Economics chapter 6 test

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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


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