Question 1

A decreasing-cost industry is one in which:

Accepted Answer

A)  contraction of the industry will decrease unit costs. 
B)  input prices fall or technology improves as the industry expands. 
C)  the long-run supply curve is perfectly elastic. 
D)  the long-run supply curve is upsloping. 
A)  contraction of the industry will decrease unit costs. 
B)  input prices fall or technology improves as the industry expands. 
C)  the long-run supply curve is perfectly elastic. 
D)  the long-run supply curve is upsloping.

Question 2

The long-run supply curve for a decreasing-cost industry is downsloping.

Accepted Answer

A) True 
 B)False

Question 3

Assume a purely competitive,increasing-cost industry is in long-run equilibrium.If a decline in demand occurs,firms will:

Accepted Answer

A)  leave the industry,price will decrease,and quantity produced will increase. 
B)  enter the industry and price and quantity will both increase. 
C)  leave the industry and price and output will both increase. 
D)  leave the industry and price and output will both decline. 
A)  leave the industry,price will decrease,and quantity produced will increase. 
B)  enter the industry and price and quantity will both increase. 
C)  leave the industry and price and output will both increase. 
D)  leave the industry and price and output will both decline.

Question 4

Assume a purely competitive increasing-cost industry is initially in long-run equilibrium and that an increase in consumer demand occurs.After all economic adjustments have been completed,product price will be:

Accepted Answer

A)  lower,but total output will be larger than originally. 
B)  higher and total output will be larger than originally. 
C)  lower and total output will be smaller than originally. 
D)  higher,but total output will be smaller than originally. 
A)  lower,but total output will be larger than originally. 
B)  higher and total output will be larger than originally. 
C)  lower and total output will be smaller than originally. 
D)  higher,but total output will be smaller than originally.

Question 5

A constant-cost industry is one in which:

Accepted Answer

A)  resource prices fall as output is increased. 
B)  resource prices rise as output is increased. 
C)  resource prices remain unchanged as output is increased. 
D)  small and large levels of output entail the same total costs. 
A)  resource prices fall as output is increased. 
B)  resource prices rise as output is increased. 
C)  resource prices remain unchanged as output is increased. 
D)  small and large levels of output entail the same total costs.

Question 6

Suppose a firm in a purely competitive market discovers that the price of its product is above its minimum AVC point but everywhere below ATC.Given this,the firm:

Accepted Answer

A)  minimizes losses by producing at the minimum point of its AVC curve. 
B)  maximizes profits by producing where MR = ATC. 
C)  should close down immediately. 
D)  should continue producing in the short run but leave the industry in the long run if the situation persists. 
A)  minimizes losses by producing at the minimum point of its AVC curve. 
B)  maximizes profits by producing where MR = ATC. 
C)  should close down immediately. 
D)  should continue producing in the short run but leave the industry in the long run if the situation persists.

Question 7

The primary force encouraging the entry of new firms into a purely competitive industry is:

Accepted Answer

A)  normal profits earned by firms already in the industry. 
B)  economic profits earned by firms already in the industry. 
C)  government subsidies for start-up firms. 
D)  a desire to provide goods for the betterment of society. 
A)  normal profits earned by firms already in the industry. 
B)  economic profits earned by firms already in the industry. 
C)  government subsidies for start-up firms. 
D)  a desire to provide goods for the betterment of society.

Question 8

Which of the following will not hold true for a competitive firm in long-run equilibrium?

Accepted Answer

A)  P equals AFC. 
B)  P equals minimum ATC. 
C)  MC equals minimum ATC. 
D)  P equals MC. 
A)  P equals AFC. 
B)  P equals minimum ATC. 
C)  MC equals minimum ATC. 
D)  P equals MC.

Question 9

After all long-run adjustments have been completed,a firm in a competitive industry will produce that level of output where average total cost is at a minimum.

Accepted Answer

A) True 
 B)False

A decreasing-cost industry is one in which:

The long-run supply curve for a decreasing-cost industry is downsloping.

Assume a purely competitive,increasing-cost industry is in long-run equilibrium.If a decline in demand occurs,firms will:

Assume a purely competitive increasing-cost industry is initially in long-run equilibrium and that an increase in consumer demand occurs.After all economic adjustments have been completed,product price will be:

A constant-cost industry is one in which:

Suppose a firm in a purely competitive market discovers that the price of its product is above its minimum AVC point but everywhere below ATC.Given this,the firm:

The primary force encouraging the entry of new firms into a purely competitive industry is:

Which of the following will not hold true for a competitive firm in long-run equilibrium?

After all long-run adjustments have been completed,a firm in a competitive industry will produce that level of output where average total cost is at a minimum.

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 Cost of Production

Pure Competition in the Short Run

Pure Monopoly

Monopolistic Competition and Oligopoly

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

Filters

Exam 11: Pure Competition in the Long Run

A decreasing-cost industry is one in which:

The long-run supply curve for a decreasing-cost industry is downsloping.

Assume a purely competitive,increasing-cost industry is in long-run equilibrium.If a decline in demand occurs,firms will:

Assume a purely competitive increasing-cost industry is initially in long-run equilibrium and that an increase in consumer demand occurs.After all economic adjustments have been completed,product price will be:

A constant-cost industry is one in which:

Suppose a firm in a purely competitive market discovers that the price of its product is above its minimum AVC point but everywhere below ATC.Given this,the firm:

The primary force encouraging the entry of new firms into a purely competitive industry is:

Which of the following will not hold true for a competitive firm in long-run equilibrium?

After all long-run adjustments have been completed,a firm in a competitive industry will produce that level of output where average total cost is at a minimum.

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 Cost of Production

Pure Competition in the Short Run

Pure Monopoly

Monopolistic Competition and Oligopoly

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

Filters