Economics chapter 6 test
In a perfectly competitive market with positive economic profits:
firms will enter until economic profits are zero
The firms demand curve is always
horizontal
Economic profits attract firms then-->industry output
increase
A perfectly competitive firm is a price taker because:
it has no control over the selling price of its products
market supply curve shifts to the blank as entry increase
right
The market supply curve is calculated by
summing the prices from individual supply curves
A competitive firm is a price maker of taker
taker
A monopoly firm is one that produces
the entire market supply of the product
In long-run competitive equilibrium, price equals
all of the above
Which of the following is a characteristic of a perfectly competitive market structure
all of the above
In making a production decision, an entrepreneur
Determines the short-run rate of output
Business firms attempt to maximize total output
False
When economic losses exist in a perfectly competitive market, the number of suppliers will increase and the market price will increase and market price will fall
False
Total profits are maximized only where p=
MC(marginal cost)
Are there barriers to entry in a competitive market
NO
Which of the following conditions always characterizes a firm that is maximizing profits in the short run?
Price equals marginal cost
Competitive markets provide society with the best answer to the WHAT to produce question because competitive firms produce where price equals marginal cost
True
If a perfectly competitive firm were to raise its price above the market, it would lose all its customers
True
In a perfectly competitive market, the individual firm's demand curve is horizontal
True
Prices in perfect competition are determined by the market; individual firms have no control over this price
True
When some firms are forced out of a market due to economic loss the result is a better use of our scarce resources
True
monopolistic competition is all about
brand loyalty
If a perfectly competitive firm can sell 500 computers at 600$ each, in order to sell one more computer, the firm:
can sell the next computer at 600$
the market mechanism works best in blank markets
competitive
The market demand curve is always
downward sloping, right
Price blank
falls
in an oligopoly, a few
large firms supply all or most of a particular product
A monopoly firm is a price maker of taker
maker
list 3 characteristics of a competitive market
many firms with identical products, low barriers to entry, operates at p=MC
In which of the following types of markets does a single firm have the most power?
monopoly
A competitive market is one in which
no (1) buyer or (1) seller has market power
Important influences on marginal cost and supply behavior are
price of factor inputs, technology, expectations, raw materials
Total revenue is
price times quantity
New firms will continue to enter the industry as long as
profit exists
Additional firms will enter the industry when
profits are plentiful
Explain marginal cost
the increase in total cost associated with a one unit increase in production, it also increases as the rate of production increases
The market demand curve in a perfectly competitive market is downward sloping because:
the law of demand
Efficiency is
the maximum output of a good from the resources used in production
market structure is
the number and relative size of firms in an industry
The difference between total cost and total revenue curves at a given output is:
total profit
Total profit can be computed 2 ways:
total revenue minus total cost, profit per unit times quantity sold
In a duopoly only
two firms supply a particular product
A catfish farmer, in a perfectly competitive market:
would like to keep other potential catfish producers out of the market but cannot do so
