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Activity : 2 point(s)
If P = $8 and MC = $5 + 0. 2Q, the competitive firm's profit-maximizing level of output is:
5
0.2
8
15
Activity : 2 point(s)
In the long run, firms will exit a perfectly competitive industry if:
excess profits exceed zero.
excess profits are less than zero.
total profit equals zero.
excess profits equal zero.
Activity : 2 point(s)
In long-run equilibrium, monopoly prices are set at a level where:
price exceeds marginal revenue.
industry demand equals industry supply.
industry demand is less than industry supply.
price exceeds average revenue.
Activity : 1 point(s)
The kinked demand curve theory of oligopoly assumes that rival firms:
react to price increases.
react to price increases and decreases.
do not react to price changes.
react to price decreases.
Activity : 1 point(s)
In oligopoly markets, the market demand curve is:
upward sloping.
downward sloping.
horizontal.
vertical.
Activity : 2 point(s)
The level of competition in a given market tends to increase if:
minimum efficient scale of firms increases.
the number of substitutes increases.
significant barriers to exit are imposed.
the number of potential entrants decreases.
Activity : 2 point(s)
In the short run, the:
firm has complete flexibility with respect to input use.
availability of all inputs is fixed.
operating period is longer than the planning period.
availability of at least one input is fixed.
Activity : 1 point(s)
In both monopolistic competition and oligopoly markets:
there is easy entry and exit.
consumers perceive differences among the products of various competitors.
economic profits may be earned in the long run.
there are many sellers.
Activity : 1 point(s)
In oligopoly equilibrium:
MC = AC
MC > AC
MR = MC
MC < AC
Activity : 2 point(s)
A firm will earn normal profits when price:
equals average total cost.
equals average variable cost.
equals marginal cost.
exceeds minimum average total cost.
Activity : 2 point(s)
Economic costs include both explicit and implicit cost. When analyzing costs the next-best use of a given asset is called:
current cost.
replacement cost.
historical cost
opportunity cost.
Activity : 2 point(s)
In a perfectly competitive market:
sellers and buyers have perfect information.
entry and exit are difficult.
c. sellers produce similar, but not identical products.
each seller can affect the market price by changing output.
Activity : 2 point(s)
In competitive market equilibrium, the firm's:
MR = MC and P > AR
MR = MC and P > AC
AR = AC and MR > MC
P = MR = AR = AC = MC
Activity : 1 point(s)
A firm should increase advertising if the net marginal revenue derived is:
equal to the marginal cost of advertising.
greater than the marginal cost of advertising.
greater than zero.
less than the marginal cost of advertising.
Activity : 2 point(s)
For a firm in perfectly competitive market equilibrium:
a replacement cost.
an implicit cost.
an explicit cost.
an opportunity cost.
Activity : 1 point(s)
In a monopolistically competitive industry, firms:
offer products that are not perfect substitutes.
make decisions in light of expected reactions from other firms.
set price equal to marginal cost.
are price takers.
Activity : 2 point(s)
Fixed costs include:
variable labor expenses.
output-related energy costs.
output-related raw material costs.
variable interest costs for borrowed capital.
Activity : 2 point(s)
A monopolist maximizes profits by producing a level of output when:
P = AC
P > MC
P < MC
P = MC
Activity : 2 point(s)
The demand curve for a unique product without substitutes is:
upward sloping.
downward sloping.
horizontal.
vertical.
Activity : 2 point(s)
At the point of minimum Average Variable Cost:
historical cost.
incremental cost.
current cost.
Activity : 2 point(s)
In the decision process, management should ignore:
implicit costs.
historical costs.
sunk costs.
incremental costs.
Activity : 1 point(s)
At the profit maximizing level of output for a monopolist:
P = AR and AR = AC
P = MC and MR > MC
P = MR and AC = MC
P > MC and MR = MC
Activity : 2 point(s)
In perfectly competitive markets, profits are maximized when:
MC=AC
P>AC
MR=MC
MR=P
Activity : 2 point(s)
Graphically, competitive market supply is measured by the:
vertical difference of competitor demand curves.
vertical sum of competitor demand curves.
horizontal difference of competitor MC curves.
horizontal sum of competitor MC curves.
Activity : 2 point(s)
For a firm in perfectly competitive market equilibrium:
MR < AR
P > AC
P > MR
P = MC
Activity : 2 point(s)
In the long run, firms will offer supply at the point where P = MR = MC if:
MC is rising.
