Question 1

Which of the following is not an example of monopolistic competition?

Accepted Answer

A)  Lettuce farmers 
B)  Fast-food restaurants 
C)  Convenience stores 
D)  Gasoline stations 
A)  Lettuce farmers 
B)  Fast-food restaurants 
C)  Convenience stores 
D)  Gasoline stations

Question 2

A perfectly competitive firm currently sells 30,000 cartons of eggs at $1.25 each.If the firm wants to sell one more carton of eggs,the firm:

Accepted Answer

A)  Should raise its price above $1.25. 
B)  Cannot sell an additional carton at any price because there are other egg farmers in the market. 
C)  Must sell the carton for less than $1.25. 
D)  Should price the carton at $1.25. 
A)  Should raise its price above $1.25. 
B)  Cannot sell an additional carton at any price because there are other egg farmers in the market. 
C)  Must sell the carton for less than $1.25. 
D)  Should price the carton at $1.25.

Question 3

In a long-run competitive market equilibrium:

Accepted Answer

A)  Price equals the minimum of average total cost. 
B)  Price equals the maximum of average total cost. 
C)  Marginal cost equals the maximum of total revenue. 
D)  Marginal cost equals the minimum of total revenue. 
A)  Price equals the minimum of average total cost. 
B)  Price equals the maximum of average total cost. 
C)  Marginal cost equals the maximum of total revenue. 
D)  Marginal cost equals the minimum of total revenue.

Question 4

Market power:

Accepted Answer

A)  Is the same for all market structures. 
B)  Means that a firm is a price taker,not a price setter. 
C)  Is the ability to alter the market price of a good or service. 
D)  Only exists for a monopoly. 
A)  Is the same for all market structures. 
B)  Means that a firm is a price taker,not a price setter. 
C)  Is the ability to alter the market price of a good or service. 
D)  Only exists for a monopoly.

Question 5

In a competitive market if a firm is operating at a point where MC is greater than price it will attempt to cut back production.

Accepted Answer

A) True 
 B)False

Question 6

If marginal cost equals price,then _____ is at a maximum.

Accepted Answer

A)  Total cost 
B)  Profit 
C)  Total revenue 
D)  Marginal cost 
A)  Total cost 
B)  Profit 
C)  Total revenue 
D)  Marginal cost

Question 7

If one perfectly competitive firm is the only one to raise its price above the market price,it will:

Accepted Answer

A)  Sell some output,but less than previously. 
B)  Not sell any output. 
C)  Sell more output than previously. 
D)  Sell the same amount of output as previously. 
A)  Sell some output,but less than previously. 
B)  Not sell any output. 
C)  Sell more output than previously. 
D)  Sell the same amount of output as previously.

Question 8

Marginal cost is:

Accepted Answer

A)  The change in total costs because of a one-unit increase in output. 
B)  Total cost divided by the rate of output. 
C)  Total revenue minus total cost. 
D)  The average profit divided by the quantity sold. 
A)  The change in total costs because of a one-unit increase in output. 
B)  Total cost divided by the rate of output. 
C)  Total revenue minus total cost. 
D)  The average profit divided by the quantity sold.

Question 9

A profit-maximizing producer wants to produce where:

Accepted Answer

A)  Profit per unit is maximized. 
B)  Average total cost is minimized. 
C)  Price equals marginal cost. 
D)  Price is greater than marginal cost. 
A)  Profit per unit is maximized. 
B)  Average total cost is minimized. 
C)  Price equals marginal cost. 
D)  Price is greater than marginal cost.

Question 10

Economic profits disappear when:

Accepted Answer

A)  Price is greater than marginal costs. 
B)  Price falls to the level of minimum average total cost. 
C)  Price is greater than average variable cost. 
D)  Firms exit an industry. 
A)  Price is greater than marginal costs. 
B)  Price falls to the level of minimum average total cost. 
C)  Price is greater than average variable cost. 
D)  Firms exit an industry.

Question 11

Which of the following does not characterize a competitive market?

Accepted Answer

A)  Many firms 
B)  Advertising by individual firms 
C)  Low barriers to entry 
D)  Zero economic profit in the long run 
A)  Many firms 
B)  Advertising by individual firms 
C)  Low barriers to entry 
D)  Zero economic profit in the long run

Question 12

If Pepsi and Coke are the only two soft drink producers,they could be considered:

Accepted Answer

A)  A duopoly. 
B)  A monopoly. 
C)  An oligopoly. 
D)  Perfectly competitive firms. 
A)  A duopoly. 
B)  A monopoly. 
C)  An oligopoly. 
D)  Perfectly competitive firms.

Question 13

As long as price is greater than marginal cost,an increase in the rate of output will decrease profit.

Accepted Answer

A) True 
 B)False

Question 14

Figure 6.2:  
-Refer to Figure 6.2 for a perfectly competitive firm.If price is $8,the firm is:

Accepted Answer

A)  Earning an economic profit. 
B)  In long run equilibrium. 
C)  Maximizing efficiency. 
D)  Unable to sell any output. 
A)  Earning an economic profit. 
B)  In long run equilibrium. 
C)  Maximizing efficiency. 
D)  Unable to sell any output.

