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
If a firm operates in a perfectly competitive market, then A) all firms will advertise. B) no firms will advertise. C) the market leader will advertise. D) new firms will advertise. ANSWER B
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
If all conditions for a perfectly competitive market are met, A) firms face sunk cost when entering the market. B) firms’ demand curves are horizontal. C) the market demand curve is horizontal. D) the firms’ demand curves are downward-sloping. 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 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
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
