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
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
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
If a pharmaceutical firm is researching ways to improve its heartburn medicine and discovers a technique that will improve its allergy medicine, one could conclude that economies of scope exist in that industry. Indicate whether the statement is true or false ANSWER True . Economies of scope imply that the cost of producing two […]
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
