Microeconomics exam 4 t/f - Assignment Essays %

question

In a competitive market, firms are unable to differentiate their product from that of other producers.

answer

True

question

Firms in a competitive markets are said to be price takers.

answer

True

question

In competitive markets, firms that raise their prices are typically rewarded with larger profits.

answer

False

question

For a firm in a competitive market, marginal revenue is always equal to average revenue.

answer

True

question

The marginal firm in a competitive market will earn zero economic profits in the long run.

answer

True

question

A firm will shut down in the short run if revenue is not sufficient to cover its variable cost curve, above the minimum of marginal cost.

answer

False

question

The supply curve of a firm in a competitive market is the average variable cost curve, above the minimum of marginal cost.

answer

False

question

A firm in a competitive market will maximize profit when the level of production is such that marginal cost equals price.

answer

True

question

By comparing the marginal revenue and marginal cost from each unit produced, a firm in a competitive market can determined the profit-maximizing level of production

answer

True

question

When a profit-maximizing firm in a competitive market experiences rising prices, it will respond with an increase in production

answer

True

question

A profit-maximizing firm in a competitive market will increase production when average revenue exceeds marginal cost.

answer

True

question

A firm's incentive to compare marginal revenue and marginal cost is an application of the principle that rational people think at the margin

answer

True

question

In the long run, when price is less than average total cost for all possible levels of production, a firm in a competitive market, will choose to exit (or not enter) the market.

answer

True

question

The long-run equilibrium in a competitive market characterized by firms with identical costs is generally characterized by firms operating at efficient scale.

answer

True

question

The short-run supply curve in a competitive market must be more elastic than the long-run supply curve.

answer

False

question

A profit-maximizing firm in a competitive market will earn zero accounting profits in the long run

answer

False

question

When a firm experiences zero-profit equilibrium, the firm's revenue must be sufficient to cover all opportunity costs

answer

True

question

When individual firms in competitive markets increase their production, it is likely that the market price will fall.

answer

False

question

A firm will shut down in the short run if revenue is not sufficient to cover all of its fixed costs of production.

answer

False

question

A competitive market will typically experience entry and exit until all accounting profits are zero

answer

False

question

At the end of the process of entry and exit, it is possibly that some firms in a competitive market are making a positive economic profit.

answer

True

question

In the long run, a competitive market with 1,000 identical firms will experience an equilibrium price equal to the minimum of each firm's average total cost.

answer

True

question

The De Beers Diamond company advertises heavily to promote the sale of all diamonds, not just its own. This is evidence that tehy have a monopoly position to some degree

answer

True

question

The amount of power that a monopoly has is a function of whether there are close substitutes for its product.

answer

True

question

Declining average total cost with increased production is one of the defining characteristics of a natural monopoly

answer

True

1 of 25

question

In a competitive market, firms are unable to differentiate their product from that of other producers.

answer

True

question

Firms in a competitive markets are said to be price takers.

answer

True

question

In competitive markets, firms that raise their prices are typically rewarded with larger profits.

answer

False

question

For a firm in a competitive market, marginal revenue is always equal to average revenue.

answer

True

question

The marginal firm in a competitive market will earn zero economic profits in the long run.

answer

True

question

A firm will shut down in the short run if revenue is not sufficient to cover its variable cost curve, above the minimum of marginal cost.

answer

False

question

The supply curve of a firm in a competitive market is the average variable cost curve, above the minimum of marginal cost.

answer

False

question

A firm in a competitive market will maximize profit when the level of production is such that marginal cost equals price.

answer

True

question

By comparing the marginal revenue and marginal cost from each unit produced, a firm in a competitive market can determined the profit-maximizing level of production

answer

True

question

When a profit-maximizing firm in a competitive market experiences rising prices, it will respond with an increase in production

answer

True

question

A profit-maximizing firm in a competitive market will increase production when average revenue exceeds marginal cost.

answer

True

question

A firm's incentive to compare marginal revenue and marginal cost is an application of the principle that rational people think at the margin

answer

True

question

In the long run, when price is less than average total cost for all possible levels of production, a firm in a competitive market, will choose to exit (or not enter) the market.

answer

True

question

The long-run equilibrium in a competitive market characterized by firms with identical costs is generally characterized by firms operating at efficient scale.

answer

True

question

The short-run supply curve in a competitive market must be more elastic than the long-run supply curve.

answer

False

question

A profit-maximizing firm in a competitive market will earn zero accounting profits in the long run

answer

False

question

When a firm experiences zero-profit equilibrium, the firm's revenue must be sufficient to cover all opportunity costs

answer

True

question

When individual firms in competitive markets increase their production, it is likely that the market price will fall.

answer

False

question

A firm will shut down in the short run if revenue is not sufficient to cover all of its fixed costs of production.

answer

False

question

A competitive market will typically experience entry and exit until all accounting profits are zero

answer

False

question

At the end of the process of entry and exit, it is possibly that some firms in a competitive market are making a positive economic profit.

answer

True

question

In the long run, a competitive market with 1,000 identical firms will experience an equilibrium price equal to the minimum of each firm's average total cost.

answer

True

question

The De Beers Diamond company advertises heavily to promote the sale of all diamonds, not just its own. This is evidence that tehy have a monopoly position to some degree

answer

True

question

The amount of power that a monopoly has is a function of whether there are close substitutes for its product.

answer

True

question

Declining average total cost with increased production is one of the defining characteristics of a natural monopoly

answer

True

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