Question 1

Which of the following is an example of a monopoly?

Accepted Answer

A)  One large firm supplies the entire product to the market 
B)  One firm supplies 60 percent of the product to the market and there are two other rival firms 
C)  Many firms supply the same product essentially,but each has significant brand loyalty 
D)  A few large firms supply the entire product to the market 
A)  One large firm supplies the entire product to the market 
B)  One firm supplies 60 percent of the product to the market and there are two other rival firms 
C)  Many firms supply the same product essentially,but each has significant brand loyalty 
D)  A few large firms supply the entire product to the market

Question 2

Market structure is determined by:

Accepted Answer

A)  The equilibrium price in a specific market. 
B)  The level of government regulation in a specific market. 
C)  Whether or not a firm is able to alter its output. 
D)  The number and relative size of firms in an industry. 
A)  The equilibrium price in a specific market. 
B)  The level of government regulation in a specific market. 
C)  Whether or not a firm is able to alter its output. 
D)  The number and relative size of firms in an industry.

Question 3

Competitive firms can earn an economic profit in the long run.

Accepted Answer

A) True 
 B)False

Question 4

In monopolistic competition,firms charge the same price as other firms in the market since they produce identical products.

Accepted Answer

A) True 
 B)False

Question 5

Assume that for an individual firm MC = AVC at $6 and MC = ATC = $10 and MC = price = $12,then the firm will be operating:

Accepted Answer

A)  at a loss. 
B)  where economic profits are negative. 
C)  at a point where firms will leave the market. 
D)  where economic profits are positive. 
A)  at a loss. 
B)  where economic profits are negative. 
C)  at a point where firms will leave the market. 
D)  where economic profits are positive.

Question 6

Which of the following does not characterize a competitive market?

Accepted Answer

A)  A few firms 
B)  No market power 
C)  Identical products 
D)  Marginal cost equals price 
A)  A few firms 
B)  No market power 
C)  Identical products 
D)  Marginal cost equals price

Question 7

There are high barriers to entry in a perfectly competitive market.

Accepted Answer

A) True 
 B)False

Question 8

In a competitive market,maximum efficiency is achieved because of:

Accepted Answer

A)  Competitive pressure on prices. 
B)  Differentiated products. 
C)  High barriers to entry. 
D)  Significant market power. 
A)  Competitive pressure on prices. 
B)  Differentiated products. 
C)  High barriers to entry. 
D)  Significant market power.

Question 9

A rightward shift in market supply curve could be caused by:

Accepted Answer

A)  An improvement in technology. 
B)  An increase in the market price. 
C)  An increase in wages. 
D)  The expectation that the market price will fall in the future. 
A)  An improvement in technology. 
B)  An increase in the market price. 
C)  An increase in wages. 
D)  The expectation that the market price will fall in the future.

Question 10

Competitive firms cannot individually affect market price because:

Accepted Answer

A)  There is an infinite demand for their goods. 
B)  The market demand curve is flat or horizontal. 
C)  Their individual production is insignificant relative to the production of the industry. 
D)  The government exercises control over the market power of competitive firms. 
A)  There is an infinite demand for their goods. 
B)  The market demand curve is flat or horizontal. 
C)  Their individual production is insignificant relative to the production of the industry. 
D)  The government exercises control over the market power of competitive firms.

Question 11

In perfect competition,individual firms have some control over market price.

Accepted Answer

A) True 
 B)False

Question 12

Figure 6.2:  
-Refer to Figure 6.2 for a perfectly competitive firm.If price is $10,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 13

In a perfectly competitive industry,firms are likely to:

Accepted Answer

A)  Exit when there are economic profits because they know the profits will not last. 
B)  Reduce the level of production when there are economic profits. 
C)  Enter when there are economic profits. 
D)  Enter when price is equal to the minimum average total cost. 
A)  Exit when there are economic profits because they know the profits will not last. 
B)  Reduce the level of production when there are economic profits. 
C)  Enter when there are economic profits. 
D)  Enter when price is equal to the minimum average total cost.

Question 14

A profit-maximizing competitive firm wants to _____ the rate of output when price _____ marginal cost.

Accepted Answer

A)  Expand;exceeds 
B)  Reduce;exceeds 
C)  Expand;is less than 
D)  Reduce;equals 
A)  Expand;exceeds 
B)  Reduce;exceeds 
C)  Expand;is less than 
D)  Reduce;equals

Question 15

In a competitive market,in the long run,economic profits will cause:

Accepted Answer

A)  New firms to enter the market. 
B)  Existing firms to leave the market. 
C)  Supply to decrease. 
D)  Demand to decrease. 
A)  New firms to enter the market. 
B)  Existing firms to leave the market. 
C)  Supply to decrease. 
D)  Demand to decrease.

