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| 1 | |
Price-taking behavior is a feature of: |
| | A) | pure competition |
| | B) | monopolistic competition |
| | C) | oligopoly |
| | D) | monopoly |
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| 2 | |
Oscar is one of many farmers growing soybeans in the upper Midwest under purely competitive market conditions. As Oscar perceives it, the demand curve for Oscar's soybeans: |
| | A) | is downward sloping |
| | B) | is perfectly inelastic |
| | C) | coincides with Oscar's marginal revenue curve |
| | D) | lies above his marginal revenue curve |
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| 3 | |
Use the following data to answer the next question.
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Refer to the table. Suppose the firm's goal is maximum profits (or minimum losses.) If this firm's minimum average variable cost is $23, the firm will produce: |
| | A) | 0 units |
| | B) | 2 units |
| | C) | 3 units |
| | D) | 4 units |
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| 4 | |
Answer the next question on the basis of the following cost data for a competitive firm.
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Refer to the above data. If the market price is $50 and the firm produces its optimal amount, it will: |
| | A) | realize a $15 profit |
| | B) | realize a $80 profit |
| | C) | realize a $90 profit |
| | D) | incur a $15 loss |
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| 5 | |
A competitive firm is currently producing 2000 units per month at a total cost of $12,000. Its fixed costs are $1,000 and its marginal cost is $5. If the market price is $5.60, this firm: |
| | A) | should shut down |
| | B) | should increase production |
| | C) | is making an economic profit, but not an accounting profit |
| | D) | is maximizing profits |
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| 6 | |
A purely competitive firm's output is currently such that its marginal cost is $225 and rising. Its marginal revenue is $210. Assuming profit maximization, this firm should: |
| | A) | cut its price and increase production |
| | B) | raise its price and cut production |
| | C) | cut its price and cut production |
| | D) | leave price unchanged and cut production |
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| 7 | |
For all values above minimum average variable cost, a competitive firm's: |
| | A) | supply curve is coincident with its marginal cost curve |
| | B) | supply curve is coincident with its average total cost curve |
| | C) | demand curve is coincident with its average total cost curve |
| | D) | demand curve is coincident with its supply curve |
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| 8 | |
Use the following diagrams to answer the next question.
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Refer to the above diagrams, which pertain to a purely competitive firm and the industry in which it operates. In the long run we should expect: |
| | A) | new firms to enter, market demand to rise, and price to fall |
| | B) | demand to increase, and price to rise |
| | C) | input prices to fall, supply to increase, and price to fall |
| | D) | exit of some firms, supply to decrease, and price to rise |
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| 9 | |
Use the following diagram to answer the next question.
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Which one of the following price-quantity combinations is not on this competitive firm's short-run supply curve? |
| | A) | P1, 47 |
| | B) | P2, 44 |
| | C) | P3, 40 |
| | D) | P4, 30 |
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| 10 | |
In the long run, competitive markets achieve: |
| | A) | allocative efficiency because P = min ATC but not productive efficiency because P > min AVC |
| | B) | allocative efficiency because P = MC and productive efficiency because P = min ATC |
| | C) | productive efficiency because P = min ATC but not allocative efficiency because P > MR |
| | D) | neither productive nor allocative efficiency |
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