Question 1

When a new firm enters a competitive price-searcher market,the demand curves faced by all existing firms in that market will

Accepted Answer

A) shift to the left. 
B) shift to the right. 
C) shift in a direction that is unpredictable without further information. 
D) remain unchanged.It is the supply curve that will shift. 
A) shift to the left. 
B) shift to the right. 
C) shift in a direction that is unpredictable without further information. 
D) remain unchanged.It is the supply curve that will shift.

Question 2

A profit-maximizing price searcher will expand output to the point where

Accepted Answer

A) total revenue equals total cost. 
B) marginal revenue equals marginal cost. 
C) price equals average total cost. 
D) price equals marginal cost. 
A) total revenue equals total cost. 
B) marginal revenue equals marginal cost. 
C) price equals average total cost. 
D) price equals marginal cost.

Question 3

If firms in a competitive price-searcher market are incurring economic losses,which of the following scenarios would best describe the change existing firms (who are able to stay in the market)would face as the market adjusts to long-run equilibrium?

Accepted Answer

A) An increase in demand for each firm and lower prices. 
B) A decrease in demand for each firm and lower prices. 
C) An increase in demand for each firm and higher prices. 
D) A decrease in demand for each firm and higher prices. 
A) An increase in demand for each firm and lower prices. 
B) A decrease in demand for each firm and lower prices. 
C) An increase in demand for each firm and higher prices. 
D) A decrease in demand for each firm and higher prices.

Question 4

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 5

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 = ATC in both price-taker and competitive price-searcher markets. 
B) P = ATC in price-taker markets;P = MC in competitive price-searcher markets. 
C) P = MC in both price-taker and competitive price-searcher markets. 
D) P = ATC in both price-taker and competitive price-searcher markets. 
A) MR = ATC in both price-taker and competitive price-searcher markets. 
B) P = ATC in price-taker markets;P = MC in competitive price-searcher markets. 
C) P = MC in both price-taker and competitive price-searcher markets. 
D) P = ATC in both price-taker and competitive price-searcher markets.

Question 6

Price discrimination occurs when

Accepted Answer

A) firms maximize their profit by setting price equal to marginal cost. 
B) a seller charges different prices to different consumers for the same product or service. 
C) a seller charges the same price to consumers for a different product or service. 
D) a seller charges different prices to consumers,discriminating by race or gender of the consumer. 
A) firms maximize their profit by setting price equal to marginal cost. 
B) a seller charges different prices to different consumers for the same product or service. 
C) a seller charges the same price to consumers for a different product or service. 
D) a seller charges different prices to consumers,discriminating by race or gender of the consumer.

Question 7

Which of the following statements is correct?

Accepted Answer

A) Price discrimination is always more profitable than charging a single price. 
B) A price discriminator would want to charge the highest price to those customers with the most elastic demand for his product. 
C) To be successful,a price discriminator must assure that items can be resold between high- and low-price groups. 
D) To maximize profit,a price discriminator distinguishes groups with different demands and charges higher prices to those with the more inelastic demand. 
A) Price discrimination is always more profitable than charging a single price. 
B) A price discriminator would want to charge the highest price to those customers with the most elastic demand for his product. 
C) To be successful,a price discriminator must assure that items can be resold between high- and low-price groups. 
D) To maximize profit,a price discriminator distinguishes groups with different demands and charges higher prices to those with the more inelastic demand.

Question 8

Tombstones are produced in a competitive price-searcher market.One producer,Rolling Stones,sells 20 tombstones a week at a price of $500 each.Its average total cost is $600.From this information,we can conclude

Accepted Answer

A) new tombstone firms will want to enter. 
B) this producer is losing $2,000 a week. 
C) this producer is making an economic profit of $400. 
D) this producer is setting MR = MC. 
E) this producer should increase production. 
A) new tombstone firms will want to enter. 
B) this producer is losing $2,000 a week. 
C) this producer is making an economic profit of $400. 
D) this producer is setting MR = MC. 
E) this producer should increase production.

Question 9

A price-searcher firm will expand output and sales 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 10

Figure 10-4
  
-If the cost and demand conditions of this competitive price-searcher firm depicted in Figure 10-4 are representative of the market,what will happen in the future?

Accepted Answer

A) Some firms will go out of business,and the market price will rise. 
B) The current market price will tend to persist into the future. 
C) New firms will enter the market,and the market price will decline. 
D) The firms in this industry will probably collude in order to increase their profitability. 
A) Some firms will go out of business,and the market price will rise. 
B) The current market price will tend to persist into the future. 
C) New firms will enter the market,and the market price will decline. 
D) The firms in this industry will probably collude in order to increase their profitability.

Question 11

If a profit-maximizing restaurant is going to increase its revenues by charging senior citizens (persons age 65 and over)lower prices than other customers,

Accepted Answer

A) the demand of senior citizens for the services of the restaurant must be inelastic. 
B) senior citizens must have lower incomes than other potential customers. 
C) the demand of senior citizens for the services of the restaurant must be elastic. 
D) senior citizens must have higher incomes than other potential customers. 
E) other customers must enjoy food more than senior citizens. 
A) the demand of senior citizens for the services of the restaurant must be inelastic. 
B) senior citizens must have lower incomes than other potential customers. 
C) the demand of senior citizens for the services of the restaurant must be elastic. 
D) senior citizens must have higher incomes than other potential customers. 
E) other customers must enjoy food more than senior citizens.

