ECON 201 Week 6 Quiz | american-public-university-system
Quiz Submissions - Week 6 Quiz (Chapter 9 & 10)
Perfect competition is characterized by:
· rivalry in advertising.
· fierce quality competition.
· the inability of any one firm to influence price.
· widely recognized brands.
An industry that contains a firm that is the only producer of a good or service for which there are no close substitutes and for which entry by potential rivals is prohibitively difficult is:
· a duopoly.
· a monopoly.
· an oligopoly.
· perfect competition.
Which of the following is true in a perfectly competitive market?
· One unit of a good or service cannot be differentiated from any other on any basis.
· Brand preferences exist but are very slight.
· Barriers to entry are relatively strong.
· Information is costly.
The assumptions of perfect competition imply that:
· individuals in the market accept the market price as given.
· individuals can influence the market price.
· the price will be a fair price.
· the price will be low.
Which of the following is true?
· Price and average revenue are never equal.
· Price and marginal revenue are seldom equal under conditions of perfect competition.
· When a firm is operating under perfectly competitive market conditions, price and marginal cost will always be equal if the firm is maximizing profits.
· Average revenue equals price times quantity.
If a firm possesses monopoly power, it means that:
· the firm can set its own price based on its output decision.
· the firm's demand curve is always elastic.
· the firm is necessarily a monopoly.
· A and C are true.
· is the slope of the average revenue curve.
· equals the market price in perfect competition.
· is the change in quantity divided by the change in total revenue.
· is the price divided by the changes in quantity.
A natural monopoly exists whenever a single firm:
· is owned and operated by the federal or local government.
· is investor owned but granted the exclusive right by the government to operate in a market.
· confronts economies of scale over the entire range of production that is relevant to its market.
· has gained control over a strategic input of an important production process.
Which of the following is (are) true?
· A monopoly firm is a price taker.
· MR > P if the demand curve is downward sloping.
· MR = MC is a profit-maximizing rule for any firm.
· All of the above are true.
Perfect competition is important to study because it:
· is a theoretical extreme used for analysis.
· is a realistic model of a few key markets.
· is a realistic model of many different markets.
· avoids all real-world problems and complexities.
· Perfectly Competitive Firm in the Short Run
(Exhibit: A Perfectly Competitive Firm in the Short Run) The firm's total cost of producing its most profitable level of output is:
(Exhibit: A Perfectly Competitive Firm in the Short Run) The firm's total revenue from the sale of its most profitable level of output is:
(Exhibit: A Perfectly Competitive Firm in the Short Run) The firm's total economic profit at its most profitable level of output is:
(Exhibit: A Perfectly Competitive Firm in the Short Run) The firm will shut down in the short run if the price falls below:
· Computing Monopoly Profit
(Exhibit: Computing Monopoly Profit) The profit-maximizing price is _______ and will generate total economic profit of _______ .
· P2; EF
· P3; the rectangle P1P2FG
· P3; the rectangle P2P3EF
· P2; EF
(Exhibit: Computing Monopoly Profit) In order to obtain maximum profits, the monopoly should produce the output determined by point _______ .
(Exhibit: Computing Monopoly Profit) Total economic profit at the profit-maximizing level of output is:
· EF times Q.
· price minus average total cost times the quantity where MR = MC.
· described by B and C.