
B)  $200 
C)  $400 
D)  $600 
A)  zero 
B)  $200 
C)  $400 
D)  $600

Question 13

Some economists argue that competitive price-searcher markets are inefficient because

Accepted Answer

A)  the firms earn economic profits in the long run. 
B)  the firms' marginal costs and marginal revenues are not always equal. 
C)  firms do not produce the output rate that would minimize their average total costs. 
D)  barriers to entry are high. 
A)  the firms earn economic profits in the long run. 
B)  the firms' marginal costs and marginal revenues are not always equal. 
C)  firms do not produce the output rate that would minimize their average total costs. 
D)  barriers to entry are high.

Question 14

In a market that is contestable, but has only a few sellers, the

Accepted Answer

A)  threat of new entrants will prevent prices from rising above the competitive level. 
B)  producers will be able to charge prices that are high enough to produce long-run economic profits. 
C)  producers will not face new competition because the barriers to entry are high. 
D)  market will never be expected to come close to the competitive result. 
A)  threat of new entrants will prevent prices from rising above the competitive level. 
B)  producers will be able to charge prices that are high enough to produce long-run economic profits. 
C)  producers will not face new competition because the barriers to entry are high. 
D)  market will never be expected to come close to the competitive result.

Question 15

The traditional view of competitive price-searcher markets holds that this type of market structure is inefficient because

Accepted Answer

A)  there are too few firms to reach an efficient level of competition. 
B)  barriers to entry are high. 
C)  excessive advertising is encouraged. 
D)  consumers are not allowed a sufficient amount of choice in which to express their individual preferences. 
A)  there are too few firms to reach an efficient level of competition. 
B)  barriers to entry are high. 
C)  excessive advertising is encouraged. 
D)  consumers are not allowed a sufficient amount of choice in which to express their individual preferences.

Question 16

When you go to a grocery store, most candy bars of a given size sell for virtually the same price. Can we conclude that this is evidence of collusion on the part of candy bar manufacturers?

Accepted Answer

Probably not. The manufacturers generall

Question 17

Which of the following must be true if a price-searcher firm is operating at the profit-maximizing output rate?

Accepted Answer

A)  The marginal cost of producing the last unit is greater than the marginal revenue derived from its sale. 
B)  The marginal cost of producing the last unit is no greater than the marginal revenue derived from its sale. 
C)  The total cost of producing all units is no greater than the total revenue derived from the sale of the units. 
D)  The total cost of producing all units is less than the total revenue derived from the sale of the units. 
A)  The marginal cost of producing the last unit is greater than the marginal revenue derived from its sale. 
B)  The marginal cost of producing the last unit is no greater than the marginal revenue derived from its sale. 
C)  The total cost of producing all units is no greater than the total revenue derived from the sale of the units. 
D)  The total cost of producing all units is less than the total revenue derived from the sale of the units.

Question 18

Use the figure to answer the following question(s).
Figure 10-10  
-What is the approximate maximum economic profit this firm depicted in Figure 10-10 will be able to earn per month?

Accepted Answer

A)  zero profit 
B)  $50,000 profit 
C)  $200,000 profit 
D)  $400,000 profit 
A)  zero profit 
B)  $50,000 profit 
C)  $200,000 profit 
D)  $400,000 profit

Question 19

In the short run, a price searcher wishing to maximize profits or minimize losses should produce the output that

Accepted Answer

A)  equates marginal cost with marginal revenue. 
B)  equates marginal cost with price. 
C)  corresponds to the lowest point on the average variable cost curve. 
D)  corresponds to the lowest point on the average total cost curve. 
A)  equates marginal cost with marginal revenue. 
B)  equates marginal cost with price. 
C)  corresponds to the lowest point on the average variable cost curve. 
D)  corresponds to the lowest point on the average total cost curve.

