Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

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 3

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.

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

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.

Question 6

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.

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

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.

Question 9

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.

Question 10

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.

Question 11

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

Question 12

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 13

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

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

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

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.

Question 17

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.

Question 18

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.

Question 19

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.

Question 20

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.

Exam 6: Competition

In a perfectly competitive industry,firms are likely to:

Correct AnswerverifiedShow Answer

Market structure is determined by:

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

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Marginal costs:

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedA producer seeks to operate at a point w...View AnswerShow Answer

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.

Correct AnswerverifiedA perfectly competitive market has a num...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Competitive firms cannot individually affect market price because:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is an example of a monopoly?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following does not characterize a competitive market?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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A producer seeks to operate at a point w...
View Answer

Correct Answer
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A perfectly competitive market has a num...
View Answer

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

Correct Answer
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