Question 1

In the long-run,a perfectly competitivel firm will achieve

Accepted Answer

A) Average rate of return 
B) Above average profits 
C) Losses 
D) Economic Profits 
A) Average rate of return 
B) Above average profits 
C) Losses 
D) Economic Profits A

Question 2

Which of the products below is towards the spectrum of perfectly competitive industry?

Accepted Answer

A) Nike shoes 
B) Eggs 
C) Purdue Chicken 
D) Restaurants 
A) Nike shoes 
B) Eggs 
C) Purdue Chicken 
D) Restaurants B

Question 3

Lipitor,with few substitutes,should have an own-price elasticity of demand that is:

Accepted Answer

A) Relative elastic 
B) Relatively inelastic 
C) Perfectly inelastic 
D) Perfectly elastic 
A) Relative elastic 
B) Relatively inelastic 
C) Perfectly inelastic 
D) Perfectly elastic B

Question 4

A sudden increase in the market demand in a competitive industry leads to

Accepted Answer

A) Losses in the short-run and average profits in the long-run 
B) Above average profits in the short-run and average profits in the long-run 
C) New firms being attracted to the industry 
D) Demand creating supply 
A) Losses in the short-run and average profits in the long-run 
B) Above average profits in the short-run and average profits in the long-run 
C) New firms being attracted to the industry 
D) Demand creating supply

Question 5

The short run supply curve for a perfect competitive firm is

Accepted Answer

A) Marginal cost curve 
B) Average revenue curve 
C) Marginal revenue curve 
D) Marginal cost curve above its average variable cost curve 
A) Marginal cost curve 
B) Average revenue curve 
C) Marginal revenue curve 
D) Marginal cost curve above its average variable cost curve

Question 6

When Clean City banned the air pollution that still plagues Smogville,over time,we would expect that:
A)The residents of Clean City are happy with the decision
B)The residents of Smogville are happy that they did not enact a similar law
C)House prices in Clean City will have risen
D)All of the above

Accepted Answer

The answer of When Clean City banned the air pollution...

Question 7

A perfectly competitive industry has

Accepted Answer

A) A perfectly elastic demand curve 
B) A perfectly elastic supply curve 
C) A downward sloping demand curve 
D) A downward sloping supply curve 
A) A perfectly elastic demand curve 
B) A perfectly elastic supply curve 
C) A downward sloping demand curve 
D) A downward sloping supply curve

Question 8

A market tends to be monopolistic if

Accepted Answer

A) The good has too many substitutes 
B) The good has very few substitutes 
C) The good has too many complements 
D) The good has very few complements 
A) The good has too many substitutes 
B) The good has very few substitutes 
C) The good has too many complements 
D) The good has very few complements

Question 9

A monopolist's profit maximizing price is $15.At MC=MR,the output is 100 units and the MC is $10.At this level of production,average total costs are $12.Monopolist's profits are

Accepted Answer

A) $300 
B) $1500 
C) $500 
D) None of the above 
A) $300 
B) $1500 
C) $500 
D) None of the above

Question 10

Monopoly firms have a downward sloping curve in the short-run because

Accepted Answer

A) They have no close substitutes 
B) There are no barriers to entry 
C) They have no cost advantage over their rivals 
D) None of the above 
A) They have no close substitutes 
B) There are no barriers to entry 
C) They have no cost advantage over their rivals 
D) None of the above

Question 11

A firm sees its marginal revenue increase by $20 and marginal cost increase by $15 when it produces its 1000th product.This implies

Accepted Answer

A) the production of the 1000th unit of output increases the firm's profit by $5. 
B) The firm is past its profit maximizing output 
C) We cannot say much on the profitability of the firm 
D) Producing the 1000th item will in fact decrease the overall firm's profits. 
A) the production of the 1000th unit of output increases the firm's profit by $5. 
B) The firm is past its profit maximizing output 
C) We cannot say much on the profitability of the firm 
D) Producing the 1000th item will in fact decrease the overall firm's profits.