Question 12

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,w

Question 13

Which of the following is true?

Accepted Answer

A) A price-discriminating seller will charge consumers with an elastic demand a lower price than consumers with an inelastic demand. 
B) A firm must face a horizontal demand curve for its product in order to engage in effective price discrimination in a market. 
C) Price discrimination always harms consumers and helps sellers in the short run but in the long run,consumers benefit at the expense of sellers. 
D) A seller must have a monopoly in order to gain from price discrimination. 
A) A price-discriminating seller will charge consumers with an elastic demand a lower price than consumers with an inelastic demand. 
B) A firm must face a horizontal demand curve for its product in order to engage in effective price discrimination in a market. 
C) Price discrimination always harms consumers and helps sellers in the short run but in the long run,consumers benefit at the expense of sellers. 
D) A seller must have a monopoly in order to gain from price discrimination.

Question 14

Which of the following would be most likely if firms in a competitive price-searcher market were earning economic profit?

Accepted Answer

A) Production inefficiencies would persist until the profit was eliminated. 
B) Firms would decrease their rate of output in the short run,causing a decline in profitability in the market. 
C) New firms would enter the market,resulting in fewer sales by existing firms. 
D) All firms in the market would continue to produce at their current levels and continue to charge the same price. 
A) Production inefficiencies would persist until the profit was eliminated. 
B) Firms would decrease their rate of output in the short run,causing a decline in profitability in the market. 
C) New firms would enter the market,resulting in fewer sales by existing firms. 
D) All firms in the market would continue to produce at their current levels and continue to charge the same price.

Question 15

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 16

Competitive price-searcher markets are common in

Accepted Answer

A) retail selling. 
B) farming. 
C) basic manufacturing. 
D) electric power generation. 
A) retail selling. 
B) farming. 
C) basic manufacturing. 
D) electric power generation.

Question 17

Which of the following is true of entrepreneurship?

Accepted Answer

A) Entrepreneurial discovery is an important source of economic growth and higher living standards. 
B) The role of the entrepreneur is not very important and that is why it is generally not included in economic models. 
C) The role of entrepreneurial discovery could be easily integrated into economic models,but nonetheless economists choose not to do so. 
D) Economic models are able to capture fully the important role of the entrepreneur in the market process. 
A) Entrepreneurial discovery is an important source of economic growth and higher living standards. 
B) The role of the entrepreneur is not very important and that is why it is generally not included in economic models. 
C) The role of entrepreneurial discovery could be easily integrated into economic models,but nonetheless economists choose not to do so. 
D) Economic models are able to capture fully the important role of the entrepreneur in the market process.

Question 18

In the long run,a competitive price-searcher firm will

Accepted Answer

A) produce a greater variety of goods than do firms in other market structures 
B) produce a greater output level than would a perfectly competitive firm 
C) produce where price equals average total cost 
D) earn an economic profit 
E) suffer a loss because of its advertising budget 
A) produce a greater variety of goods than do firms in other market structures 
B) produce a greater output level than would a perfectly competitive firm 
C) produce where price equals average total cost 
D) earn an economic profit 
E) suffer a loss because of its advertising budget

Question 19

Which of the following businesses is most likely to be able to increase its total revenues by employing price discrimination?

Accepted Answer

A) an automobile dealership 
B) a retail furniture store 
C) a grocery store chain like Publix or Kroger 
D) a college or university 
A) an automobile dealership 
B) a retail furniture store 
C) a grocery store chain like Publix or Kroger 
D) a college or university

Question 20

A competitive market economy with low barriers to entry faces an entrepreneur with

Accepted Answer

A) an environment that shields each currently successful producer from changing market conditions. 
B) the opportunity to bring new and different products and services to the market. 
C) little opportunity for wealth creation. 
D) a static business environment. 
A) an environment that shields each currently successful producer from changing market conditions. 
B) the opportunity to bring new and different products and services to the market. 
C) little opportunity for wealth creation. 
D) a static business environment.

Exam 23: Price-Searcher Markets With Low Entry Barriers

When a new firm enters a competitive price-searcher market,the demand curves faced by all existing firms in that market will

A profit-maximizing price searcher will expand output to the point where

If firms in a competitive price-searcher market are incurring economic losses,which of the following scenarios would best describe the change existing firms (who are able to stay in the market)would face as the market adjusts to long-run equilibrium?

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

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

Price discrimination occurs when

Which of the following statements is correct?

Tombstones are produced in a competitive price-searcher market.One producer,Rolling Stones,sells 20 tombstones a week at a price of $500 each.Its average total cost is $600.From this information,we can conclude

A price-searcher firm will expand output and sales until

Figure 10-4 -If the cost and demand conditions of this competitive price-searcher firm depicted in Figure 10-4 are representative of the market,what will happen in the future?

If a profit-maximizing restaurant is going to increase its revenues by charging senior citizens (persons age 65 and over)lower prices than other customers,

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?

Which of the following is true?

Which of the following would be most likely if firms in a competitive price-searcher market were earning economic profit?

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

Competitive price-searcher markets are common in

Which of the following is true of entrepreneurship?

In the long run,a competitive price-searcher firm will

Which of the following businesses is most likely to be able to increase its total revenues by employing price discrimination?

A competitive market economy with low barriers to entry faces an entrepreneur with

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