Question 16

Briefly describe some of the key characteristics of a perfectly competitive market.Explain the impact of the number of firms and the type of product that is produced.Also comment on what effect (if any)advertising has on a competitive market.

Accepted Answer

A perfectly competitive market has a num

Question 17

A producer is concerned about total profits which can be calculated by subtracting the average cost per unit from the average market price per unit times the quantity sold which is per unit profits.However why does a producer never seek to maximize per unit profits?

Accepted Answer

A producer seeks to operate at a point w

Question 18

The segment of the firm's marginal cost curve that:

Accepted Answer

A)  lies above the average total cost is its supply curve. 
B)  is rising is equal to rising marginal physical product. 
C)  lies above the market price is equal to per unit profit. 
D)  lies above the average variable cost is its supply curve. 
A)  lies above the average total cost is its supply curve. 
B)  is rising is equal to rising marginal physical product. 
C)  lies above the market price is equal to per unit profit. 
D)  lies above the average variable cost is its supply curve.

Question 19

The location of the firm's product supply curve depends on:

Accepted Answer

A)  The number of firms in the industry. 
B)  The market demand curve. 
C)  Technology. 
D)  The taste of the buyers. 
A)  The number of firms in the industry. 
B)  The market demand curve. 
C)  Technology. 
D)  The taste of the buyers.

Question 20

Marginal costs:

Accepted Answer

A)  Are the additional costs incurred in producing one more unit of output. 
B)  Fall as the rate of output increases. 
C)  Are constant for a perfectly competitive firm. 
D)  Are equal to total costs divided by total output. 
A)  Are the additional costs incurred in producing one more unit of output. 
B)  Fall as the rate of output increases. 
C)  Are constant for a perfectly competitive firm. 
D)  Are equal to total costs divided by total output.

Which of the following is an example of a monopoly?

Market structure is determined by:

Competitive firms can earn an economic profit in the long run.

In monopolistic competition,firms charge the same price as other firms in the market since they produce identical products.

Assume that for an individual firm MC = AVC at $6 and MC = ATC = $10 and MC = price = $12,then the firm will be operating:

Which of the following does not characterize a competitive market?

There are high barriers to entry in a perfectly competitive market.

In a competitive market,maximum efficiency is achieved because of:

A rightward shift in market supply curve could be caused by:

Competitive firms cannot individually affect market price because:

In perfect competition,individual firms have some control over market price.

Figure 6.2: -Refer to Figure 6.2 for a perfectly competitive firm.If price is $10,the firm is:

In a perfectly competitive industry,firms are likely to:

A profit-maximizing competitive firm wants to _ the rate of output when price _ marginal cost.

In a competitive market,in the long run,economic profits will cause:

Briefly describe some of the key characteristics of a perfectly competitive market.Explain the impact of the number of firms and the type of product that is produced.Also comment on what effect (if any)advertising has on a competitive market.

A producer is concerned about total profits which can be calculated by subtracting the average cost per unit from the average market price per unit times the quantity sold which is per unit profits.However why does a producer never seek to maximize per unit profits?

The segment of the firm's marginal cost curve that:

The location of the firm's product supply curve depends on:

Marginal costs:

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 a monopoly?

Market structure is determined by:

Competitive firms can earn an economic profit in the long run.

In monopolistic competition,firms charge the same price as other firms in the market since they produce identical products.

Assume that for an individual firm MC = AVC at $6 and MC = ATC = $10 and MC = price = $12,then the firm will be operating:

Which of the following does not characterize a competitive market?

There are high barriers to entry in a perfectly competitive market.

In a competitive market,maximum efficiency is achieved because of:

A rightward shift in market supply curve could be caused by:

Competitive firms cannot individually affect market price because:

In perfect competition,individual firms have some control over market price.

Figure 6.2: -Refer to Figure 6.2 for a perfectly competitive firm.If price is $10,the firm is:

In a perfectly competitive industry,firms are likely to:

A profit-maximizing competitive firm wants to _____ the rate of output when price _____ marginal cost.

In a competitive market,in the long run,economic profits will cause:

Briefly describe some of the key characteristics of a perfectly competitive market.Explain the impact of the number of firms and the type of product that is produced.Also comment on what effect (if any)advertising has on a competitive market.

A producer is concerned about total profits which can be calculated by subtracting the average cost per unit from the average market price per unit times the quantity sold which is per unit profits.However why does a producer never seek to maximize per unit profits?

The segment of the firm's marginal cost curve that:

The location of the firm's product supply curve depends on:

Marginal costs:

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

A profit-maximizing competitive firm wants to _ the rate of output when price _ marginal cost.