Micro Final

Perfect competition is characterized by all of the following except NOT: a horizontal demand curve for individual sellers. sellers are price takers. heavy advertising by individual sellers. homogeneous products.

heavy advertising by individual sellers.

A characteristic found only in oligopolies is

interdependence of firms.

A perfectly competitive firm has to charge the same price as every other firm in the market. Therefore, the firm

is a price taker.

By drawing a demand curve with ________ on the vertical axis and ________ on the horizontal axis, economists assume that the most important determinant of the demand for a good is the ________ of the good.

price; quantity; price

Both individual buyers and sellers in perfect competition

have to take the market price as a given.

Which of the following is the best example of a perfectly competitive industry?

wheat production

A monopoly is a seller of a product

without a close substitute.

A monopolistically competitive firm will

have some control over its price because its product is differentiated.

If an industry is made up of five identical firms, the four-firm concentration ratio is 80%.

80%

A monopolistically competitive firm faces a downward-sloping demand curve because NOT: it is able to control price and quantity demanded. its market decisions are affected by the decisions of its rivals. there are few substitutes for its product. of product differentiation.

of product differentiation.

A four-firm concentration ratio measures NOT: the production of any four firms in an industry. the fraction of an industry's sales accounted for by the four largest firms. how the four largest firms became so concentrated. the fraction of employment of the four largest firms in an industry.

the fraction of an industry's sales accounted for by the four largest firms.

What is the difference between an "increase in demand" and an "increase in quantity demanded"?

An "increase in demand" is represented by a rightward shift of the demand curve while an "increase in quantity demanded" is represented by a movement along a given demand curve.

What is the difference between an "increase in supply" and an "increase in quantity supplied"?

An "increase in supply" means the supply curve has shifted to the right while an "increase in quantity supplied" refers to a movement along a given supply curve in response to an increase in price.

Which of the following is true of a typical firm in a monopolistically competitive industry?

Each firm acts independently.

Which of the following is not a characteristic of a monopolistically competitive market structure

Each firm must react to actions of other firms.

Jason, a high-school student, mows lawns for families in his neighborhood. The going rate is $12 for each lawn-mowing service. Jason would like to charge $20 because he believes he has more experience mowing lawns than the many other teenagers who also offer the same service. If the market for lawn mowing services is perfectly competitive, what would happen if Jason raised his price?

If Jason raises his price he would lose all his customers.

In Walnut Creek, California, there are three very popular supermarkets: Safeway, Whole Foods, and Lunardi's. While Safeway remains open twenty-four hours a day, Whole Foods and Lunardi's close at 9 pm. Which of the following statements is true?

Safeway has a monopoly at midnight but not during the day.

Which of the following is a characteristic of a firm in a perfectly competitive market? NOT: the firm can make a profit in the long run but not in the short run The firm must lower its price in order to increase the quantity demanded. The firm can sell as much as it wants without having to lower its price. The firm cannot make a profit in the short run because it is too small a part of the total market.

The firm can sell as much as it wants without having to lower its price.

If a perfectly competitive firm raises the price it charges to consumers, which of the following is the most likely outcome? NOT: the firm's total revenue will increase only if the demand for its product is inelastic The firm will not sell any output. The firm's total revenue will increase only if the demand for its product is elastic. The firm's revenue will not change because some consumers will refuse to pay the higher price.

The firm will not sell any output.

Which of the following describes the difference between the market demand curve for a perfectly competitive industry and the demand curve for a firm in this industry?

The market demand curve is downward sloping; the firm's demand curve is a horizontal line.

Which of the following is a characteristic of an oligopolistic market structure?

There are few dominant sellers.

Which of the following is not an assumption of perfectly competitive markets? NOT: There are no barriers to new firms entering the market. There are many sellers and many buyers, all of which are small relative to the market. The products sold by all firms in the market are identical. Each firm produces a similar but not identical product.

There are many sellers and many buyers, all of which are small relative to the market.

Which of the following is not a characteristic of a perfectly competitive market structure? Not: all firms sell identical products There are restrictions on the exit of firms. There are a very large number of firms that are small compared to the market. There are no restrictions to entry by new firms.

