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Exam (elaborations)

Econ 102 Exam 2 Questions and Correct Answers the Latest Update and Recommended Version

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  • Course
  • Econ 102
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  • Econ 102

Which of the following is NOT true regarding perfectly competive markets? A. It is difficult or impossible for a firm to enter and compete in the market. B. All firms in the market are price takers. C. Homogenous goods are sold by the firms. D. The market contains many buyers and sellers. → ...

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  • October 19, 2024
  • 89
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers
  • Econ 102
  • Econ 102
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2 0 2 4 /2025 | © copyright | This work may not be copied for profit gain Excel!


Econ 102 Exam 2 Questions and Correct
Answers the Latest Update and
Recommended Version
Which of the following is NOT true regarding perfectly competive markets?




A. It is difficult or impossible for a firm to enter and compete in the market.

B. All firms in the market are price takers.

C. Homogenous goods are sold by the firms.

D. The market contains many buyers and sellers.

→ It is difficult or impossible for a firm to enter and compete in the market.


Regarding perfect competition, what does it mean when the goods sold by the firms in a

market are homogeneous?

A

Firms can produce the same good with different inputs and different costs.

B

The good sold by one firm is a perfect substitute of the good sold by another firm in the same

market.

C

The firms in the market are the same size.

D




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,2 0 2 4 /2025 | © copyright | This work may not be copied for profit gain Excel!

The goods sold by one firm are complements of the goods sold by another firm in another

market.

→ The good sold by one firm is a perfect substitute of the good sold by another firm in
the same market.


In a perfectly competitive market, a single firm that sets its price a small amount above the

market price will do which of the following?

A

Make lower profits than other firms, but the exact amount less depends on the elasticity of

demand for the product

B

Have lower revenues but receive zero economic profits

C

Not sell any units at all

D

Earn profits higher than other firms as long as the other firms continued to charge the market

price

→ Not sell any units at all


When a firm earns zero economic profits, it does which of the following?

A

Has a positive accounting profit

B



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,2 0 2 4 /2025 | © copyright | This work may not be copied for profit gain Excel!

Has a negative accounting profit

C

Cannot continue to produce and should shut down

D

Has opportunity costs that are larger than accounting profits

→ Has a positive accounting profit


Why are perfectly competitive markets are considered economically efficient?

A

There is only a small amount of deadweight loss

B

The opportunity cost of society for making the good is equal to society's value of the good.

C

Consumers enjoy the goods produced in these markets most

D

Firms always have low and identical costs

→ The opportunity cost of society for making the good is equal to society's value of the
good.


Given all the characteristics of perfect competition, which of the following is the main factor

that affects consumers' decisions on which firm to purchase a good from?

A

Opinions of friends

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, 2 0 2 4 /2025 | © copyright | This work may not be copied for profit gain Excel!

B

Quality of the good

C

Price

D

Reputation of the firm

→ C
→ Price


The clothing and attire retail market has seen an increased number of firms entering the

industry. Thus, there is a lot of competition in markets for many types of clothing. What is the

result of this high amount of competition?

A

Individual buyers and sellers cannot affect the market price.

B

Firms have a lot of flexibility in pricing their products.

C

One individual firm can determine the market price.

D

Some firms must necessarily leave since the prices will be too low.

→ Individual buyers and sellers cannot affect the market price.




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