MC is falling.
MC is constant.
P > AC
Activity : 2 point(s)
The firm demand curve in a competitive market is:
upward sloping.
downward sloping.
horizontal.
vertical.
Activity : 1 point(s)
Monopolistic competition is characterized by:
homogeneous products.
barriers to entry and exit.
perfect dissemination of information.
few buyers and sellers.
Activity : 2 point(s)
Marginal cost equals:
average variable cost at its maximum point.
the change in total fixed cost divided by the change in quantity.
the change in total variable cost divided by the change in quantity.
total cost divided by quantity.
Activity : 2 point(s)
In the short run, a perfectly competitive firm will shut down and produce nothing if:
excess profits equal zero.
total cost exceeds total revenue.
total variable cost exceeds total revenue.
the market price falls below the minimum average total cost.
Activity : 2 point(s)
For a monopoly in equilibrium:
MR = MC
MC ≤ AC
MR ≤ AC
P ≥ AC
Activity : 2 point(s)
When profits are maximized in a competitive market, average cost is always:
rising.
falling.
constant.
none of these.
Activity : 2 point(s)
So long as P > AVC, the competitive firm's short-run supply curve is equal to:
AVC
P
MC
none of these.
Activity : 1 point(s)
The four-firm concentration ratio will rise following:
a rise in imports.
a fall in imports.
a merger between the two largest firms in the industry.
small firm entry.
Activity : 2 point(s)
In oligopoly markets, the market demand curve is:
point on the short-run marginal cost curve.
short-run average cost of production.
long-run average cost of production.
point on the short-run average cost curve.
Activity : 2 point(s)
The following market cannot be described as perfectly competitive:
the unskilled labor market.
the milk market.
discount retailing.
the agricultural grain markets.
Activity : 2 point(s)
In the long run, the:
availability of at least one input is fixed.
firm's operating decisions are typically constrained by prior capital expenditures.
availability of all but one input is fixed.
firm has complete flexibility with respect to input use.
Activity : 1 point(s)
The industry supply curve is derived through the horizontal summation of firm:
average cost curves.
marginal revenue curves.
marginal cost curves.
demand curves.
Activity : 2 point(s)
Price and product quality competition tends to be vigorous when:
entry barriers are low.
potential entrants are few.
product quality information is scarce.
the number of active sellers is few.
Activity : 1 point(s)
A perfectly functioning cartel results in:
oligopoly.
monopoly.
perfect competition.
monopolistic competition.
Activity : 1 point(s)
When prices in monopolistically competitive markets exceed those in a perfectly competitive equilibrium, this difference is the cost of:
information.
market power.
inefficiency.
product differentiation.
Activity : 1 point(s)
In the short run, a monopolist will:
shut down if price equals average total cost.
shut down if price is less than average total cost.
shut down if price is less than average variable cost.
never shut down.
Activity : 2 point(s)
In the short run, a perfectly competitive firm will shut down and produce nothing if:
typically involve multiple units of output.
do not vary across decision alternatives.
come into play when judging the costs of adding a new product line, advertising campaign, production shift, or organization structure.
play a role in determining the optimal course of action.
Activity : 2 point(s)
At the point of minimum AVC:
MC is falling.
MC is constant.
MC is rising.
MC = AVC.
Activity : 2 point(s)
A monopsony is a market with:
many sellers.
one buyer.
many buyers.
one seller.
Activity : 1 point(s)
The demand curve faced by a firm in a monopolistically competitive industry is:
the downward sloping industry demand curve.
downward sloping.
more elastic than the perfectly competitive firm's demand curve.
horizontal.
Activity : 2 point(s)
Perfect competition always prevails in markets with:
few buyers and sellers.
many buyers and sellers.
an even balance of power between sellers and buyers.
a single buyer.
Activity : 2 point(s)
If the slope of a long-run total cost function decreases as output increases, the firm's underlying production function exhibits:
constant returns to scale.
decreasing returns to scale.
decreasing returns to a factor input.
increasing returns to scale.
Activity : 2 point(s)
Average cost declines as output expands in a production process with:
constant returns to scale.
decreasing returns to scale.
decreasing returns to a factor input.
increasing returns to scale.
Activity : 2 point(s)
If the productivity of variable factors is decreasing in the short-run:
marginal cost must increase as output increases.
average cost must decrease as output increases.
average cost must increase as output increases.
marginal cost must decrease as output increases.
