Question 1

Sometimes offering no guarantee on a product signals to consumers that the product is of lower quality than it really is.

Accepted Answer

A) True 
 B)False

Question 2

If, at the current level of output, the extra revenue received from producing and selling the last unit of output is less than the extra cost of producing that output, the firm should

Accepted Answer

A)   expand rapidly.
B)   expand cautiously.
C)   do nothing.
D)   reduce output to the point where the extra revenue is less than the extra cost.
E)   reduce output to the point where the extra revenue just equals the extra cost.

Question 3

A most-favored customer is one who

Accepted Answer

A)   buys the most of a firm's product.
B)   is a relative of the owner of the firm.
C)   is given a guarantee of receiving the lowest price.
D)   spends the most money.
E)   None of these

Question 4

Economic profits are earned

Accepted Answer

A)   when price is less than average total cost.
B)   when price exceeds average total cost.
C)   by perfectly competitive firms in the long run.
D)   when marginal revenue equals marginal cost.
E)   when price exceeds average sunk cost.

Question 5

When firms collude, they usually do so to

Accepted Answer

A)   increase their size.
B)   increase costs and raise barriers to entry.
C)   avoid antitrust prohibitions.
D)   increase their profits.
E)   become more efficient.

Question 6

-Assume that the firm described in Table 6.1 is incurring a total cost of $25,000 at the profit-maximizing output level. The firm will

Accepted Answer

A)   lose $10,000 in the short run.
B)   break even.
C)   earn a profit of $3,000.
D)   earn a profit of $30,000.
E)   earn a profit of $55,000.

Question 7

In an oligopoly market,

Accepted Answer

A)   many firms produce differentiated products.
B)   one firm dominates the market.
C)   easy entry is one of its characteristics.
D)   a few firms dominate market.
E)   the other firms' demand curves are not affected by a large firm's behavior change.

Question 8

A monopolistically competitive firm will maximize profits where

Accepted Answer

A)   MR = MC.
B)   P = MR.
C)   MR + MC = 0.
D)   TR- TC = MC.
E)   MC - MR = P.

Question 9

When a cartel is successful,

Accepted Answer

A)   it offers consumers the lowest possible prices.
B)   it minimizes profits for its members.
C)   it behaves as a monopolist in the market.
D)   it has no effective mechanism for enforcing agreements.
E)   it will always be stable.

Question 10

Figure 6.1
 2, what is total revenue if the firm produces 60 units and the lowest point of the average-total-cost curve is $4? A)  $240 B)  $300 C)  $400 D)  $440 E)  The amount cannot be determined from the information given." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 6.1. Given MR2, what is total revenue if the firm produces 60 units and the lowest point of the average-total-cost curve is $4?

Accepted Answer

A)   $240
B)   $300
C)   $400
D)   $440
E)   The amount cannot be determined from the information given.

Question 11

Which of the following is most likely to be a monopoly market in the United States?

Accepted Answer

A)   Retail clothing
B)   Patented pharmaceuticals
C)   Mobile telephone service
D)   Automobile manufacturing
E)   College textbook manufacturing

Question 12

Product differentiation can be created because one firm's salespeople provide better service to the customers.

Accepted Answer

A) True 
 B)False

Question 13

Competition benefits individuals because

Accepted Answer

A)   Firms must continually work to improve their products.
B)   Technology continually improves.
C)   Consumers get the goods and services at the lowest possible price.
D)   Resources are allocated to their highest-valued use.
E)   All of these are true of competition.

Question 14

A perfectly competitive market is characterized by

Accepted Answer

A)   large numbers of producers of differentiated products.
B)   large numbers of producers of commodities with barriers to entry.
C)   small numbers of producers of commodities with ease of entry.
D)   large numbers of producers of commodities with ease of entry.
E)   none of these.

Question 15

"Creative destruction" is:

Accepted Answer

A)   always easy and fast
B)   the process of competition where the inefficient producers are driven out of business
C)   exemplified by farms being replaced by golf courses and resorts
D)   one reason for the decrease in consumer buying power
E)   when one firm is taken over by another

Question 16

Which of the following is not a characteristic of monopolistic competition?

Accepted Answer

A)   Differentiated products
B)   A downward-sloping demand curve for individual firms
C)   Firms that are price makers
D)   Impeded entry to the industry
E)   A large number of firms

Question 17

Because of their brand names, Apple, Sony, BMW, Mercedes-Benz, and other well-known firms are able to charge significantly higher prices for their products than their competitors without losing any business. Expenditures made by firms to create brand names

Accepted Answer

A)   are always inefficient.
B)   provide information to consumers.
C)   lead to monopolies.
D)   leads to advertising wars.
E)   would not exist if information were less costly for firms than consumers to obtain.

Question 18

The size of the firm relative to the market can be a barrier to entry.

Accepted Answer

A) True 
 B)False

Question 19

A price taker is

Accepted Answer

A)   an individual seller in a commodity market
B)   a monopoly firm
C)   the electric company as their rates are set by the Public Utilities Commission
D)   a firm that has a brand name
E)   a firm that enjoys positive economic profits

Question 20

A monopolist will earn

Accepted Answer

A)   normal profit in the short run.
B)   normal profit in the long run.
C)   positive economic profit as long as entry is blocked.
D)   less profit than if it were monopolistically competitive.
E)   greater economic profit as entry becomes available.

Exam 6: Competition

Figure 6.1 -Refer to Figure 6.1. Given MR2, what is total revenue if the firm produces 60 units and the lowest point of the average-total-cost curve is $4?

Correct AnswerverifiedShow Answer

A monopolistically competitive firm will maximize profits where

Correct AnswerverifiedShow Answer

A monopolist will earn

Correct AnswerverifiedShow Answer

If, at the current level of output, the extra revenue received from producing and selling the last unit of output is less than the extra cost of producing that output, the firm should

Correct AnswerverifiedShow Answer

A price taker is

Correct AnswerverifiedShow Answer

A most-favored customer is one who

Correct AnswerverifiedShow Answer

-Assume that the firm described in Table 6.1 is incurring a total cost of $25,000 at the profit-maximizing output level. The firm will

Correct AnswerverifiedShow Answer

When firms collude, they usually do so to

Correct AnswerverifiedShow Answer

A perfectly competitive market is characterized by

Correct AnswerverifiedShow Answer

In an oligopoly market,

Correct AnswerverifiedShow Answer

Sometimes offering no guarantee on a product signals to consumers that the product is of lower quality than it really is.

Correct AnswerverifiedShow Answer

The size of the firm relative to the market can be a barrier to entry.

Correct AnswerverifiedShow Answer

"Creative destruction" is:

Correct AnswerverifiedShow Answer

Because of their brand names, Apple, Sony, BMW, Mercedes-Benz, and other well-known firms are able to charge significantly higher prices for their products than their competitors without losing any business. Expenditures made by firms to create brand names

Correct AnswerverifiedShow Answer

Economic profits are earned

Correct AnswerverifiedShow Answer

When a cartel is successful,

Correct AnswerverifiedShow Answer

Which of the following is not a characteristic of monopolistic competition?

Correct AnswerverifiedShow Answer

Which of the following is most likely to be a monopoly market in the United States?

Correct AnswerverifiedShow Answer

Competition benefits individuals because

Correct AnswerverifiedShow Answer

Product differentiation can be created because one firm's salespeople provide better service to the customers.

Correct AnswerverifiedShow Answer

Figure 6.1 -Refer to Figure 6.1. Given MR₂, what is total revenue if the firm produces 60 units and the lowest point of the average-total-cost curve is $4?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified