Question 1

Economists use the term imperfect competition to describe

Accepted Answer

A) all industries that produce standardized products. 
B) any industry in which there is no nonprice competition. 
C) a pure monopoly only. 
D) those markets that are not purely competitive. 
A) all industries that produce standardized products. 
B) any industry in which there is no nonprice competition. 
C) a pure monopoly only. 
D) those markets that are not purely competitive.

Question 2

The total revenue of a purely competitive firm from selling 6 units of output is $48.Based on this information, the unit price of the output must be

Accepted Answer

A) $8. 
B) $42. 
C) $288. 
D) $54. 
A) $8. 
B) $42. 
C) $288. 
D) $54.

Question 3

As long as an additional unit of output yields a marginal revenue larger than its marginal cost, it will be adding to total profits of the firm.

Accepted Answer

A) True 
 B)False

Question 4

Economists would describe the U.S.automobile industry as

Accepted Answer

A) purely competitive. 
B) an oligopoly. 
C) monopolistically competitive. 
D) a pure monopoly. 
A) purely competitive. 
B) an oligopoly. 
C) monopolistically competitive. 
D) a pure monopoly.

Question 5

Which of the following is not a basic market model?

Accepted Answer

A) pure competition 
B) free enterprise 
C) oligopoly 
D) monopoly 
A) pure competition 
B) free enterprise 
C) oligopoly 
D) monopoly

Question 6

If a purely competitive firm is producing at the P = MC output and realizing an economic profit, at that output

Accepted Answer

A) marginal revenue is less than price. 
B) marginal revenue exceeds ATC. 
C) ATC is being minimized. 
D) total revenue equals total cost. 
A) marginal revenue is less than price. 
B) marginal revenue exceeds ATC. 
C) ATC is being minimized. 
D) total revenue equals total cost.

Question 7

Which of the following is a reason why individual firms under pure competition would not find it gainful to advertise their product?

Accepted Answer

A) Firms produce a homogeneous product. 
B) The quantity of the product demanded is very large. 
C) The market demand curve cannot be increased. 
D) Firms do not make long-run profits. 
A) Firms produce a homogeneous product. 
B) The quantity of the product demanded is very large. 
C) The market demand curve cannot be increased. 
D) Firms do not make long-run profits.

Question 8

The accompanying table gives cost data for a firm that is selling in a purely competitive market.If the market price for the firm's product is $12, the competitive firm should produce

Accepted Answer

A) 4 units at a loss of $109. 
B) 4 units at an economic profit of $31.75. 
C) 8 units at a loss of $48.80. 
D) zero units at a loss of $100. 
A) 4 units at a loss of $109. 
B) 4 units at an economic profit of $31.75. 
C) 8 units at a loss of $48.80. 
D) zero units at a loss of $100.

Question 9

Mutual interdependence would tend to limit control over price in which market model?

Accepted Answer

A) monopolistic competition 
B) pure competition 
C) pure monopoly 
D) oligopoly 
A) monopolistic competition 
B) pure competition 
C) pure monopoly 
D) oligopoly

Question 10

In which market model are the conditions of entry the most difficult?

Accepted Answer

A) monopolistic competition 
B) pure competition 
C) pure monopoly 
D) oligopoly 
A) monopolistic competition 
B) pure competition 
C) pure monopoly 
D) oligopoly

Question 11

If a purely competitive firm shuts down in the short run,

Accepted Answer

A) its loss will be zero. 
B) it will realize a loss equal to its total variable costs. 
C) it will realize a loss equal to its total fixed costs. 
D) it will realize a loss equal to its explicit costs. 
A) its loss will be zero. 
B) it will realize a loss equal to its total variable costs. 
C) it will realize a loss equal to its total fixed costs. 
D) it will realize a loss equal to its explicit costs.

Question 12

In which market model are the conditions of entry into the market easiest?

Accepted Answer

A) pure competition 
B) pure monopoly 
C) monopolistic competition 
D) oligopoly 
A) pure competition 
B) pure monopoly 
C) monopolistic competition 
D) oligopoly

Question 13

An industry comprising 40 firms, none of which has more than 3 percent of the total market for a differentiated product, is an example of

Accepted Answer

A) monopolistic competition. 
B) oligopoly. 
C) pure monopoly. 
D) pure competition. 
A) monopolistic competition. 
B) oligopoly. 
C) pure monopoly. 
D) pure competition.