There are restrictions on the exit of firms.

A supply schedule

is a table that shows the relationship between the price of a product and the quantity of the product supplied.

If, in response to an increase in the price of chocolate the quantity of chocolate demanded decreases, economists would describe this as

a decrease in quantity demanded.

Last year, the Pottery Palace supplied 8,000 ceramic pots at $40 each. This year, the company supplied the same quantity of ceramic pots at $55 each. Based on this evidence, The Pottery Palace has experienced NOT: a decrease in the quantity supplied. a decrease in supply. an increase in supply. an increase in the quantity supplied.

a decrease in supply

A monopolist faces

a downward-sloping demand curve.

Which of the following would cause a decrease in the supply of milk?

an increase the price of a product that producers sell instead of milk

One reason why the "fast-casual" restaurant market is competitive is that

barriers to entry are low.

An oligopoly firm is similar to a monopolistically competitive firm in that NOT: both firms are in industries characterized by an interdependent firm. both firms face the prisoner's dilemma. both firms have market power. both operate in a market in which there are significant entry barriers.

both firms have market power

Some markets have many buyers and sellers but fall into the category of monopolistic competition rather than perfect competition. The most common reason for this is

firms in these markets do not sell identical products.

An oligopolistic industry is characterized by all of the following except

firms pursuing aggressive business strategies, independent of rivals' strategies.

If a firm faces a downward-sloping demand curve NOT: it can control both price and quantity sold. the demands for its product must be inelastic. it must reduce its price to sell more units. it will always make a profit.

it must reduce its price to sell more units.

In monopolistic competition there is/are

many sellers who each face a downward-sloping demand curve.

The key characteristics of a monopolistically competitive market structure include NOT: all sellers sell a homogeneous product. many small (relative to the total market) sellers acting independently. barriers to entry are strong. sellers have no incentive to advertise their products.

many small (relative to the total market) sellers acting independently.

The music streaming industry, where a firm's profitability depends on its interactions with other firms, is an example of

oligopoly.

When a monopolistically competitive firm cuts its price to increase its sales, it experiences a gain in revenue due to the

output effect.

The reason that the "fast-casual" restaurant market is monopolistically competitive rather than perfectly competitive is because

products are differentiated

A major difference between monopolistic competition and perfect competition is NOT: The barriers to entry in two markets that products are not standardized in a monopolistic competition unlike in perfect competition. the degree by which the market demand curves slope downwards . the number of sellers in the markets.

that products are not standardized in a monopolistic competition unlike in perfect competition.

Which of the following is the best example of an oligopolistic industry? NOT: the beauty products industry the beef market the pharmaceutical industry public education

the pharmaceutical industry

An individual seller in the perfect competition will not sell at a price lower than the market price because Not: demand for the product will exceed supply the seller can sell any quantity she wants at the prevailing market price. the seller would start a price war. demand is perfectly inelastic.

the seller can sell any quantity she wants at the prevailing market price.

All of the following characteristics are common to both monopolistic competition and perfect competition except

firms take market prices as given.

A perfectly competitive firm faces a demand curve that is

horizontal

For a monopolistically competitive firm, marginal revenue NOT: is greater than the price is less than the price. and price are unrelated. equals the price.

is less than the price.

The key characteristics of a monopolistically competitive market structure include

sellers selling similar but differentiated products.

If we use a narrow definition of monopoly, then a monopoly is defined as a firm NOT: that can ignore the actions of all other firms because it produces a superior product compared to its rivals' products. that has been granted special production rights by the government. that has the largest market share in an industry. that can ignore the actions of all other firms because it produces a product for which there are no close substitutes.

that can ignore the actions of all other firms because it produces a product for which there are no close substitutes.

A very large number of small sellers who sell identical products imply

the inability of one seller to influence price.

A change in all of the following variables will change the market demand for a product except

the price of the product.

Firms in perfectly competitive industries are unable to control the prices of the products they sell and earn a profit in the long run. Which of the following is one reason for this?

Firms in these industries sell identical products.