Question 1

As long as a market is contestable,then even if it has only a few sellers,the

Accepted Answer

A) threat of new entrants will prevent the 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 the 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

Question 2

In competitive price-searcher markets,short-run economic losses will lead to

Accepted Answer

A) long-run economic losses. 
B) the exit of firms from the market and the eventual restoration of zero long-run economic profits. 
C) the entry of new firms into the market as old firms fail. 
D) the entry of additional firms into the market,causing each firm to experience an increase in demand for its product. 
A) long-run economic losses. 
B) the exit of firms from the market and the eventual restoration of zero long-run economic profits. 
C) the entry of new firms into the market as old firms fail. 
D) the entry of additional firms into the market,causing each firm to experience an increase in demand for its product. B

Question 3

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 A

Question 4

If a market is in long-run equilibrium,which of the following conditions will be present in a competitive price-taker market but absent from a competitive price-searcher market?

Accepted Answer

A) P = ATC 
B) MR = MC 
C) P = MC 
D) MR < P 
A) P = ATC 
B) MR = MC 
C) P = MC 
D) MR < P

Question 5

Cecilia's Café is in a competitive price-searcher market.Cecilia's is currently producing where average total cost is at its minimum,and Cecilia's is earning a positive economic profit.In the long run we would expect Cecilia's output to

Accepted Answer

A) decrease and average total cost to be higher. 
B) decrease and average total cost to be lower. 
C) remain unchanged as Cecilia's is doing the best it can. 
D) increase and average total costs to be lower. 
A) decrease and average total cost to be higher. 
B) decrease and average total cost to be lower. 
C) remain unchanged as Cecilia's is doing the best it can. 
D) increase and average total costs to be lower.

Question 6

Which of the following is true when long-run equilibrium conditions are present in price-taker and competitive price-searcher markets?

Accepted Answer

A) MR = MC in both price-taker and competitive price-searcher markets 
B) P = ATC in both price-taker and competitive price-searcher markets 
C) P = MC in both price-taker and competitive price-searcher markets 
D) Both a and b,but not c are true. 
A) MR = MC in both price-taker and competitive price-searcher markets 
B) P = ATC in both price-taker and competitive price-searcher markets 
C) P = MC in both price-taker and competitive price-searcher markets 
D) Both a and b,but not c are true.

Question 7

Suppose that a price-discriminating firm divides its market into two segments.If the firm sells its product for a price of $42 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) $42 
B) greater than $42 
C) less than $42 
D) $42 plus average fixed costs 
A) $42 
B) greater than $42 
C) less than $42 
D) $42 plus average fixed costs

Question 8

If a firm in a competitive price-searcher market raises its price,it will

Accepted Answer

A) lose all of its sales. 
B) increase its sales. 
C) lose only some of its sales. 
D) have to go out of business. 
A) lose all of its sales. 
B) increase its sales. 
C) lose only some of its sales. 
D) have to go out of business.

Question 9

Figure 10-11

-Refer to Figure 10-11.Which of the graphs shown would be consistent with a firm in a competitive price-searcher market that is earning a positive profit?

Accepted Answer

A) Panel a 
B) Panel b 
C) Panel c 
D) Panel d 
A) Panel a 
B) Panel b 
C) Panel c 
D) Panel d

Question 10

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 generally

Question 11

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 maximizing its profit. 
B) the profits of the firm are positive. 
C) firms are likely to enter this market in the long run. 
D) the firm would earn more profit by expanding output 
A) the firm is currently maximizing its profit. 
B) the profits of the firm are positive. 
C) firms are likely to enter this market in the long run. 
D) the firm would earn more profit by expanding output

Question 12

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 13

Which of the following is true of a competitive price-searcher firm when the market is in a long-run equilibrium?

Accepted Answer

A) MR < MC < price 
B) MR < MC = price 
C) MR = MC < price 
D) MR = MC = price 
A) MR < MC < price 
B) MR < MC = price 
C) MR = MC < price 
D) MR = MC = price

Question 14

If firms in competitive price-searcher markets are earning economic losses,what effect will the exit of existing firms have?

Accepted Answer

A) Demand for the product of each firm will be reduced until the losses are eliminated. 
B) Demand for the product of each firm will increase until all firms earn zero profit. 
C) Demand for the product of each firm will increase until price is greater than average total cost. 
D) Demand for the product of each firm will fall until price equals marginal cost. 
A) Demand for the product of each firm will be reduced until the losses are eliminated. 
B) Demand for the product of each firm will increase until all firms earn zero profit. 
C) Demand for the product of each firm will increase until price is greater than average total cost. 
D) Demand for the product of each firm will fall until price equals marginal cost.

Question 15

Figure 10-3
  
-What price should a competitive price searcher firm with the cost and demand conditions depicted in Figure 10-3 charge if it wants to maximize its profit?

