Question 1

Which of the following is an example of perfect competition?

Accepted Answer

A)  One large firm supplies the entire product to the market 
B)  Two firms supply the entire market and compete with each other for customers 
C)  Many small firms all produce the same good 
D)  Many firms supply the same product essentially,but each has significant brand loyalty 
A)  One large firm supplies the entire product to the market 
B)  Two firms supply the entire market and compete with each other for customers 
C)  Many small firms all produce the same good 
D)  Many firms supply the same product essentially,but each has significant brand loyalty

Question 2

Which of the following characterizes a perfectly competitive market?

Accepted Answer

A)  A downward-sloping demand curve facing the firm. 
B)  A horizontal demand curve for the market. 
C)  A selling price at the market-established equilibrium price. 
D)  A few firms that compete by changing price. 
A)  A downward-sloping demand curve facing the firm. 
B)  A horizontal demand curve for the market. 
C)  A selling price at the market-established equilibrium price. 
D)  A few firms that compete by changing price.

Question 3

Distinguish the difference between the market demand curve and the demand curve that a particular firm in the industry faces.Why are the two curves different?

Accepted Answer

The market demand curve is a downward sl

Question 4

A monopoly is a single firm that produces the entire market supply of a particular good or service.

Accepted Answer

A) True 
 B)False

Question 5

The number and relative size of firms in an industry is the definition of:

Accepted Answer

A)  Competitive firm. 
B)  Competitive market. 
C)  Market structure. 
D)  Monopoly. 
A)  Competitive firm. 
B)  Competitive market. 
C)  Market structure. 
D)  Monopoly.

Question 6

Figure 6.2:  
-Refer to Figure 6.2 for a perfectly competitive firm.If price is $4,the firm is:

Accepted Answer

A)  In long run equilibrium. 
B)  Earning an economic loss. 
C)  Maximizing efficiency. 
D)  Earning an economic profit. 
A)  In long run equilibrium. 
B)  Earning an economic loss. 
C)  Maximizing efficiency. 
D)  Earning an economic profit.

Question 7

In a competitive market with economic profits,equilibrium:

Accepted Answer

A)  Price will rise as new firms enter the market. 
B)  Price will fall as new firms enter the market. 
C)  Quantity will fall as new firms enter the market. 
D)  Quantity will remain the same as new firms enter the market. 
A)  Price will rise as new firms enter the market. 
B)  Price will fall as new firms enter the market. 
C)  Quantity will fall as new firms enter the market. 
D)  Quantity will remain the same as new firms enter the market.

Question 8

A perfectly competitive firm is a price taker because:

Accepted Answer

A)  It has no control over the market price of its product. 
B)  It has market power. 
C)  Market demand is downward sloping. 
D)  Its products are differentiateD. 
A)  It has no control over the market price of its product. 
B)  It has market power. 
C)  Market demand is downward sloping. 
D)  Its products are differentiateD.

Question 9

Marginal cost is the change in total costs because of a one-unit increase in output.

Accepted Answer

A) True 
 B)False

Question 10

In perfect competition,price is determined by the market and individual firms have no control over price.

Accepted Answer

A) True 
 B)False

Question 11

Market supply in a competitive market is determined by:

Accepted Answer

A)  Income. 
B)  The number of buyers. 
C)  The cost of factor inputs. 
D)  Consumer preferences. 
A)  Income. 
B)  The number of buyers. 
C)  The cost of factor inputs. 
D)  Consumer preferences.

Question 12

If the market supply curve shifts to the left,explain in terms of the market supply determinants what would have to change to cause that shift.

Accepted Answer

In order for the market supply curve to

Question 13

Suppose that consumers learn that eating apples can significantly reduce a person's chance of getting cancer.Comment on what the apple producers would notice in terms of their marginal cost verses marginal revenue.In the short-run,what would you expect them to do and what would happen to the market price and quantity produced.In the long-run what do you expect would happen to the market price and quantity?

Accepted Answer

Since apple producers operate in a compe

Question 14

Total profit is the difference between total revenue and total cost.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is consistent with a competitive market?