Question 20

In a market economy, if the supply of oil declines relative to demand,

Accepted Answer

A)  it will only be a matter of time until we run out of oil. 
B)  the price of gas will rise, and therefore price controls should be imposed in order to assure efficient allocation of petroleum resources. 
C)  oil prices will fall, reducing the incentive to find new oil reserves and alternative technologies. 
D)  oil prices will rise, increasing the incentive to conserve, discover new oil reserves, and develop alternative technologies. 
A)  it will only be a matter of time until we run out of oil. 
B)  the price of gas will rise, and therefore price controls should be imposed in order to assure efficient allocation of petroleum resources. 
C)  oil prices will fall, reducing the incentive to find new oil reserves and alternative technologies. 
D)  oil prices will rise, increasing the incentive to conserve, discover new oil reserves, and develop alternative technologies.

Entrepreneurs will increase their efforts to develop economical alternative energy sources

Firms that are price searchers

Use the figure to answer the following question(s). Figure 10-9 -What price should a competitive price-searcher firm charge with the cost and demand conditions depicted in Figure 10-9 if it wants to maximize its profit?

Suppose that a price-discriminating firm divides its market into two segments. If the firm sells its product for a price of $22 in the market segment where demand is relatively less elastic, the price in the market segment whose customers' demand is more elastic will be

Which of the following is not a necessary condition for effective price discrimination?

In the long run the prices charged by a firm in a competitive price-searcher market will be

In order to be successful in a competitive market economy, an entrepreneur must

An important variable that is left out of economic models is

Why do the airlines charge less for passengers who stay over Saturday night and purchase their tickets two weeks in advance?

How does the invisible hand ensure that an economy will not run out of a renewable resource?

Use the figure to answer the following question(s). Figure 10-3 -What is the maximum economic profit this firm depicted in Figure 10-3 will be able to earn?

Some economists argue that competitive price-searcher markets are inefficient because

In a market that is contestable, but has only a few sellers, the

The traditional view of competitive price-searcher markets holds that this type of market structure is inefficient because

When you go to a grocery store, most candy bars of a given size sell for virtually the same price. Can we conclude that this is evidence of collusion on the part of candy bar manufacturers?

Which of the following must be true if a price-searcher firm is operating at the profit-maximizing output rate?

Use the figure to answer the following question(s). Figure 10-10 -What is the approximate maximum economic profit this firm depicted in Figure 10-10 will be able to earn per month?

In the short run, a price searcher wishing to maximize profits or minimize losses should produce the output that

In a market economy, if the supply of oil declines relative to demand,

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

Entrepreneurs will increase their efforts to develop economical alternative energy sources

Firms that are price searchers

Use the figure to answer the following question(s). Figure 10-9 -What price should a competitive price-searcher firm charge with the cost and demand conditions depicted in Figure 10-9 if it wants to maximize its profit?

Suppose that a price-discriminating firm divides its market into two segments. If the firm sells its product for a price of $22 in the market segment where demand is relatively less elastic, the price in the market segment whose customers' demand is more elastic will be

Which of the following is not a necessary condition for effective price discrimination?

In the long run the prices charged by a firm in a competitive price-searcher market will be

In order to be successful in a competitive market economy, an entrepreneur must

An important variable that is left out of economic models is

Why do the airlines charge less for passengers who stay over Saturday night and purchase their tickets two weeks in advance?

How does the invisible hand ensure that an economy will not run out of a renewable resource?

Use the figure to answer the following question(s). Figure 10-3 -What is the maximum economic profit this firm depicted in Figure 10-3 will be able to earn?

Some economists argue that competitive price-searcher markets are inefficient because

In a market that is contestable, but has only a few sellers, the

The traditional view of competitive price-searcher markets holds that this type of market structure is inefficient because

When you go to a grocery store, most candy bars of a given size sell for virtually the same price. Can we conclude that this is evidence of collusion on the part of candy bar manufacturers?

Which of the following must be true if a price-searcher firm is operating at the profit-maximizing output rate?

Use the figure to answer the following question(s). Figure 10-10 -What is the approximate maximum economic profit this firm depicted in Figure 10-10 will be able to earn per month?

In the short run, a price searcher wishing to maximize profits or minimize losses should produce the output that

In a market economy, if the supply of oil declines relative to demand,

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