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
The perfectly competitive model makes a lot of fairly unrealistic assumptions. Why do economics textbooks still talk a lot about this model? A) Many markets are close to being perfectly competitive. B) It is an important model to use as a benchmark to compare other markets structures to. C) Perfectly competitive markets maximize societal welfare. […]
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
A profit-maximizing monopolist A) is guaranteed to lose money because of a lack of competition. B) is not guaranteed to make a positive profit. C) is guaranteed to make a positive profit, hence the desire to be a monopolist. D) is guaranteed to make a non-negative profit, otherwise government would step in to assist. […]
Date: September 9th, 2020
Firms that exhibit price-taking behavior A) wait for other firms to set price, take it as given, and charge a higher price. B) have outputs that are too small to influence market price and thus take it as given. C) take pricing behavior in their own hands. D) are independently capable of setting price. […]
Date: September 9th, 2020
In the absence of any government regulation on price, if a firm has no power to set price on its own, one can safely conclude A) the demand curve for the firm’s product is horizontal. B) there aren’t many firms in the industry. C) the market is in long-run equilibrium. D) the firms in this […]
Date: September 9th, 2020
Many car owners and car dealers describe their different cars for sale in the local newspapers and list their asking price. Many people shopping for a used car consider the different choices listed in the paper. The absence of which condition prohibits this market from being described as perfectly competitive? A) Buyers and sellers know […]
Date: September 9th, 2020
Many used car owners and used car dealers describe their different cars for sale in the local newspapers and list their asking price. Many people shopping for a used car consider the different choices listed in the paper. The market for used cars could be described as A) relatively competitive. B) perfectly competitive. C) non-competitive. […]
Date: September 9th, 2020
If consumers view the output of any firm in a market to be identical to the output of any other firm in the market, the demand curve for the output of any given firm A) will be identical to the market demand curve. B) will be horizontal. C) will be vertical. D) cannot be determined […]
Date: September 9th, 2020