Question 12

These are characteristics of a competitive industry,except:

Accepted Answer

A) Many substitutes 
B) No barriers to entry 
C) Homogenous product 
D) Little or no information on rivals' products 
A) Many substitutes 
B) No barriers to entry 
C) Homogenous product 
D) Little or no information on rivals' products

Question 13

Based on the above scenario,is the industry in the long run equilibrium?

Accepted Answer

A) yes,because all firms are producing at P=MR=MC 
B) no,because the price is still greater than the minimum average total cost. 
C) cannot answer because need information on MR 
D) cannot answer unless we see that the market lets some firms enter and/or some firms exit. 
A) yes,because all firms are producing at P=MR=MC 
B) no,because the price is still greater than the minimum average total cost. 
C) cannot answer because need information on MR 
D) cannot answer unless we see that the market lets some firms enter and/or some firms exit.

Question 14

A sudden rise in the market demand in a competitive industry leads to

Accepted Answer

A) A market equilibrium price higher than the original equilibrium in the short-run 
B) A market equilibrium price equal to the original equilibrium in the long-run 
C) Both a and b 
D) None of the above 
A) A market equilibrium price higher than the original equilibrium in the short-run 
B) A market equilibrium price equal to the original equilibrium in the long-run 
C) Both a and b 
D) None of the above

Question 15

Which of the following cannot be classified as a market structure?

Accepted Answer

A) Oligopoly 
B) Monopolistic Competition 
C) Mergers 
D) Perfect Competition 
A) Oligopoly 
B) Monopolistic Competition 
C) Mergers 
D) Perfect Competition

Question 16

A sudden decrease in the market demand in a competitive industry leads to

Accepted Answer

A) A market equilibrium price higher than the original equilibrium in the short-run 
B) A market equilibrium price equal to the original equilibrium in the long-run 
C) Both a and b 
D) None of the above 
A) A market equilibrium price higher than the original equilibrium in the short-run 
B) A market equilibrium price equal to the original equilibrium in the long-run 
C) Both a and b 
D) None of the above

Question 17

A monopolist maximizes profit by producing

Accepted Answer

A) At MR= rising MC 
B) At MR>MC 
C) At P=MR 
D) At MC=0 
A) At MR= rising MC 
B) At MR>MC 
C) At P=MR 
D) At MC=0

Question 18

How does Ebay differ from an economist's view of a perfect competitive market?

Accepted Answer

A) Ebay has few buyers whereas perfect competitive industry assumes many buyers 
B) Ebay has few sellers whereas perfect competitive industry assumes many sellers 
C) There is limited information in ebay whereas perfect competitive industry assumes full information for both buyers and sellers 
D) There is no difference between these two markets. 
A) Ebay has few buyers whereas perfect competitive industry assumes many buyers 
B) Ebay has few sellers whereas perfect competitive industry assumes many sellers 
C) There is limited information in ebay whereas perfect competitive industry assumes full information for both buyers and sellers 
D) There is no difference between these two markets.

Question 19

You run a construction firm with unique capabilities.An architecture firm you have worked for in the past is working on a proposal for a new building that could earn them huge profits.They are considering one of two unique design concepts that either exploit your capabilities or those of another contractor with a different set of capabilities.They contact you to determine if you could actually get the job done and to get a quote to be included in their bid.The client makes a few changes that will have a small impact on your operations but awards the contract to the architect's plan that includes you.How does the awarding of the contract with changes affect how much your final fee for your services?

Accepted Answer

You know the architect is going to earn

Question 20

Each firm in the egg industry (competitive)produces 15 million eggs per year.Each egg has an average cost of $0.02 and they sell an egg for $0.06.The marginal cost of a string is

Accepted Answer

A) $0.02 
B) $0.06 
C) $0.04 
D) not enough information provided. 
A) $0.02 
B) $0.06 
C) $0.04 
D) not enough information provided.

In the long-run,a perfectly competitivel firm will achieve

Which of the products below is towards the spectrum of perfectly competitive industry?

