Econ quiz 5
Which of the following is a reason why individual firms under perfect competition would not find gainful to advertise their product? A. Firms produce a homogeneous product B. The quantity of the product demanded is very large C. The market demand curve cannot be increased D. Firms do not make long-run profits
A
Which of the following is characteristic of a perfectly competitive firms demand curve? A. Price and marginal revenue are equal at all levels of output B. Average revenue is less than price C. Its elasticity coefficient is 1 at all levels of output D. It's the same as the market demand curve
A
Which of the following is NOT a necessary characteristic of a perfectly competitive industry? A. The industry or market demand is highly elastic B. Firms can easily enter or exit the industry C. There are so many firms that none can influence market price D. Consumers see no difference between the product of one firm and that of another
A
Which of the following is a barrier to entry? A. Infrastructure costs B. Buyers' income C. Close substitutes D. Diminishing marginal returns
A
In a perfectly competitive industry, each firm... A. Determines its own price B. Produces a differentiated product C. Can easily enter or exit the industry D. Engages in various forms of nonprice competition
C
Clara produces and sells tomatoes in a perfectly competitive market. This implies that Claire's marginal revenue generated from selling an additional unit of tomatoes is always equal to... A. Price B. Average cost C. Variable cost D. Profit per unit
A
In perfect competition, each additional unit of output that a firm sells will yield a marginal revenue that is... A. Equal to price B. Less than price C. Greater than price D. Equal to average total cost
A
A perfectly competitive firm does NOT try to raise its price above the market price because... A. Its competitors would not permit it B. It would not be able to sell its output C. This would be considered unethical price chiseling D. It's demand curve is inelastic, so total revenue will decline
B
A perfectly competitive firm does NOT try to sell more of its product by lowering its prices below the market price because... A. Its competitors would not permit it B. It can sell all it wants to at the market price C. This would be considered unethical price chiseling D. Its demand curve is inelastic, so total revenue will decline
B
Barriers to entry... A. Usually result in perfect competition B. Are characteristic of pure monopoly C. Exist in economic theory but not in the real world D. Are typically the result of wrongdoing on the part of a firm
B
If the demand curve faced by an individual firm is perfectly elastic, the firm must be a... A. Pure monopoly B. Perfectly competitive firm C. Oligopolistic firm D. Monopolistically competitive firm
B
In many large U.S. cities, taxicab companies operate as near monopolies because of... A. Patents B. Licenses C. Economies of scale D. Strategic pricing
B
One major barrier to entry under pure monopoly arises from... A. The availability of close substitutes for a product B. The cost of the infrastructure needed to produce C. The price taking ability of the monopoly D. Diseconomies of scale
B
Suppose that Oscar sells pork in a perfectly competitive market. The market price of pork is $3 per pound. The marginal revenue generated by Oscar from selling the 12th pound of pork would be... A. $36 B. $3 C. $4 D. Not enough information is given to answer this question
B
The demand curve faced by a non-discriminating pure monopoly is... A. Horizontal B. The same as the industry's demand curve C. More elastic than the demand curve faced by a perfectly competitive firm D. Derived by vertically summing the buyers' individual demand curves
B
The local pizza place sells 1 large pizza for $7.99 or 2 large pizzas for $11.99. The pizza joint is engaging in... A. First-degree price discrimination B. Second-degree price discrimination C. Third-degree price discrimination D. Regular price discrimination
B
Which characteristic would be best associated with perfect competition? A. Few sellers B. Price takers C. Nonprice competition D. Product differentiation
B
Which idea is inconsistent with perfect competition? A. Price-taking behavior B. Product differentiation C. Freedom of entry or exit for firms D. A large number of buyers and sellers
B
Which of the following is NOT a barrier to entry in an industry? A. Economies of scale B. Profit maximization C. Strategic pricing D. Government licensing
B
A perfectly competitive firm can be identified by the fact that... A. There are other firms in the industry producing similar products B. It is making only accounting profits in the short run C. It's average revenue equals its marginal revenue D. It experiences diminishing marginal returns
