In a competitive market, if buyers did not know all the prices charged by the many firms, A) all firms still face horizontal demand curves. B) firms sell a differentiated product. C) demand curves can be downward sloping for some or all firms. D) the number of firms will most likely decrease. ANSWER C […]
Date: September 9th, 2020
A market’s structure is described by A) the number of firms in the market. B) the ease with which firms can enter and exit the market. C) the ability of firms to differentiate their product. D) All of the above. ANSWER D
Date: September 9th, 2020
A horizontal demand curve for a firm implies that A) the firm is a monopoly. B) the market the firm is operating in is not competitive. C) the firm is selling in a competitive market. D) the products of that firm are very different from other firms’ products. ANSWER C
Date: September 9th, 2020
In a perfectly competitive market, A) firms can freely enter and exit. B) firms sell a differentiated product. C) transaction costs are high. D) All of the above. ANSWER A
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
Economies of scope A) is a situation in which it is more expensive to produce goods separately than jointly. B) is the opposite of economies of scale. C) occur whenever only one good is produced at a time. D) are an example of the gains from specialization. ANSWER A
Date: September 9th, 2020
Explain why in the case of economies of scope the production possibility frontier is bowed outward. What will be an ideal response? ANSWER With economies of scope a firm uses less resources if it produces 2 goods jointly instead of producing the 2 goods in two firms separately. This means that the firm can […]
Date: September 9th, 2020
Economists define a market to be competitive when the firms A) spend large amounts of money on advertising to lure customers away from the competition. B) watch each other’s behavior closely. C) are price takers. D) All of the above. ANSWER C
Date: September 9th, 2020
If the inverse demand function for a monopoly’s product is p = 100 – 2Q, then the firm’s marginal revenue function is A) -2. B) 100 – 4Q. C) 200 – 4Q. D) 200 – 2Q. ANSWER B
Date: September 9th, 2020
If the inverse demand curve a monopoly faces is p = 100 – 2Q, then profit maximization A) is achieved when 25 units are produced. B) is achieved by setting price equal to 25. C) is achieved only by shutting down in the short run. D) cannot be determined solely from the information provided. […]
Date: September 9th, 2020
