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BUS 2010 Managerial Economics (Market Structure) Quiz 6 with Verified Solutions A+ Graded
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BUS 2010 Managerial Economics (Market Structure) Quiz 6 with Verified Solutions A+ Graded
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BUS 2010 Managerial Economics (Market Structure) Quiz 6 with VerifiedSolutions A+ Graded
1. The market demand curve in a perfectly com- True
petitive industry is downward sloping, while the
demand curve faced by an individual perfectly
competitive firm is horizontal.
True/False
2. In order to maximize profits, a firm should pro- False
duce the level of output at which total revenue
is maximized.
True/False
3. A welfare loss occurs when a monopolist True
chooses not to produce units of output that are
of greater marginal value to consumers than
the marginal cost of producing them.
True/False
4. Monopolistic competition differs from perfect False
competition only with regard to the number of
firms participating in the market.
True/False
5. Unlike purely competitive firms, firms in mo- True
nopolistic competition will operate with excess
capacity even in long-run equilibrium.
True/False
6. Condition of perfect competition characteris- - Many firms
tics - Must sell same products
(homogeneous product)
- Free to entry/exit
- Full information on P&Q
7. Perfectly competition characteristics - Each firm can't control
their own price
- Price taker, price follow
others
- P=MR
8. Profit Maximizing Principle
, BUS 2010 Managerial Economics (Market Structure) Quiz 6 with Verified
Solutions A+ Graded
MR > MC: produce
MR = MC: stop produce
Profit = (P-ATC) x Q
9. Condition of monopoly - 1 firm
- No close substitute
- Barriers to entry
10. In the perfectly competitive model, all firms are c
assumed to be producing:
a. products that are heavily advertised.
b. differentiated products.
c. identical products.
d. complementary products.
11. In the monopolistic competitive model, all firms b
are assumed to be producing:
a. products that are heavily advertised.
b. differentiated products.
c. identical products.
d. complementary products.
12. Which of the following is characteristic of a a
perfectly competitive market?
a. There is free entry into and exit from the
market.
b. Individual firms can exert a perceptible influ-
ence on the market price.
c. Firms in the market produce a differentiated
product.
d. All of the above are true.
13. Which of the following is most likely to be a d
price taker?
a. a respected heart surgeon
b. an ice cream shop owner located in Atlanta,
Georgia
c. a beachside tourist resort
d. a Kansas wheat farmer
, BUS 2010 Managerial Economics (Market Structure) Quiz 6 with Verified
Solutions A+ Graded
14. Refer to Exhibit 12-5. In the short run, if the c
market price falls below , the firm should
shut down.
a. $60
b. $45
c. $30
d. $10
15. Refer to Exhibit 12-5. The firm's short-run sup- c
ply curve corresponds to which segment of the
marginal cost curve in the diagram?
a. ABCDE
b. BCDE
c. CDE
d. DE
16. Economic losses caused several firms to leave c
the car wash business in Portland, Oregon.
Though prices have risen, firms are still leaving
the industry. Apparently:
a. economic profits exist but they are not as
high as in other industries.
b. economic profits are zero and firms won't
stay in the industry if they are not earning an
economic profit.
c. firms are still generating economic losses.
d. economic profits have decreased because of
the exit of existing firms.
17. The fast-food industry is generally considered c
to be a constant cost industry in regards to its
use of labor as an input. Why?
a. Few people prefer to work in the industry.
b. Available labor is in short supply.
c. Firms use a relatively small share of unskilled
labor in most cities.
d. The productivity of the workers is relatively
low.
18. b
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