Lipitor,with few substitutes,should have an own-price elasticity of demand that is:

A sudden increase in the market demand in a competitive industry leads to

The short run supply curve for a perfect competitive firm is

When Clean City banned the air pollution that still plagues Smogville,over time,we would expect that: A)The residents of Clean City are happy with the decision B)The residents of Smogville are happy that they did not enact a similar law C)House prices in Clean City will have risen D)All of the above

A perfectly competitive industry has

A market tends to be monopolistic if

A monopolist's profit maximizing price is $15.At MC=MR,the output is 100 units and the MC is $10.At this level of production,average total costs are $12.Monopolist's profits are

Monopoly firms have a downward sloping curve in the short-run because

A firm sees its marginal revenue increase by $20 and marginal cost increase by $15 when it produces its 1000th product.This implies

These are characteristics of a competitive industry,except:

Based on the above scenario,is the industry in the long run equilibrium?

A sudden rise in the market demand in a competitive industry leads to

Which of the following cannot be classified as a market structure?

A sudden decrease in the market demand in a competitive industry leads to

A monopolist maximizes profit by producing

How does Ebay differ from an economist's view of a perfect competitive market?

Each firm in the egg industry (competitive)produces 15 million eggs per year.Each egg has an average cost of $0.02 and they sell an egg for $0.06.The marginal cost of a string is

The One Lessor of Business

Benefits, Costs, and Decisions

Extent How Muchdecisions

Investment Decisions: Look Ahead and Reason Back

Simple Pricing

Economies of Scale and Scope

Understanding Markets and Industry Changes

Strategy: the Quest to Keep Profit From Eroding

Foreign Exchange, trade, and Bubbles

More Realistic and Complex Pricing

Direct Price Discrimination Indirect Price Discrimination

Strategic Games

Bargaining

Making Decisions With Uncertainty

Auctions

The Problem of Adverse Selection

The Problem of Moral Hazard

Getting Employees to Work in the Firms Best Interest

Getting Divisions to Work in the Firms Best Interest

Managing Vertical Relationships

Filters

Exam 9: Market Structure and Long-Run Equilibrium

In the long-run,a perfectly competitivel firm will achieve

Which of the products below is towards the spectrum of perfectly competitive industry?

Lipitor,with few substitutes,should have an own-price elasticity of demand that is:

A sudden increase in the market demand in a competitive industry leads to

The short run supply curve for a perfect competitive firm is

A perfectly competitive industry has

A market tends to be monopolistic if

A monopolist's profit maximizing price is $15.At MC=MR,the output is 100 units and the MC is $10.At this level of production,average total costs are $12.Monopolist's profits are

Monopoly firms have a downward sloping curve in the short-run because

A firm sees its marginal revenue increase by $20 and marginal cost increase by $15 when it produces its 1000th product.This implies

These are characteristics of a competitive industry,except:

Based on the above scenario,is the industry in the long run equilibrium?

A sudden rise in the market demand in a competitive industry leads to

Which of the following cannot be classified as a market structure?

A sudden decrease in the market demand in a competitive industry leads to

A monopolist maximizes profit by producing

How does Ebay differ from an economist's view of a perfect competitive market?

Each firm in the egg industry (competitive)produces 15 million eggs per year.Each egg has an average cost of $0.02 and they sell an egg for $0.06.The marginal cost of a string is

The One Lessor of Business

Benefits, Costs, and Decisions

Extent How Muchdecisions

Investment Decisions: Look Ahead and Reason Back

Simple Pricing

Economies of Scale and Scope

Understanding Markets and Industry Changes

Strategy: the Quest to Keep Profit From Eroding

Foreign Exchange, trade, and Bubbles

More Realistic and Complex Pricing

Direct Price Discrimination Indirect Price Discrimination

Strategic Games

Bargaining

Making Decisions With Uncertainty

Auctions

The Problem of Adverse Selection

The Problem of Moral Hazard

Getting Employees to Work in the Firms Best Interest

Getting Divisions to Work in the Firms Best Interest

Managing Vertical Relationships

Filters