Question 1

The behavior expected in a competitive market includes

Accepted Answer

A)   Very little entry and exit.
B)   Marginal cost pricing.
C)   Aggressive behavior among competitors to control prices.
D)   Little technological growth.

Question 2

Which of the following is consistent with long-run equilibrium for a perfectly competitive market?

Accepted Answer

A)   Average total costs of production are maximized.
B)   Economic profits are positive.
C)   Maximum technical efficiency is achieved.
D)   Average variable costs of production are maximized.

Question 3

Exit and shutdown mean the same thing.

Accepted Answer

A) True 
 B)False

Question 4

In a competitive market where firms are earning economic losses, which of the following should be expected as the industry moves to long-run equilibrium, ceteris paribus?

Accepted Answer

A)   A higher price and more firms.
B)   A higher price and fewer firms.
C)   A lower price and more firms.
D)   A lower price and fewer firms.

Question 5

Competitive market pressures were a driving force in the spectacular growth of the computer industry.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following is true about a competitive market supply curve?

Accepted Answer

A)   It is horizontal.
B)   It is downward-sloping to the right.
C)   It is the sum of the marginal cost curves of all firms.
D)   It is vertical.

Question 7

Which of the following characterizes a firm that is in long-run perfectly competitive equilibrium where profits are maximized?

Accepted Answer

A)   Price equals minimum ATC.
B)   Positive economic profit.
C)   Price equals marginal cost.
D)   Price exceeds marginal cost.

Question 8

Patents are a barrier to entry.

Accepted Answer

A) True 
 B)False

Question 9

Explain how a perfectly competitive market promotes productive efficiency (minimum average costs).

Accepted Answer

If economic profits exist in a competiti...

Question 10

Most product markets are perfectly competitive.

Accepted Answer

A) True 
 B)False

Question 11

Examples of barriers to entry include

Accepted Answer

A)   Price taking.
B)   Patents.
C)   Standardized products.
D)   Economic profits.

Question 12

Entry and exit are long-run investment decisions.

Accepted Answer

A) True 
 B)False

Question 13

Perfectly competitive firms always earn economic profits in the short run.

Accepted Answer

A) True 
 B)False

Question 14

In a perfectly competitive market, when price is equal to the

Accepted Answer

A)   Minimum short-run average total cost, it has reached the shutdown point.
B)   Minimum average variable cost, economic profit is zero.
C)   Marginal cost, accounting profit is maximized.
D)   Minimum average total cost, economic profit is zero.

Question 15

For a perfectly competitive market, long-run equilibrium is characterized by all of the following but which one?

Accepted Answer

A)   P = MR.
B)   P = MC.
C)   P = minimum ATC.
D)   P = maximum ATC.

Question 16

2 in Figure 23.3, A)  There is economic profit. B)  The firm will produce the quantity where MC = MR. C)  Firms will enter the market. D)  Firms will exit the market." class="answers-bank-image d-inline" rel="preload" > In Figure 23.3, diagram "a" presents the cost curves that are relevant to a firm's production decision, and diagram "b" shows the market demand and supply curves for the market. Use both diagrams to answer the following question: In the long run, at prices below p2 in Figure 23.3,

Accepted Answer

A)   There is economic profit.
B)   The firm will produce the quantity where MC = MR.
C)   Firms will enter the market.
D)   Firms will exit the market.

Question 17

Which of the following is a production decision?

Accepted Answer

A)   Whether to enter or exit an industry.
B)   Whether to increase or decrease plant capacity.
C)   Whether to increase or decrease output.
D)   Whether to share information with a competitor.

Question 18

In making an investment decision, an entrepreneur

Accepted Answer

A)   Makes a decision to exit if price is above marginal cost.
B)   Makes a short-run decision.
C)   Must consider only variable costs.
D)   Must take account of diminishing returns.

Question 19

2 in Figure 23.3, then in the long run, A)  Economic profit is less than zero, and firms will exit. B)  Economic profit is greater than zero, and firms will expand production. C)  There are zero economic profits, so there will be no entry or exit. D)  There are zero economic profits, so firms will exit." class="answers-bank-image d-inline" rel="preload" > In Figure 23.3, diagram "a" presents the cost curves that are relevant to a firm's production decision, and diagram "b" shows the market demand and supply curves for the market. Use both diagrams to answer the following question: If the market demand curve is D2 in Figure 23.3, then in the long run,

Accepted Answer

A)   Economic profit is less than zero, and firms will exit.
B)   Economic profit is greater than zero, and firms will expand production.
C)   There are zero economic profits, so there will be no entry or exit.
D)   There are zero economic profits, so firms will exit.