Accepted Answer

A)  A small number of firms 
B)  Exit of small firms when profits are high for large firms 
C)  Zero economic profit in the long run 
D)  Marginal revenue lower than price for each firm 
A)  A small number of firms 
B)  Exit of small firms when profits are high for large firms 
C)  Zero economic profit in the long run 
D)  Marginal revenue lower than price for each firm

Question 16

In the long run,a perfectly competitive market with economic losses will experience:

Accepted Answer

A)  An increase in equilibrium price as firms exit. 
B)  An increase in equilibrium quantity as firms exit. 
C)  The entry of firms until economic profits are zero. 
D)  No change in equilibrium price or quantity. 
A)  An increase in equilibrium price as firms exit. 
B)  An increase in equilibrium quantity as firms exit. 
C)  The entry of firms until economic profits are zero. 
D)  No change in equilibrium price or quantity.

Question 17

The production decision is the:

Accepted Answer

A)  Selection of the short-run rate of output. 
B)  Selection of the long-run rate of output. 
C)  Choice of whether to enter or exit the industry. 
D)  Choice of factory or plant size. 
A)  Selection of the short-run rate of output. 
B)  Selection of the long-run rate of output. 
C)  Choice of whether to enter or exit the industry. 
D)  Choice of factory or plant size.

Question 18

Choosing the rate of output with existing plant and equipment is known as the production decision.

Accepted Answer

A) True 
 B)False

Question 19

In which of the following industries is the firm referred to as a price taker?

Accepted Answer

A)  Monopolistic competition 
B)  Monopoly 
C)  Perfect competition 
D)  Oligopoly 
A)  Monopolistic competition 
B)  Monopoly 
C)  Perfect competition 
D)  Oligopoly

Question 20

Figure 6.1:  
-Refer to Figure 6.1 for a perfectly competitive firm.If the market price is $46:

Accepted Answer

A)  The firm should produce 19 units. 
B)  There will be economic losses. 
C)  There will be economic profits. 
D)  Economic profits equal zero. 
A)  The firm should produce 19 units. 
B)  There will be economic losses. 
C)  There will be economic profits. 
D)  Economic profits equal zero.

Which of the following is an example of perfect competition?

Which of the following characterizes a perfectly competitive market?

Distinguish the difference between the market demand curve and the demand curve that a particular firm in the industry faces.Why are the two curves different?

A monopoly is a single firm that produces the entire market supply of a particular good or service.

The number and relative size of firms in an industry is the definition of:

Figure 6.2: -Refer to Figure 6.2 for a perfectly competitive firm.If price is $4,the firm is:

In a competitive market with economic profits,equilibrium:

A perfectly competitive firm is a price taker because:

Marginal cost is the change in total costs because of a one-unit increase in output.

In perfect competition,price is determined by the market and individual firms have no control over price.

Market supply in a competitive market is determined by:

If the market supply curve shifts to the left,explain in terms of the market supply determinants what would have to change to cause that shift.

Total profit is the difference between total revenue and total cost.

Which of the following is consistent with a competitive market?

In the long run,a perfectly competitive market with economic losses will experience:

The production decision is the:

Choosing the rate of output with existing plant and equipment is known as the production decision.

In which of the following industries is the firm referred to as a price taker?

Figure 6.1: -Refer to Figure 6.1 for a perfectly competitive firm.If the market price is $46:

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 an example of perfect competition?

Which of the following characterizes a perfectly competitive market?

Distinguish the difference between the market demand curve and the demand curve that a particular firm in the industry faces.Why are the two curves different?

A monopoly is a single firm that produces the entire market supply of a particular good or service.

The number and relative size of firms in an industry is the definition of:

Figure 6.2: -Refer to Figure 6.2 for a perfectly competitive firm.If price is $4,the firm is:

In a competitive market with economic profits,equilibrium:

A perfectly competitive firm is a price taker because:

Marginal cost is the change in total costs because of a one-unit increase in output.

In perfect competition,price is determined by the market and individual firms have no control over price.

Market supply in a competitive market is determined by:

If the market supply curve shifts to the left,explain in terms of the market supply determinants what would have to change to cause that shift.

Total profit is the difference between total revenue and total cost.

Which of the following is consistent with a competitive market?

In the long run,a perfectly competitive market with economic losses will experience:

The production decision is the:

Choosing the rate of output with existing plant and equipment is known as the production decision.

In which of the following industries is the firm referred to as a price taker?

Figure 6.1: -Refer to Figure 6.1 for a perfectly competitive firm.If the market price is $46:

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