All else equal, a smaller elasticity of the supply curve to the other firms leads to a ________ individual firm’s residual elasticity of demand. A) less elastic B) unit elastic C) more elastic D) zero ANSWER A
Date: September 9th, 2020
In a competitive market, one would expect to see A) no advertising. B) false advertising. C) advertising only in the Sunday papers. D) minimal advertising. ANSWER A
Date: September 9th, 2020
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
A special license is required to operate a taxi in many cities. The number of licenses is restricted. More drivers want licenses than are issued. This describes a non-perfectly competitive market because A) taxi services are very different. B) firms cannot freely enter and exit the market. C) transaction costs are high. D) the government […]
Date: September 9th, 2020
Which of the following characteristics of a competitive market make auction sites such as eBay so popular? A) There is freedom of entry and exit. B) There are very low transaction costs. C) There are only one or two sellers. D) Buyers and sellers have complete information. ANSWER B
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
