question
An industry comprising a very large number of sellers producing a standardized product is known as
a. monopolistic competition.
b. oligopoly.
c. pure monopoly.
d. pure competition.
a. monopolistic competition.
b. oligopoly.
c. pure monopoly.
d. pure competition.
answer
pure competition
question
A purely competitive seller 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."
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."
answer
a "price taker"
question
Which of the following is not a characteristic of pure competition?
a. pricing strategies by firms
b. a standardized product
c. no barriers to entry
d. a larger number of sellers
a. pricing strategies by firms
b. a standardized product
c. no barriers to entry
d. a larger number of sellers
answer
pricing strategies by firms
question
The marginal revenue curve of a purely competitive firm
a. lies below the firm's demand curve
b. is downsloping because price must be reduced to sell more output
c. is horizontal at the market price
d. has all of these characteristics
a. lies below the firm's demand curve
b. is downsloping because price must be reduced to sell more output
c. is horizontal at the market price
d. has all of these characteristics
answer
is horizontal at the market price
question
A perfectly elastic demand curve implies that the firm
a. must lower price to sell more output.
b. can sell as much output as it chooses at the existing price
c. realizes an increase in total revenue that is less than product price when it sells an extra unit.
d. is selling a differentiated (heterogeneous) product.
a. must lower price to sell more output.
b. can sell as much output as it chooses at the existing price
c. realizes an increase in total revenue that is less than product price when it sells an extra unit.
d. is selling a differentiated (heterogeneous) product.
answer
can sell as much output as it chooses at the existing price
question
The fact that a purely competitive firm's total revenue curve is linear and upsloping to the right implies that
a. product price increases as output increases.
b. product price decreases as output increases.
c. product price is constant at all levels of output.
d. marginal revenue declines as more output is produced.
a. product price increases as output increases.
b. product price decreases as output increases.
c. product price is constant at all levels of output.
d. marginal revenue declines as more output is produced.
answer
product price is constant at all levels of output
question
Refer to the diagram, which pertains to a purely competitive firm. Curve A represents
a. total revenue and marginal revenue.Incorrect
b. marginal revenue only.
c. total revenue and average revenue.
d. total revenue only.
a. total revenue and marginal revenue.Incorrect
b. marginal revenue only.
c. total revenue and average revenue.
d. total revenue only.
answer
total revenue only
question
Refer to the diagram, which pertains to a purely competitive firm. Curve C represents
a. total revenue and marginal revenue.
b. marginal revenue only.
c. total revenue and average revenue.
d. average revenue and marginal revenue.
a. total revenue and marginal revenue.
b. marginal revenue only.
c. total revenue and average revenue.
d. average revenue and marginal revenue.
answer
average revenue and marginal revenue
question
Marginal revenue is the
a. change in product price associated with the sale of one more unit of output.
b. change in average revenue associated with the sale of one more unit of output.
c. difference between product price and average total cost.
d. change in total revenue associated with the sale of one more unit of output.
a. change in product price associated with the sale of one more unit of output.
b. change in average revenue associated with the sale of one more unit of output.
c. difference between product price and average total cost.
d. change in total revenue associated with the sale of one more unit of output.
answer
change in total revenue associated with the sale of one more unit of output
question
Firms seek to maximize
a. per unit profit
b. total revenue
c. total profit
d. market share
a. per unit profit
b. total revenue
c. total profit
d. market share
answer
total profit
question
A competitive firm in the short run can determine the profit-maximizing (or loss-minimizing) output by equating
a. price and average total cost.
b. price and average fixed cost.
c. marginal revenue and marginal cost.
d. price and marginal revenue.
a. price and average total cost.
b. price and average fixed cost.
c. marginal revenue and marginal cost.
d. price and marginal revenue.
answer
marginal revenue and marginal cost
question
When a firm is experiencing economies of scale,
a. long-run total cost is decreasing.
b. long-run average (per-unit) total cost is decreasing.
c. an increase in output is accompanied by a more-than-proportionate increase in long-run total cost.
d. a given percentage increase in output requires a more-than-proportionate increase in resources.
a. long-run total cost is decreasing.
b. long-run average (per-unit) total cost is decreasing.
c. an increase in output is accompanied by a more-than-proportionate increase in long-run total cost.
d. a given percentage increase in output requires a more-than-proportionate increase in resources.
answer
long-run average (per-unit) total cost is decreasing
question
The diagram shows the short-run average total cost curves for five different plant sizes of a firm. The position of these five curves in relation to one another reflects
a. economies and diseconomies of scale.
b. the effect of fixed costs on ATC as output increases.
c. the law of constant costs.
d. the law of diminishing returns.
a. economies and diseconomies of scale.
b. the effect of fixed costs on ATC as output increases.
c. the law of constant costs.
d. the law of diminishing returns.
answer
economies and diseconomies of scale
question
When diseconomies of scale occur
a. the long-run average total cost curve falls.
b. marginal cost intersects average total cost.
c. the long-run average total cost curve rises.
d. average fixed costs will rise.
a. the long-run average total cost curve falls.
b. marginal cost intersects average total cost.
c. the long-run average total cost curve rises.
d. average fixed costs will rise.
answer
the long-run average total cost curve rises
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