Question 1

Question text

All of the following are characteristics of a perfectly competitive market except which one?

Select one:

A.

no transaction costs

B.

homogeneous goods

C.

barriers to entry

D.

many buyers and sellers

Clear my choice

Question 2

Question text

Which of the following is an example of a perfectly competitive market?

Select one:

A.

the market for paper towels

B.

the market for designer jeans

C.

the market for laundry detergent

D.

the market for soybeans

Clear my choice

Question text

In a competitive market, buyers have ________ impact on the market price and sellers have ________ impact on the market price.

Select one:

A.

some; some

B.

no; some

C.

no; no

D.

some; no

Clear my choice

Question 4

Question text

The market for jeans is not perfectly competitive because ________.

Select one:

A.

jeans are not a homogeneous good

B.

there are few buyers

C.

there are few sellers

D.

sellers are price takers

Clear my choice

Question 5

Question text

If a firm is a price taker, this means that the firm ________.

Select one:

A.

has market power

B.

has transaction costs

C.

has the ability to change the price of the good or service

D.

has no ability to change the price of the good or service

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Question 6

Question text

Which of the following is an example of a homogeneous good?

Select one:

A.

jeans

B.

sunglasses

C.

smart phones

D.

yellow onions

Clear my choice

Question 7

Question text

To maximize profits, a manager must select the quantity of output that ________.

Select one:

A.

maximizes the difference between total revenue and total cost

B.

maximizes the difference between total revenue and marginal cost

C.

maximizes the difference between marginal revenue and marginal cost

D.

maximizes the difference between marginal revenue and total cost

Clear my choice

Question 8

Question text

A perfectly competitive firm is producing 700 units, which is their profit-maximizing output level. The market price for their good is $2 and the firm’s average total cost to produce the 700 units is $0.50. What is their profit or loss from producing the 700 units?

Select one:

A.

-$1,050

B.

$1,050

C.

-$1,750

D.

$1,750

Clear my choice

Question 9

Question text

  

Quantity

Total Cost

 

495

1500

 

496

1505

 

497

1512

 

498

1520

 

499

1530

 

500

1545

 

501

1562

 

502

1580

The table above shows the total cost for Happy Cows, a perfectly competitive dairy farm, at various levels of production. The market price for Happy Cows dairy is $10 per unit of dairy product.
 

Refer to the table above. What is the marginal revenue of producing the 500th unit of dairy product?

Select one:

A.

$10

B.

$5,000

C.

$1,545

D.

$15

Clear my choice

Question 10

Question text

  

Quantity

Total Cost

 

495

1500

 

496

1505

 

497

1512

 

498

1520

 

499

1530

 

500

1545

 

501

1562

 

502

1580

The table above shows the total cost for Happy Cows, a perfectly competitive dairy farm, at various levels of production. The market price for Happy Cows dairy is $10 per unit of dairy product.
 

Refer to the table above. What is the profit-maximizing output level for Happy Cows?

Select one:

A.

501

B.

500

C.

498

D.

499

Clear my choice

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Question 11

Question text

All of the following are true for a perfectly competitive firm’s demand curve except which one?

Select one:

A.

It is perfectly elastic.

B.

It is equal to the market price at all quantities.

C.

It is horizontal.

D.

It is equal to the market demand curve.

Clear my choice

Question 12

Question text

Perfectly competitive firms are earning economic profits at a market price of $5 and an average total cost of $4. If new firms enter and do not affect the cost for all firms, the market price will ________ until it reaches ________.

Select one:

A.

fall; $5

B.

fall; $4

C.

increase; $5

D.

increase; $4

Clear my choice

Question 13

Question text

In a perfectly competitive market, an increase in the market demand will shift the perfectly competitive firm’s ________ curve ________.

Select one:

A.

marginal cost; downward

B.

demand; downward

C.

demand; upward

D.

marginal cost; upward

Clear my choice

Question 14

Question text

In the short run, a decrease in the market demand will cause a(n) ________ in the market equilibrium price and a perfectly competitive firm’s demand and marginal revenue curve to shift ________.

Select one:

A.

increase; upward

B.

increase; downward

C.

decrease; upward

D.

decrease; downward

Clear my choice

Question 15

=Question text

In a perfectly competitive market, a decrease in the market demand will ultimately lead to ________ firms in the market and a ________ market equilibrium quantity.

Select one:

A.

fewer; higher

B.

more; higher

C.

more; lower

D.

fewer; lower

Question 16

Question text

In a perfectly competitive market, a decrease in the market demand will shift the perfectly competitive firm’s ________ curve ________.

Select one:

A.

marginal cost; downward

B.

marginal revenue; upward

C.

marginal cost; upward

D.

marginal revenue; downward

Clear my choice

Question 17

Question text

If a perfectly competitive firm is producing 200 units and, at the 200th unit, the difference between marginal revenue and marginal cost (MR – MC) is positive, which of the following is true?

Select one:

A.

The firm should decrease production to maximize profit.

B.

The firm should increase production to maximize profit.

C.

The 200th unit costs more to produce than the firm earns in revenue.

D.

The firm is maximizing profit.

Clear my choice

Question 18

Question text

Overexpansion can cause a perfectly competitive firm to ________.

Select one:

A.

produce at a quantity where the marginal revenue exceeds the firm’s average total cost

B.

earn economic profit

C.

incur economic losses

D.

produce at a quantity where the market price exceeds the firm’s average total cost

Clear my choice

Question 19

Question text

The cycle of increased market demand that leads to ________ and then a(n) ________ in market price has caused many firms bankruptcy.

Select one:

A.

underexpansion; decrease

B.

underexpansion; increase

C.

overexpansion; decrease

D.

overexpansion; increase

Clear my choice

Question 20

Question text

If the market price is $3 and a perfectly competitive firm is producing 2,200 units and the marginal cost to produce the 2,200th unit is $2.85, which of the following is true?

Select one:

A.

The firm should decrease production to maximize profit.

B.

The firm should increase production to maximize profit.

C.

The firm is maximizing profit.

D.

The difference between marginal revenue and marginal cost (MR – MC) for the 2,200th unit is negative.

Clear my choice