Question 15

A producer tries to maximize profits by operating at an output where:

Accepted Answer

A)  MC equals price. 
B)  Price minus ATC is greatest. 
C)  MR is greater then MC. 
D)  the profit per unit is greatest. 
A)  MC equals price. 
B)  Price minus ATC is greatest. 
C)  MR is greater then MC. 
D)  the profit per unit is greatest.

Question 16

In the perfectly competitive catfish market,the market demand curve is:

Accepted Answer

A)  Flat (horizontal). 
B)  The same as the demand curve faced by the firm. 
C)  Vertical. 
D)  Downward sloping. 
A)  Flat (horizontal). 
B)  The same as the demand curve faced by the firm. 
C)  Vertical. 
D)  Downward sloping.

Question 17

If price is greater than marginal cost,a competitive firm should increase output because additional units of output will:

Accepted Answer

A)  Cause marginal costs to fall. 
B)  Add to the firm's profits (or reduce losses). 
C)  Add to the firm's fixed costs. 
D)  Cause price to rise. 
A)  Cause marginal costs to fall. 
B)  Add to the firm's profits (or reduce losses). 
C)  Add to the firm's fixed costs. 
D)  Cause price to rise.

Question 18

The market supply curve is calculated by:

Accepted Answer

A)  Summing the marginal cost curves of all firms. 
B)  Averaging the individual supply curves. 
C)  Summing the prices from individual supply curves. 
D)  Averaging the individual marginal cost curves below ATC. 
A)  Summing the marginal cost curves of all firms. 
B)  Averaging the individual supply curves. 
C)  Summing the prices from individual supply curves. 
D)  Averaging the individual marginal cost curves below ATC.

Question 19

The equilibrium price for a perfectly competitive firm always occurs:

Accepted Answer

A)  Where price equals minimum average total cost. 
B)  At the intersection of market supply and market demand. 
C)  Where a firm's marginal cost equals total revenue. 
D)  At the point where profit is maximized. 
A)  Where price equals minimum average total cost. 
B)  At the intersection of market supply and market demand. 
C)  Where a firm's marginal cost equals total revenue. 
D)  At the point where profit is maximized.

Question 20

From the NEWSWIRE article,"Catfish Farmers Feel Forced Out of Business",the expected economic profit from the catfish market:

Accepted Answer

A)  Is enough to attract entry. 
B)  Is less than zero because firms are exiting the industry. 
C)  Is zero because there are significant barriers to entry. 
D)  Is so high that even inefficient firms are attracted to the industry. 
A)  Is enough to attract entry. 
B)  Is less than zero because firms are exiting the industry. 
C)  Is zero because there are significant barriers to entry. 
D)  Is so high that even inefficient firms are attracted to the industry.

Which of the following is not an example of monopolistic competition?

A perfectly competitive firm currently sells 30,000 cartons of eggs at $1.25 each.If the firm wants to sell one more carton of eggs,the firm:

In a long-run competitive market equilibrium:

Market power:

In a competitive market if a firm is operating at a point where MC is greater than price it will attempt to cut back production.

If marginal cost equals price,then _____ is at a maximum.

If one perfectly competitive firm is the only one to raise its price above the market price,it will:

Marginal cost is:

A profit-maximizing producer wants to produce where:

Economic profits disappear when:

Which of the following does not characterize a competitive market?

If Pepsi and Coke are the only two soft drink producers,they could be considered:

As long as price is greater than marginal cost,an increase in the rate of output will decrease profit.

Figure 6.2: -Refer to Figure 6.2 for a perfectly competitive firm.If price is $8,the firm is:

A producer tries to maximize profits by operating at an output where:

In the perfectly competitive catfish market,the market demand curve is:

If price is greater than marginal cost,a competitive firm should increase output because additional units of output will:

The market supply curve is calculated by:

The equilibrium price for a perfectly competitive firm always occurs:

From the NEWSWIRE article,"Catfish Farmers Feel Forced Out of Business",the expected economic profit from the catfish 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

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Exam 6: Competition

Which of the following is not an example of monopolistic competition?

A perfectly competitive firm currently sells 30,000 cartons of eggs at $1.25 each.If the firm wants to sell one more carton of eggs,the firm:

In a long-run competitive market equilibrium:

Market power:

In a competitive market if a firm is operating at a point where MC is greater than price it will attempt to cut back production.

If marginal cost equals price,then _____ is at a maximum.

If one perfectly competitive firm is the only one to raise its price above the market price,it will:

Marginal cost is:

A profit-maximizing producer wants to produce where:

Economic profits disappear when:

Which of the following does not characterize a competitive market?

If Pepsi and Coke are the only two soft drink producers,they could be considered:

As long as price is greater than marginal cost,an increase in the rate of output will decrease profit.

Figure 6.2: -Refer to Figure 6.2 for a perfectly competitive firm.If price is $8,the firm is:

A producer tries to maximize profits by operating at an output where:

In the perfectly competitive catfish market,the market demand curve is:

If price is greater than marginal cost,a competitive firm should increase output because additional units of output will:

The market supply curve is calculated by:

The equilibrium price for a perfectly competitive firm always occurs:

From the NEWSWIRE article,"Catfish Farmers Feel Forced Out of Business",the expected economic profit from the catfish 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