ECON 213 Latest Study Guide
Chapter 12
1. If a local California avocado stand operates in a perfectly competitive market, that stand owner will
be a:
A. price-maker.
B. price-taker.
C. price-discriminator.
D. price-maximizer.
Answer: B
2. If all firms in an industry are price-takers, then:
A. each firm can sell at the price it wants to charge, provided it is not too different from the
prices other firms are charging.
B. each firm takes the market price as given for its current output level, recognizing that the
price will change if it alters its output significantly.
C. an individual firm cannot alter the market price even if it doubles its output.
D. the market sets the price, and each firm can take it or leave it (by setting a different price).
Answer: C
3. The assumptions of perfect competition imply that:
A. individuals in the market accept the market price as given.
B. individuals can influence the market price.
C. the price will be fair.
D. the price will be low.
Answer: A
4. Price-takers are individuals in a market who:
A. select a price from a wide range of alternatives.
B. select the lowest price available in a competitive market.
C. select the average of prices available in a competitive market.
D. have no ability to affect the price of a good in a market.
Answer: D
5. Individuals in a market who must take the market price as given are:
A. quantity-minimizers.
B. quantity-takers.
C. price-takers.
D. price-searchers.
Answer: C
,6. Perfect competition is characterized by:
, A. rivalry in advertising.
B. fierce quality competition.
C. the inability of any one firm to influence price.
D. widely recognized brands.
Answer: C
7. When a firm cannot affect the market price of the good that it sells, it is said to be a:
A. price-taker.
B. natural monopoly.
C. dominant firm.
D. cartel.
Answer: A
8. The assumptions of perfect competition imply that:
A. individuals in the market determine the market price.
B. firms in the market accept the market price as given.
C. there will be no new competition due to natural monopolies.
D. the price will be decreasing yearly.
Answer: B
9. In the model of perfect competition:
A. the consumer is at the mercy of powerful firms that can set prices wherever they prefer.
B. individual firms can influence the price, but only slightly.
C. no individual or firm has enough power to have any impact on price.
D. the price is determined by how many years are left in the product's patent.
Answer: C
10. Perfect competition is characterized by:
A. rivalry in advertising.
B. fierce quality competition.
C. the inability of any one firm to influence price.
D. widely recognized brands.
Answer: C
11. A perfectly competitive firm is a:
A. price-taker.
B. price-searcher.
C. cost-maximizer.
D. quantity-taker.
Answer: A
, 12. If a Florida strawberry wholesaler operates in a perfectly competitive market, that wholesaler will
have a share of the market, and consumers will consider her strawberries to be
. Therefore, advertising will take place in this market.
A. large; standardized; no
B. small; standardized; little, if any
C. small; differentiated; no
D. large; differentiated; extensive
Answer: B
13. One characteristic of a perfectly competitive market is that there are sellers of the good
or service.
A. one or two
B. a few
C. usually fewer than 10
D. many
Answer: D
14. Which of the following is not a characteristic of a perfectly competitive industry?
A. Firms seek to maximize profits.
B. Profits may be positive in the short run.
C. There are many firms.
D. There are differentiated products.
Answer: D
15. In a perfectly competitive industry, each firm:
A. is a price-maker.
B. produces about half of the total industry output.
C. produces a differentiated product.
D. produces a standardized product.
Answer: D
16. For the Colorado beef industry to be classified as perfectly competitive, ranchers in Colorado must
have on prices and beef must be a product.
A. no noticeable effect; standardized
B. a huge effect; standardized
C. a huge effect; differentiated
D. no noticeable effect; differentiated
Answer: A
17. Which of the following is a necessary condition for perfect competition?
Chapter 12
1. If a local California avocado stand operates in a perfectly competitive market, that stand owner will
be a:
A. price-maker.
B. price-taker.
C. price-discriminator.
D. price-maximizer.
Answer: B
2. If all firms in an industry are price-takers, then:
A. each firm can sell at the price it wants to charge, provided it is not too different from the
prices other firms are charging.
B. each firm takes the market price as given for its current output level, recognizing that the
price will change if it alters its output significantly.
C. an individual firm cannot alter the market price even if it doubles its output.
D. the market sets the price, and each firm can take it or leave it (by setting a different price).
Answer: C
3. The assumptions of perfect competition imply that:
A. individuals in the market accept the market price as given.
B. individuals can influence the market price.
C. the price will be fair.
D. the price will be low.
Answer: A
4. Price-takers are individuals in a market who:
A. select a price from a wide range of alternatives.
B. select the lowest price available in a competitive market.
C. select the average of prices available in a competitive market.
D. have no ability to affect the price of a good in a market.
Answer: D
5. Individuals in a market who must take the market price as given are:
A. quantity-minimizers.
B. quantity-takers.
C. price-takers.
D. price-searchers.
Answer: C
,6. Perfect competition is characterized by:
, A. rivalry in advertising.
B. fierce quality competition.
C. the inability of any one firm to influence price.
D. widely recognized brands.
Answer: C
7. When a firm cannot affect the market price of the good that it sells, it is said to be a:
A. price-taker.
B. natural monopoly.
C. dominant firm.
D. cartel.
Answer: A
8. The assumptions of perfect competition imply that:
A. individuals in the market determine the market price.
B. firms in the market accept the market price as given.
C. there will be no new competition due to natural monopolies.
D. the price will be decreasing yearly.
Answer: B
9. In the model of perfect competition:
A. the consumer is at the mercy of powerful firms that can set prices wherever they prefer.
B. individual firms can influence the price, but only slightly.
C. no individual or firm has enough power to have any impact on price.
D. the price is determined by how many years are left in the product's patent.
Answer: C
10. Perfect competition is characterized by:
A. rivalry in advertising.
B. fierce quality competition.
C. the inability of any one firm to influence price.
D. widely recognized brands.
Answer: C
11. A perfectly competitive firm is a:
A. price-taker.
B. price-searcher.
C. cost-maximizer.
D. quantity-taker.
Answer: A
, 12. If a Florida strawberry wholesaler operates in a perfectly competitive market, that wholesaler will
have a share of the market, and consumers will consider her strawberries to be
. Therefore, advertising will take place in this market.
A. large; standardized; no
B. small; standardized; little, if any
C. small; differentiated; no
D. large; differentiated; extensive
Answer: B
13. One characteristic of a perfectly competitive market is that there are sellers of the good
or service.
A. one or two
B. a few
C. usually fewer than 10
D. many
Answer: D
14. Which of the following is not a characteristic of a perfectly competitive industry?
A. Firms seek to maximize profits.
B. Profits may be positive in the short run.
C. There are many firms.
D. There are differentiated products.
Answer: D
15. In a perfectly competitive industry, each firm:
A. is a price-maker.
B. produces about half of the total industry output.
C. produces a differentiated product.
D. produces a standardized product.
Answer: D
16. For the Colorado beef industry to be classified as perfectly competitive, ranchers in Colorado must
have on prices and beef must be a product.
A. no noticeable effect; standardized
B. a huge effect; standardized
C. a huge effect; differentiated
D. no noticeable effect; differentiated
Answer: A
17. Which of the following is a necessary condition for perfect competition?