Question 20

If catfish farmers expect catfish prices to fall in the future, then right now

Accepted Answer

A)   There will be a movement down along the market supply curve for catfish.
B)   There will be a movement up along the market supply curve for catfish.
C)   The market supply curve for catfish will shift to the left.
D)   The market supply curve for catfish will shift to the right.

Exam 9: Aggregate Demand

Entry and exit are long-run investment decisions.

Correct Answer
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For a perfectly competitive market, long-run equilibrium is characterized by all of the following but which one?

Correct Answer
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Competitive market pressures were a driving force in the spectacular growth of the computer industry.

Correct Answer
verified

Patents are a barrier to entry.

Correct Answer
verified

Most product markets are perfectly competitive.

Correct Answer
verified

Which of the following is true about a competitive market supply curve?

Correct Answer
verified

In a competitive market where firms are earning economic losses, which of the following should be expected as the industry moves to long-run equilibrium, ceteris paribus?

Correct Answer
verified

In Figure 23.3, diagram "a" presents the cost curves that are relevant to a firm's production decision, and diagram "b" shows the market demand and supply curves for the market. Use both diagrams to answer the following question: In the long run, at prices below p₂ in Figure 23.3,

Correct Answer
verified

Which of the following is consistent with long-run equilibrium for a perfectly competitive market?

Correct Answer
verified

In a perfectly competitive market, when price is equal to the

Correct Answer
verified

Which of the following characterizes a firm that is in long-run perfectly competitive equilibrium where profits are maximized?

Correct Answer
verified

Which of the following is a production decision?

Correct Answer
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Correct Answer
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Explain how a perfectly competitive market promotes productive efficiency (minimum average costs).

Correct Answer
verified
If economic profits exist in a competiti...
View Answer

If catfish farmers expect catfish prices to fall in the future, then right now

Correct Answer
verified

In making an investment decision, an entrepreneur

Correct Answer
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The behavior expected in a competitive market includes

Correct Answer
verified

Examples of barriers to entry include

Correct Answer
verified

Exit and shutdown mean the same thing.

Correct Answer
verified

Perfectly competitive firms always earn economic profits in the short run.

Correct Answer
verified

Exam 9: Aggregate Demand

Entry and exit are long-run investment decisions.

Correct AnswerverifiedShow Answer

For a perfectly competitive market, long-run equilibrium is characterized by all of the following but which one?

Correct AnswerverifiedShow Answer

Competitive market pressures were a driving force in the spectacular growth of the computer industry.

Correct AnswerverifiedShow Answer

Patents are a barrier to entry.

Correct AnswerverifiedShow Answer

Most product markets are perfectly competitive.

Correct AnswerverifiedShow Answer

Which of the following is true about a competitive market supply curve?

Correct AnswerverifiedShow Answer

In a competitive market where firms are earning economic losses, which of the following should be expected as the industry moves to long-run equilibrium, ceteris paribus?

Correct AnswerverifiedShow Answer

In Figure 23.3, diagram "a" presents the cost curves that are relevant to a firm's production decision, and diagram "b" shows the market demand and supply curves for the market. Use both diagrams to answer the following question: In the long run, at prices below p2 in Figure 23.3,

Correct AnswerverifiedShow Answer

Which of the following is consistent with long-run equilibrium for a perfectly competitive market?

Correct AnswerverifiedShow Answer

In a perfectly competitive market, when price is equal to the

Correct AnswerverifiedShow Answer

Which of the following characterizes a firm that is in long-run perfectly competitive equilibrium where profits are maximized?

Correct AnswerverifiedShow Answer

Which of the following is a production decision?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Explain how a perfectly competitive market promotes productive efficiency (minimum average costs).

Correct AnswerverifiedIf economic profits exist in a competiti...View AnswerShow Answer

If catfish farmers expect catfish prices to fall in the future, then right now

Correct AnswerverifiedShow Answer

In making an investment decision, an entrepreneur

Correct AnswerverifiedShow Answer

The behavior expected in a competitive market includes

Correct AnswerverifiedShow Answer

Examples of barriers to entry include

Correct AnswerverifiedShow Answer

Exit and shutdown mean the same thing.

Correct AnswerverifiedShow Answer

Perfectly competitive firms always earn economic profits in the short run.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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In Figure 23.3, diagram "a" presents the cost curves that are relevant to a firm's production decision, and diagram "b" shows the market demand and supply curves for the market. Use both diagrams to answer the following question: In the long run, at prices below p₂ in Figure 23.3,

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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If economic profits exist in a competiti...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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