Accepted Answer

A) $6 
B) $8 
C) $10 
D) $12 
A) $6 
B) $8 
C) $10 
D) $12

Question 16

The strategy underlying price discrimination is

Accepted Answer

A) to charge higher prices to customers who have good substitutes available to them and lower prices to customers without many substitutes available to them.. 
B) to charge everyone the same price but limit the quantity they are allowed to buy. 
C) to increase total revenue by charging higher prices to those with the most inelastic demand for the product and lower prices to those with the most elastic demand. 
D) to reduce per-unit cost by charging higher prices to those with the most inelastic demand and lower prices to those with the most elastic demand. 
A) to charge higher prices to customers who have good substitutes available to them and lower prices to customers without many substitutes available to them.. 
B) to charge everyone the same price but limit the quantity they are allowed to buy. 
C) to increase total revenue by charging higher prices to those with the most inelastic demand for the product and lower prices to those with the most elastic demand. 
D) to reduce per-unit cost by charging higher prices to those with the most inelastic demand and lower prices to those with the most elastic demand.

Question 17

Given the following schedule,what price and output level would a profit-maximizing price searcher choose?

Accepted Answer

A) price,$45;output,2 units 
B) price,$35;output,3 units 
C) price,$30;output,4 units 
D) price,$25;output,5 units 
A) price,$45;output,2 units 
B) price,$35;output,3 units 
C) price,$30;output,4 units 
D) price,$25;output,5 units

Question 18

If a government wanted to increase the prosperity of a nation,it could best serve this goal by

Accepted Answer

A) protecting domestic industries from international trade,thus encouraging domestic growth. 
B) regulating the way in which firms can operate. 
C) reducing barriers that restrict the ability of potential competitors to enter markets. 
D) subsidizing firms that are in danger of going out of business. 
A) protecting domestic industries from international trade,thus encouraging domestic growth. 
B) regulating the way in which firms can operate. 
C) reducing barriers that restrict the ability of potential competitors to enter markets. 
D) subsidizing firms that are in danger of going out of business.

Question 19

When a competitive price-searcher market is in long-run equilibrium,the firms will

Accepted Answer

A) earn economic profit. 
B) operate at an output level that minimizes long-run average total cost. 
C) charge a price that is equal to average total cost. 
D) operate at an output level where price is equal to marginal cost. 
A) earn economic profit. 
B) operate at an output level that minimizes long-run average total cost. 
C) charge a price that is equal to average total cost. 
D) operate at an output level where price is equal to marginal cost.

Question 20

What type of industry is the market for grocery products? Is over-capacity present?

Accepted Answer

Though there are numerous large chains,a

Exam 23: Price-Searcher Markets With Low Entry Barriers

As long as a market is contestable,then even if it has only a few sellers,the

In competitive price-searcher markets,short-run economic losses will lead to

Figure 10-3 -What is the maximum economic profit this firm depicted in Figure 10-3 will be able to earn?

If a market is in long-run equilibrium,which of the following conditions will be present in a competitive price-taker market but absent from a competitive price-searcher market?

Cecilia's Café is in a competitive price-searcher market.Cecilia's is currently producing where average total cost is at its minimum,and Cecilia's is earning a positive economic profit.In the long run we would expect Cecilia's output to

Which of the following is true when long-run equilibrium conditions are present in price-taker and competitive price-searcher markets?

Suppose that a price-discriminating firm divides its market into two segments.If the firm sells its product for a price of $42 in the market segment where demand is relatively less elastic,the price in the market segment whose customers' demand is more elastic will be

If a firm in a competitive price-searcher market raises its price,it will

Figure 10-11 -Refer to Figure 10-11.Which of the graphs shown would be consistent with a firm in a competitive price-searcher market that is earning a positive profit?

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?

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

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

Which of the following is true of a competitive price-searcher firm when the market is in a long-run equilibrium?

If firms in competitive price-searcher markets are earning economic losses,what effect will the exit of existing firms have?

Figure 10-3 -What price should a competitive price searcher firm with the cost and demand conditions depicted in Figure 10-3 charge if it wants to maximize its profit?

The strategy underlying price discrimination is

Given the following schedule,what price and output level would a profit-maximizing price searcher choose?

If a government wanted to increase the prosperity of a nation,it could best serve this goal by

When a competitive price-searcher market is in long-run equilibrium,the firms will

What type of industry is the market for grocery products? Is over-capacity present?

The Economic Approach

Asome Tools of the Economist

Asupply,demand,and the Market Process

Asupply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

The Economics of Collective Decision-Making

Ataking the Nations Economic Pulse

Economic Fluctuations, unemployment, and Inflation

Aan Introduction to Basic Macroeconomic Markets

Dynamic Change, economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and Historical Perspective

Fiscal Policy, incentives, and Secondary Effects

Amoney and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, output, and Employment

Creating an Environment for Growth and Prosperity

Institutions,policies,and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Consumer Choice and Elasticity

Acosts and the Supply of Goods

Aprice Takers and the Competitive Process

Aprice-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

Government Spending and Taxation

The Economics of Social Security

The Stock Market: Its Function, Performance, and Potential As an Investment Opportunity

Great Debates in Economics: Keynes Versus Hayek

The Crisis of 2008: Causes and Lessons for the Future

Lessons From the Great Depression

Lessons From Japan and Canada

The Federal Budget and the National Debt

The Economics of Healthcare

Education: Problems and Performance

Earnings Differences Between Men and Women

Do Labor Unions Increase the Wages of Workers

The Question of Resource Exhaustion

Difficult Environmental Cases and the Role of Government

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