BE 301 QUESTIONS WITH VERIFIED ANSWERS
In the long-run, which of the following outcomes is most likely for a firm? - Answers - .
Zero economic profits but positive accounting profits.
You were selling your product at the profit-maximizing price before new entry decreased
your demand elasticity from -4 to -5 (made demand more elastic). Your marginal cost is
$12. To continue to maximize profits you should change your price from
_____________ to _______________. - Answers - $16 to $15
If the market for eggs is perfectly competitive, then we can conclude that the demand
curve for eggs of individual sellers is _____________, and the market demand curve for
eggs is ___________. - Answers - . perfectly elastic; downward sloping
A monopoly has to decide on both the price and the quantity of products it will sell, while
a firm in a competitive market decides only the price. - Answers - False
A market for a particular good tends to be monopolistic if - Answers - The good has very
few substitutes.
6. If economic profits exist in perfect competition, in the long run firms will enter because
of easy entry, the _______ curve will shift to the right, and _______ will _____ -
Answers - . Supply; output; increase.
A monopoly is likely to _______ and _______ than if the same product or service was
being produced and sold in a highly competitive market. - Answers - Produce less;
Charge more
If the cost of oil and other sources of energy decrease substantially, then the supply
curves of goods that require energy to produce and transport will - Answers - Shift to the
right causing prices to decline.
According to the model of perfect competition, a firm in a perfectly competitive market
that earns zero economic profit will exit the industry in order to take advantage of more
profitable opportunities. - Answers - False
Assume that a perfectly competitive market is in equilibrium and the typical firm in the
industry is earning zero economic profits. If an advance in production technology
suddenly reduces the marginal costs of production, then we should expect profits to
increase and new firms to enter the market and cause the price to decline. - Answers -
True
In the long-run, which of the following outcomes is most likely for a firm? - Answers - .
Zero economic profits but positive accounting profits.
You were selling your product at the profit-maximizing price before new entry decreased
your demand elasticity from -4 to -5 (made demand more elastic). Your marginal cost is
$12. To continue to maximize profits you should change your price from
_____________ to _______________. - Answers - $16 to $15
If the market for eggs is perfectly competitive, then we can conclude that the demand
curve for eggs of individual sellers is _____________, and the market demand curve for
eggs is ___________. - Answers - . perfectly elastic; downward sloping
A monopoly has to decide on both the price and the quantity of products it will sell, while
a firm in a competitive market decides only the price. - Answers - False
A market for a particular good tends to be monopolistic if - Answers - The good has very
few substitutes.
6. If economic profits exist in perfect competition, in the long run firms will enter because
of easy entry, the _______ curve will shift to the right, and _______ will _____ -
Answers - . Supply; output; increase.
A monopoly is likely to _______ and _______ than if the same product or service was
being produced and sold in a highly competitive market. - Answers - Produce less;
Charge more
If the cost of oil and other sources of energy decrease substantially, then the supply
curves of goods that require energy to produce and transport will - Answers - Shift to the
right causing prices to decline.
According to the model of perfect competition, a firm in a perfectly competitive market
that earns zero economic profit will exit the industry in order to take advantage of more
profitable opportunities. - Answers - False
Assume that a perfectly competitive market is in equilibrium and the typical firm in the
industry is earning zero economic profits. If an advance in production technology
suddenly reduces the marginal costs of production, then we should expect profits to
increase and new firms to enter the market and cause the price to decline. - Answers -
True
