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| 1 | |
In a competitive industry each buyer and seller: |
| | A) | Is a price taker. |
| | B) | Produce different products. |
| | C) | Believes that they can influence the market price. |
| | D) | Prevents the entry of competitors. |
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| 2 | |
For a competitive firm, its short run supply curve is ________ and its long run supply curve is __________. |
| | A) | SMC, LMC |
| | B) | SMC above SAVC, LMC above LAC |
| | C) | SMC below SAVC, LMC above LAC |
| | D) | SMC below SAVC, LMC below LAC |
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| 3 | |
For perfect competition to work there must be: |
| | A) | many buyers and sellers. |
| | B) | a standard product. |
| | C) | free entry and exit. |
| | D) | perfect information. |
| | E) | all of the above. |
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| 4 | |
If there are short run excess profits in a competitive industry, in the long run they will disappear because of new entrants. |
| | A) | True |
| | B) | False |
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| 5 | |
A competitive firms demand curve is: |
| | A) | horizontal. |
| | B) | vertical. |
| | C) | downward sloping. |
| | D) | fairly elastic. |
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| 6 | |
For a competitive firm, the price is its: |
| | A) | average cost. |
| | B) | total revenue. |
| | C) | marginal revenue. |
| | D) | total cost. |
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| 7 | |
A competitive firm faces a __________ demand curve. |
| | A) | vertical |
| | B) | downward sloping |
| | C) | u-shaped |
| | D) | horizontal |
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| 8 | |
Free entry and exit is crucial to maintain a monopolists dominant position. |
| | A) | True |
| | B) | False |
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| 9 | |
A firm will shut down in the short-run if it fails to cover: |
| | A) | short-run variable cost |
| | B) | short-run total cost |
| | C) | short-run average cost |
| | D) | short-run marginal cost |
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| 10 | |
The price below which the firm cuts its losses by making no output is known as the: |
| | A) | shutup price. |
| | B) | shutdown price. |
| | C) | breakup price. |
| | D) | breakdown price. |
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| 11 | |
In a competitive industry in which firms are making supernormal profits prices will ____ as ____ firms enter the market. |
| | A) | fall, more |
| | B) | fall, less |
| | C) | rise, more |
| | D) | rise, less |
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| 12 | |
The long-run marginal cost curve is flatter than the short-run marginal cost curve since the firm can adjust all ______ in the ________. |
| | A) | output, short-run |
| | B) | output, long-run |
| | C) | inputs, long-run |
| | D) | inputs, short-run |
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| 13 | |
When economic profits are zero, normal profits are zero. |
| | A) | True |
| | B) | False |
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| 14 | |
A competitive firm produces a level of output at which _________ . |
| | A) | price is greater than marginal cost. |
| | B) | price equals marginal cost. |
| | C) | price is less than marginal cost. |
| | D) | none of the above. |
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| 15 | |
The supply rule of the profit maximising monopolist (that marginal revenue should equal marginal cost) is different from that of a competitive firm. |
| | A) | True |
| | B) | False |
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| 16 | |
Comparing a monopoly and a competitive firm, the monopolist will: |
| | A) | produce less at a lower price. |
| | B) | produce more at a lower price. |
| | C) | produce less at a higher price. |
| | D) | produce less at a lower price. |
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| 17 | |
A natural monopoly has a declining ________ over a large range of output. |
| | A) | long run marginal cost |
| | B) | short run marginal cost |
| | C) | long run average cost |
| | D) | long run marginal cost |
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| 18 | |
A discriminating monopolist will charge a higher price to groups with more elastic demand. |
| | A) | True |
| | B) | False |
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| 19 | |
Perfect price discrimination means that every customer: |
| | A) | buys the same amount. |
| | B) | pays the same price. |
| | C) | contributes the same revenue. |
| | D) | pays exactly what she thinks the product is worth to her. |
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| 20 | |
A monopoly may be self-perpetuating because profits may be used for: |
| | A) | research. |
| | B) | cost-saving. |
| | C) | technical advance. |
| | D) | all of the above. |
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