Question 1

Which of the following is not considered a barrier to entry?

Accepted Answer

A)  Control of essential factors of production 
B)  Equilibrium pricing 
C)  Import quotas 
D)  Brand loyalty 
A)  Control of essential factors of production 
B)  Equilibrium pricing 
C)  Import quotas 
D)  Brand loyalty B

Question 2

A perfectly competitive firm has some competitors but it is still able to influence the market price.

Accepted Answer

A) True 
 B)False  False

Question 3

Which of the following is not true for a competitive firm?

Accepted Answer

A)  The marginal cost curve is the short-run supply curve. 
B)  The marginal cost curve is horizontal at the equilibrium price. 
C)  The marginal cost curve shifts downward when productivity increases. 
D)  The marginal cost curve shifts upward when wages increase. 
A)  The marginal cost curve is the short-run supply curve. 
B)  The marginal cost curve is horizontal at the equilibrium price. 
C)  The marginal cost curve shifts downward when productivity increases. 
D)  The marginal cost curve shifts upward when wages increase. B

Question 4

If a perfectly competitive firm produces and sells more output,its _______ will definitely increase.

Accepted Answer

A)  Total profit 
B)  Total revenue 
C)  Average total cost 
D)  Marginal revenue 
A)  Total profit 
B)  Total revenue 
C)  Average total cost 
D)  Marginal revenue

Question 5

In a competitive market where firms are earning economic profits,which of the following is likely as the industry moves toward long-run equilibrium?

Accepted Answer

A)  A lower price and fewer firms. 
B)  A higher price and fewer firms. 
C)  A lower price and more firms. 
D)  A higher price and more firms. 
A)  A lower price and fewer firms. 
B)  A higher price and fewer firms. 
C)  A lower price and more firms. 
D)  A higher price and more firms.

Question 6

Figure 6.1:  
-Refer to Figure 6.1 for a perfectly competitive firm.This firm earns zero economic profit at a price of:

Accepted Answer

A)  $8. 
B)  $20. 
C)  $30. 
D)  $46. 
A)  $8. 
B)  $20. 
C)  $30. 
D)  $46.

Question 7

The NEWSWIRE article in the text is titled "T-Shirt Shop Owner's Lament: Too Many T-Shirt Shops." If T-shirt shops are perfectly competitive firms,then:

Accepted Answer

A)  There are few T-shirt shops. 
B)  The shops sell identical products. 
C)  The barriers to entry are high. 
D)  The shops have market power. 
A)  There are few T-shirt shops. 
B)  The shops sell identical products. 
C)  The barriers to entry are high. 
D)  The shops have market power.

Question 8

Competitive firms will adjust the quantity supplied until marginal cost equals price.

Accepted Answer

A) True 
 B)False

Question 9

An industry in which only two firms compete to supply a particular product is:

Accepted Answer

A)  A duopoly. 
B)  A monopoly. 
C)  Monopolistic competition. 
D)  An oligopoly. 
A)  A duopoly. 
B)  A monopoly. 
C)  Monopolistic competition. 
D)  An oligopoly.

Question 10

In a perfectly competitive market with positive economic profits:

Accepted Answer

A)  Firms will enter until accounting profits are zero. 
B)  Firms will enter until economic profits are zero. 
C)  Firms will exit until economic profits are zero. 
D)  No entry or exit will occur. 
A)  Firms will enter until accounting profits are zero. 
B)  Firms will enter until economic profits are zero. 
C)  Firms will exit until economic profits are zero. 
D)  No entry or exit will occur.

Question 11

In a competitive market,economic losses indicate that:

Accepted Answer

A)  Consumers want resources to be reallocated. 
B)  The barriers to entry are too high. 
C)  Additional firms will enter the market. 
D)  More of the product should be produced. 
A)  Consumers want resources to be reallocated. 
B)  The barriers to entry are too high. 
C)  Additional firms will enter the market. 
D)  More of the product should be produced.

Question 12

The NEWSWIRE article in the text titled "Flat Panels,Thin Margins" says that the prices for flat-panel TVs are falling.Which of the following is a likely reason why prices are decreasing?

Accepted Answer

A)  Market supply has shifted to the left because more firms have entered the market. 
B)  Market supply has shifted to the right because more firms have entered the market. 
C)  Firms have exited the market because profits were low. 
D)  The government decided to regulate the market and it established a price floor. 
A)  Market supply has shifted to the left because more firms have entered the market. 
B)  Market supply has shifted to the right because more firms have entered the market. 
C)  Firms have exited the market because profits were low. 
D)  The government decided to regulate the market and it established a price floor.

Question 13

Ceteris paribus,if the cost of insecticide decreases for tomato farmers,in order to maximize profits tomato farmers should:

Accepted Answer

A)  Increase price. 
B)  Produce the same level of output since price has not changed. 
C)  Increase output. 
D)  Decrease output. 
A)  Increase price. 
B)  Produce the same level of output since price has not changed. 
C)  Increase output. 
D)  Decrease output.

Question 14

If price is less than marginal cost,increases in the rate of output will increase profit.

Accepted Answer

A) True 
 B)False

Question 15

If the cost of production rises for all the firms in a perfectly competitive industry:

Accepted Answer

A)  Each firm will supply less output at any given price. 
B)  Total revenue increases. 
C)  The marginal cost curve shifts downward. 
D)  Total profit increases. 
A)  Each firm will supply less output at any given price. 
B)  Total revenue increases. 
C)  The marginal cost curve shifts downward. 
D)  Total profit increases.

Question 16

For a perfectly competitive industry,as long as an economic profit is attainable,new firms will enter the market.

Accepted Answer

A) True 
 B)False

Question 17

Which list has market structures in the correct order from the most to the least market power?

Accepted Answer

A)  Perfect competition,oligopoly,monopolistic competition,monopoly 
B)  Monopoly,monopolistic competition,oligopoly,perfect competition 
C)  Monopoly,oligopoly,monopolistic competition,perfect competition 
D)  Oligopoly,perfect competition,monopolistic competition,monopoly 
A)  Perfect competition,oligopoly,monopolistic competition,monopoly 
B)  Monopoly,monopolistic competition,oligopoly,perfect competition 
C)  Monopoly,oligopoly,monopolistic competition,perfect competition 
D)  Oligopoly,perfect competition,monopolistic competition,monopoly

Question 18

For a competitive firm,the marginal cost curve:

Accepted Answer

A)  Is the short-run supply curve. 
B)  Shifts to the right when new firms enter the market. 
C)  Shifts upward when wages decrease. 
D)  Is the short-run demand curve. 
A)  Is the short-run supply curve. 
B)  Shifts to the right when new firms enter the market. 
C)  Shifts upward when wages decrease. 
D)  Is the short-run demand curve.

Question 19

Which of the following is involved in a competitive firm's short-run production decision?

Accepted Answer

A)  Deciding whether to build an additional factory or not 
B)  Choosing a rate of output using the existing plant and equipment 
C)  Changing the scale of operations 
D)  Deciding what price to charge for its product 
A)  Deciding whether to build an additional factory or not 
B)  Choosing a rate of output using the existing plant and equipment 
C)  Changing the scale of operations 
D)  Deciding what price to charge for its product

Question 20

Which of the following is the best example of a perfectly competitive market?

Accepted Answer

A)  The automobile industry. 
B)  The soft drink industry. 
C)  Dairy farming. 
D)  Fast-food restaurants. 
A)  The automobile industry. 
B)  The soft drink industry. 
C)  Dairy farming. 
D)  Fast-food restaurants.

Which of the following is not considered a barrier to entry?

A perfectly competitive firm has some competitors but it is still able to influence the market price.

Which of the following is not true for a competitive firm?

If a perfectly competitive firm produces and sells more output,its _______ will definitely increase.

In a competitive market where firms are earning economic profits,which of the following is likely as the industry moves toward long-run equilibrium?

Figure 6.1: -Refer to Figure 6.1 for a perfectly competitive firm.This firm earns zero economic profit at a price of:

The NEWSWIRE article in the text is titled "T-Shirt Shop Owner's Lament: Too Many T-Shirt Shops." If T-shirt shops are perfectly competitive firms,then:

Competitive firms will adjust the quantity supplied until marginal cost equals price.

An industry in which only two firms compete to supply a particular product is:

In a perfectly competitive market with positive economic profits:

In a competitive market,economic losses indicate that:

The NEWSWIRE article in the text titled "Flat Panels,Thin Margins" says that the prices for flat-panel TVs are falling.Which of the following is a likely reason why prices are decreasing?

Ceteris paribus,if the cost of insecticide decreases for tomato farmers,in order to maximize profits tomato farmers should:

If price is less than marginal cost,increases in the rate of output will increase profit.

If the cost of production rises for all the firms in a perfectly competitive industry:

For a perfectly competitive industry,as long as an economic profit is attainable,new firms will enter the market.

Which list has market structures in the correct order from the most to the least market power?

For a competitive firm,the marginal cost curve:

Which of the following is involved in a competitive firm's short-run production decision?

Which of the following is the best example of a perfectly competitive market?

The Challenge of Economics

The US Economy

Supply and Demand

Consumer Demand

Supply Decisions

Monopoly

The Labor Market

Government Intervention

The Business Cycle

Aggregate Supply and Demand

Fiscal Policy

Money and Banks

Monetary Policy

Economic Growth

Theory and Reality

International Trade

Filters

Exam 6: Competition

Which of the following is not considered a barrier to entry?

A perfectly competitive firm has some competitors but it is still able to influence the market price.

Which of the following is not true for a competitive firm?

If a perfectly competitive firm produces and sells more output,its _______ will definitely increase.

In a competitive market where firms are earning economic profits,which of the following is likely as the industry moves toward long-run equilibrium?

Figure 6.1: -Refer to Figure 6.1 for a perfectly competitive firm.This firm earns zero economic profit at a price of:

The NEWSWIRE article in the text is titled "T-Shirt Shop Owner's Lament: Too Many T-Shirt Shops." If T-shirt shops are perfectly competitive firms,then:

Competitive firms will adjust the quantity supplied until marginal cost equals price.

An industry in which only two firms compete to supply a particular product is:

In a perfectly competitive market with positive economic profits:

In a competitive market,economic losses indicate that:

The NEWSWIRE article in the text titled "Flat Panels,Thin Margins" says that the prices for flat-panel TVs are falling.Which of the following is a likely reason why prices are decreasing?

Ceteris paribus,if the cost of insecticide decreases for tomato farmers,in order to maximize profits tomato farmers should:

If price is less than marginal cost,increases in the rate of output will increase profit.

If the cost of production rises for all the firms in a perfectly competitive industry:

For a perfectly competitive industry,as long as an economic profit is attainable,new firms will enter the market.

Which list has market structures in the correct order from the most to the least market power?

For a competitive firm,the marginal cost curve:

Which of the following is involved in a competitive firm's short-run production decision?

Which of the following is the best example of a perfectly competitive market?

The Challenge of Economics

The US Economy

Supply and Demand

Consumer Demand

Supply Decisions

Monopoly

The Labor Market

Government Intervention

The Business Cycle

Aggregate Supply and Demand

Fiscal Policy

Money and Banks

Monetary Policy

Economic Growth

Theory and Reality

International Trade

Filters