A monopoly always operates in the inelastic portion of its demand curve. Indicate whether the statement is true or false ANSWER False. A monopoly never operates in the inelastic portion of its demand curve. Marginal revenue is negative in this region.
Date: September 9th, 2020
In a competitive market where the elasticity of the market demand curve is -2, the elasticity of the supply curve is 1, and an individual firm faces a residual demand curve with an elasticity of -98. What happens to the individual firm’s residual demand curve when the number of firms serving this market declines? A) […]
Date: September 9th, 2020
How can the market demand for a product be inelastic but the demand for a particular firm is elastic? A) There is no advertising. B) There is a sufficiently large number of sellers. C) There is only one or two sellers. D) Buyers do not have complete information. ANSWER B
Date: September 9th, 2020
The model of perfect competition is valuable for A) prediction. B) comparison to other markets. C) Either A or B D) None of the above. ANSWER C
Date: September 9th, 2020
If a firm happened to be the only seller of a particular product, it might behave as a price taker as long as A) buyers have full information about the firm’s price. B) the transaction costs of doing business with this firm are low. C) there are many buyers. D) there is free entry and […]
Date: September 9th, 2020
Even if two products have different characteristics, such as color, the products are only considered heterogeneous if consumers A) consider the two products as perfect complements. B) consider the two products as perfect substitutes. C) consider the two products as imperfect substitutes. D) consider the two products as imperfect complements. ANSWER C
Date: September 9th, 2020
If a firm operates in a perfectly competitive market, then it will most likely A) advertise its product on television. B) take the price of its product as determined by the market. C) have a difficult time obtaining information about the market price. D) have an easy time keeping other firms out of the market. […]
Date: September 9th, 2020
The “Got Milk?” advertising campaign is a good example of A) advertising in a competitive market. B) how advertising in a competitive market does not pay off for a single firm. C) interest groups financed by the industry advertise for the whole industry. D) All of the above. ANSWER D
Date: September 9th, 2020
The demand curve that an individual competitive firm faces is known as its A) excess demand curve. B) market demand curve. C) residual demand curve. D) leftover demand curve. ANSWER C
Date: September 9th, 2020
Which of the following are NOT characteristics of a competitive market? A) There is freedom of entry and exit. B) There are zero transaction costs. C) There are only one or two sellers. D) Buyers and sellers have complete information. ANSWER C
Date: September 9th, 2020