C
A perfectly competitive producer is... A. Both a "price maker" and a "price taker" B. Neither a "price maker" nor a "price taker" C. A "price taker" D. A "price maker"
C
A pure monopoly may generate economic profits because... A. of advertising B. Marginal revenue is constant as sales increase C. Of barriers to entry D. Of rising average fixed costs
C
Barriers to entering an industry... A. Encourage allocative efficiency B. Encourage productive efficiency C. Are characteristic of a pure monopoly D. Apply only to pure monopolies
C
(Graph 1) what price should the pure monopoly charge to maximize total revenue? A. P1 B. P2 C. P3 D. P4
C
A nondiscriminating pure monopoly must decrease the price on all units of a product to sell more units. This explains why... A. There are barriers to entry in pure monopoly B. A pure monopoly has a perfectly elastic demand curve C. A pure monopoly's marginal revenue curve is below it's demand curve D. Total revenues are greater than total costs at the profit-maximizing level of output
C
If a firm is a price taker, then the demand curve for the firms product is... A. Equal to the total revenue curve B. Perfectly inelastic C. Perfectly elastic D. Unit elastic
C
In perfect competition, the demand faced by a single firm is perfectly... A. Elastic, because the firm produces a differentiated product B. In elastic, because the firm produces a differentiated product C. Elastic, because many other firms produce the same standardized product D. Inelastic, because many other firms produce the same standardized product
C
It is a "given" that an individual firm selling in a perfectly competitive market will take the market price because... A. The firms demand curve is downward-sloping B. There are no good substitutes for the firms product C. Each producer supplies a negligible fraction of total market D. Product differentiation is reinforced by extensive advertising
C
One defining characteristic of pure monopoly is that the... A. Monopoly is a price taker B. Monopoly uses advertising C. Monopoly produces a product with no close substitutes D. Entry into the industry is relatively easy, but exit is difficult
C
Pure monopoly refers to... A. Any market in which the demand curve to the firm is downward-sloping B. A standardized product being produced by many firms C. A single firm producing a product for which there are no close substitutes D. A large number of firms producing a differentiated product
C
Which of the following best approximates a pure monopoly? A. The foreign exchange market B. The Kansas City wheat market C. The only bank in a small town D. The soft drink market
C
Which of the following is true under conditions of perfect competition? A. There are differentiated products B. The market demand curve is perfectly elastic C. No single firm can influence the market price D. Each individual firm has the ability to set its own price
C
Which of the following statements is correct? A. Both perfectly competitive and monopolistic firms are price takers B. Both perfectly competitive and monopolistic firms are price makers C. A perfectly competitive firm is a price taker, while a pure monopoly is a price maker D. A perfectly competitive firm is a price maker, while a pure monopoly is a price taker
C
A pure monopoly will find that marginal revenue... A. Exceeds price B. Is identical to price C. Is sometimes greater and sometimes less than price D. Is less than price
D
Given a downward-sloping linear demand curve, if total revenue decreases as quantity of output increases, marginal revenue must be... A. Positive and demand is elastic B. Negative and demand is elastic C. Positive and demand is inelastic D. Negative and demand is inelastic
D
One feature of pure monopoly is that the firm is... A. A producer of products with close substitutes B. One of several producers of a product C. A price taker D. A price maker
D
The demand curve faced by a perfectly competitive firm... A. Has unitary elasticity B. Yields constant total revenues even when price changes C. Is identical to the market demand curve D. Is the same as its marginal revenue curve
D
The demand curve faced by a pure monopoly is... A. Vertical B. Horizontal C. Upward-sloping D. Downward-sloping
D
Which is a feature of a perfectly competitive market? A. Price differences between firms producing the same product B. Significant barriers to entry into the industry C. The industry's demand curve is perfectly elastic D. Products are standardized or homogeneous
D
Which phrase would be most characteristic of a pure monopoly? A. Close substitutes B. Efficient advertiser C. Price taker D. Single seller
D