Question 14

A competitive firm will produce in the short run so long as its price exceeds its average fixed cost.

Accepted Answer

A) True 
 B)False

Question 15

In the short run, a purely competitive seller will shut down if

Accepted Answer

A) it cannot produce at an economic profit. 
B) price is less than average variable cost at all outputs. 
C) price is less than average fixed cost at all outputs. 
D) there is no point at which marginal revenue and marginal cost are equal. 
A) it cannot produce at an economic profit. 
B) price is less than average variable cost at all outputs. 
C) price is less than average fixed cost at all outputs. 
D) there is no point at which marginal revenue and marginal cost are equal.

Question 16

In contrast to American firms, Japanese firms frequently make lifetime employment commitments to their workers and agree not to lay them off when product demand is weak.Other things being equal, we would expect Japanese firms to

Accepted Answer

A) face more elastic product demand curves than American firms. 
B) have relatively greater variable costs than American firms. 
C) discontinue production at higher product prices than would American firms. 
D) continue to produce in the short run at lower prices than would American firms. 
A) face more elastic product demand curves than American firms. 
B) have relatively greater variable costs than American firms. 
C) discontinue production at higher product prices than would American firms. 
D) continue to produce in the short run at lower prices than would American firms.

Question 17

If the firm produces an output level below its break-even point, then the firm will earn negative economic profits.

Accepted Answer

A) True 
 B)False

Question 18

Firms seek to maximize

Accepted Answer

A) per unit profit. 
B) total revenue. 
C) total profit. 
D) market share. 
A) per unit profit. 
B) total revenue. 
C) total profit. 
D) market share.

Question 19

The demand curve faced by a purely competitive firm

Accepted Answer

A) has unitary elasticity. 
B) yields constant total revenues even when price changes. 
C) is identical to the market demand curve. 
D) is the same as its marginal revenue curve. 
A) has unitary elasticity. 
B) yields constant total revenues even when price changes. 
C) is identical to the market demand curve. 
D) is the same as its marginal revenue curve.

Question 20

If a purely competitive firm is producing at some output level less than the profit-maximizing output, then

Accepted Answer

A) price is necessarily greater than average total cost. 
B) fixed costs are large relative to variable costs. 
C) price exceeds marginal revenue. 
D) marginal revenue exceeds marginal cost. 
A) price is necessarily greater than average total cost. 
B) fixed costs are large relative to variable costs. 
C) price exceeds marginal revenue. 
D) marginal revenue exceeds marginal cost.

Exam 10: Pure Competition in the Short Run

Economists use the term imperfect competition to describe

The total revenue of a purely competitive firm from selling 6 units of output is $48.Based on this information, the unit price of the output must be

As long as an additional unit of output yields a marginal revenue larger than its marginal cost, it will be adding to total profits of the firm.

Economists would describe the U.S.automobile industry as

Which of the following is not a basic market model?

If a purely competitive firm is producing at the P = MC output and realizing an economic profit, at that output

Which of the following is a reason why individual firms under pure competition would not find it gainful to advertise their product?

The accompanying table gives cost data for a firm that is selling in a purely competitive market.If the market price for the firm's product is $12, the competitive firm should produce

Mutual interdependence would tend to limit control over price in which market model?

In which market model are the conditions of entry the most difficult?

If a purely competitive firm shuts down in the short run,

In which market model are the conditions of entry into the market easiest?

An industry comprising 40 firms, none of which has more than 3 percent of the total market for a differentiated product, is an example of

A competitive firm will produce in the short run so long as its price exceeds its average fixed cost.

In the short run, a purely competitive seller will shut down if

In contrast to American firms, Japanese firms frequently make lifetime employment commitments to their workers and agree not to lay them off when product demand is weak.Other things being equal, we would expect Japanese firms to

If the firm produces an output level below its break-even point, then the firm will earn negative economic profits.

Firms seek to maximize

The demand curve faced by a purely competitive firm

If a purely competitive firm is producing at some output level less than the profit-maximizing output, then

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Elasticity

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, Rd, and Efficiency

The Demand for Resources

Wage Determination

Rent, Interest, and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

Health Care

Immigration

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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