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Question
Which is a required characteristic of a perfectly competitive industry?
A) There are few firms so that none can influence market price.
B) Products are highly differentiated.
C) Barriers to entry are high.
D) None of the above
Answer
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Related questions
Q:
John takes out a student loan at a bank but spends his money in Las Vegas to play at the casino. This situation is an example of
A) moral hazard.
B) moral suasion.
C) adverse selection.
D) fraud.
Q:
The Prisoner's Dilemma is an example of
A) market signaling.
B) a zero-sum game.
C) a non-zero sum, non-cooperative game with a dominant strategy.
D) adverse selection.
Q:
Asymmetric information represents a market situation in which
A) all parties to a transaction possess less than full information.
B) one party in a transaction has more information than the other party.
C) some information possessed by the parties in a transaction may be false.
D) a zero-sum game exists.
Q:
"Tying" is a form of price discrimination which involves a buyer
A) agreeing to purchase a product at a fixed price regardless of the amount purchased.
B) paying different prices based on the amounts of a product purchased.
C) required to buy one product in order to purchase some other product.
D) All of the above
Q:
When mark-up equals 50% and AC = MC, then demand elasticity will be
A) -1.
B) -1.5.
C) -2.
D) -3.
Q:
If a product which costs $8 is sold at $10, the profit margin is
A) $2.
B) 25%.
C) 20%.
D) None of the above
Q:
The following are possible examples of price discrimination except
A) prices in export markets are lower than for identical products in the domestic market.
B) senior citizens pay lower fares on public transportation than younger people at the same time.
C) a product sells at a higher price at location A than at location B, because transportation costs are higher from the factory to A.
D) subscription prices for a professional journal are higher when bought by a library than when bought by an individual.
Q:
Dominant price leadership exists when
A) one firm drives the others out of the market.
B) the dominant firm decides how much each of its competitors can sell.
C) the dominant firm establishes the price at the quantity where its MR = MC, and permits all other firms to sell all they want to sell at that price.
D) the dominant firm charges the lowest price in the industry.
Q:
Prices under an ideal cartel situation will be equal to
A) monopoly prices.
B) competitive prices.
C) prices under monopolistic competition.
D) marginal cost.
Q:
All of the following are conditions which are favorable to the formation of cartels except
A) the existence of a small number of firms.
B) geographic proximity of firms.
C) homogeneity of the product.
D) easy entry into the industry.
Q:
Porter's "Five Forces Model" is based on
A) the laws of supply and demand.
B) the law of diminishing returns.
C) the Structure-Conduct-Performance model.
D) the key factors affecting demand.
Q:
In the kinked demand curve model, the demand curve is ________ for price increases and ________ for price decreases.
A) unit elastic; relatively elastic
B) relatively inelastic; relatively elastic
C) relatively elastic; relatively inelastic
D) perfectly elastic; perfectly inelastic
Q:
The main difference between perfect competition and monopolistic competition is
A) the number of sellers in the market.
B) the ease of exit from the market.
C) the difference in the firm's profits in the long run.
D) the degree of product differentiation.
Q:
When the slope of the total revenue curve is equal to the slope of the total cost curve
A) profit is maximized.
B) marginal revenue equals marginal cost.
C) the marginal cost curve intersects the total average cost curve.
D) the total cost curve is at its minimum.
E) Both A and B
Q:
A monopoly will usually produce
A) where its demand curve is inelastic.
B) where its demand curve is elastic.
C) where its demand curve is either elastic or inelastic.
D) only when its demand curve is perfectly inelastic.
Q:
Which of the following is true for a monopoly?
A) P = MC
B) P = MR
C) P > MR
D) P < MR
Q:
When MR = MC
A) marginal profit is maximized.
B) total profit is maximized.
C) marginal profit is positive.
D) total profit is zero.
Q:
Which of the following correctly completes this statement? The monopolist's marginal revenue
A) will be greater than price.
B) will be less than price.
C) will be equal to price.
D) will be greater than total revenues.
Q:
A perfectly competitive firm sells 15 units of output at the going market price of $10. Suppose its average fixed cost is $15 and its average variable cost is $8. Its contribution margin (i.e., contribution to fixed cost) is
A) $30.
B) $150.
C) $105.
D) Cannot be determined from the above information
Q:
In economic analysis, any amount of profit earned above zero is considered "above normal" because
A) normally firms are supposed to earn zero profit.
B) this would indicate that the firm's revenue exceeded both its accounting and opportunity cost.
C) this would indicate that the firm was at least earning a profit equal to its opportunity cost.
D) this would indicate that the firm's revenue exceeded its accounting cost.
Q:
In perfect competition
A) the firm's demand curve is relatively elastic.
B) the firm's demand curve is relatively inelastic.
C) the firm's demand curve is perfectly elastic.
D) the firm's demand curve is perfectly inelastic.
Q:
Demand facing an individual, perfectly competitive firm is
A) perfectly inelastic at the quantity the firm chooses to produce.
B) perfectly inelastic at the quantity determined by market forces.
C) perfectly elastic at the price the firm chooses to charge.
D) perfectly elastic at the price determined by market forces.
Q:
Which of the following markets comes closes to the model of perfect competition?
A) automobile industry
B) information technology industry
C) aerospace industry
D) agriculture
Q:
The learning curve indicates that
A) economies of scale are taking effect.
B) repetition of various production tasks cause unit costs to decrease.
C) workers must learn new skills in order to improve.
D) it takes time to learn a new skill.
Q:
The learning curve
A) is really no different from a marginal cost curve.
B) calculates average cost at a particular point in time.
C) shows the decrease in unit cost as more of the same product is produced over time.
D) None of the above
Q:
Which of the following relationships implies that a firm's short-run cost function is linear?
A) MC = AC
B) MC = AVC
C) AC = AFC + AVC
D) MC > AC
Q:
When a firm experiences increasing returns to scale
A) its AFC will decrease.
B) its AFC will increase.
C) its AC will increase.
D) its AC will decrease.
Q:
The marginal cost will intersect the average variable cost curve
A) when the average variable cost curve is rising.
B) where average variable cost curve equals price.
C) at the minimum point of the average variable cost curve.
D) The two will never intersect.
Q:
As the U.S. population ages, the structure of the demand for food products will change with
A) an increase in the demand for red meat products and a decrease in the demand for fish and poultry.
B) an increase in the demand for dairy products and a decrease in the demand for red meat.
C) an increase in the demand for fruits, vegetables and fish and a decrease in demand for fried foods, dairy products and items that contain a lot of sugar.
D) an increase in the demand for beverages and drinks and a decrease in the demand for solid food.
Q:
The Coase theorem states that, in the presence of cost externalities, an optimal equilibrium can be attained
A) with government taxation.
B) by prohibiting production.
C) by correctly defining property rights and through negotiation between the parties.
D) None of the above