ECON 208 Chapter 9 || WITH CORRECT SOLUTIONS!!
Which of the following is NOT a determinant of market structure? correct answers The
capital-labour ratio of the firm
The term "perfect competition" refers to correct answers a type of market structure
In economics, perfect competition refers to a market structure where correct answers each
firm has zero market power
A firm is said to have "market power" only when correct answers it has the ability to
influence the price of its product
The theory of perfect competition is built on several assumptions, including that correct
answers any firm can easily enter or leave the industry
An example of a product that could most closely satisfy the homogeneous product
assumption
of perfect competition is correct answers barley
If a firm in a perfectly competitive market were to raise its price, its correct answers revenue
would fall dramatically
Given the usual assumptions about perfect competition, a perfectly competitive firm correct
answers can sell as much of its product as it wishes at the market price
A firm in a perfectly competitive market correct answers has no power to influence the
market price
In order to decide the appropriate output to produce, the manager of a perfectly competitive
firm needs to know correct answers the prevailing market price for the firm's output
When economists say that a firm is a "price taker" they mean that correct answers the firm
can alter its rate of production and sales without affecting the market price of the
product
Suppose XYZ Corp. is a profit-maximizing firm that is producing and selling 1 billion
disposable wooden chopsticks per month at a price of $0.04 per unit. Further, suppose market
demand for this product is 1.5 billion units per month. What can we conclude about market
structure in this case? correct answers This is not a perfectly competitive market because
XYZ Corp is large relative to the size of
the industry
Why will a perfectly competitive firm not sell its product below the prevailing market price?
correct answers It can sell all it wishes at the market price
The demand curve facing a perfectly competitive firm correct answers is almost perfectly
elastic at the market price
, If the demand curve faced by a firm is downward sloping, we can reasonably believe that the
correct answers firm can influence the price of the product it sells
The market demand curve for a perfectly competitive industry is typically correct answers
downward sloping
Under perfect competition, the demand curve facing an individual firm is correct answers
infinitely price elastic
The perfectly elastic demand curve faced by a competitive firm means that correct answers
the product's price will be unaffected by any realistic change in the firm's level of output
The demand curve facing a perfectly competitive firm depends on correct answers market
demand and the market supply curve
When economists say that a perfectly competitive firm is a "quantity adjuster," they mean
that correct answers it adjusts its output in response to changes in prices
When a firm is referred to as a "price taker," correct answers the firm can alter its rate of
production and sales without affecting the market price of the
product
Total revenue (TR) for an individual firm in a perfectly competitive market equals correct
answers p × q
Average revenue (AR) for an individual firm in a perfectly competitive market equals correct
answers (p × q)/q
For any firm operating in any market structure, marginal revenue is defined as correct
answers the change in total revenue resulting from the sale of an additional unit of the
product
Any firm's average revenue is defined as correct answers total revenue divided by the number
of units sold
A perfectly competitive firm's demand curve coincides with correct answers both its marginal
and average-revenue curves
A perfectly competitive firm's demand curve correct answers is a horizontal line where P =
AR = MR
For any firm operating in any market structure, marginal revenue (MR) equals correct
answers △(p × q)/△q
In the short run, the profit-maximizing behaviour for a price-taking firm requires it to operate
where correct answers P = MC, given that P is greater than or equal to AVC
For a given market price, a competitive firm's total-revenue curve correct answers is a
positively sloped straight line, starting from the origin
Which of the following is NOT a determinant of market structure? correct answers The
capital-labour ratio of the firm
The term "perfect competition" refers to correct answers a type of market structure
In economics, perfect competition refers to a market structure where correct answers each
firm has zero market power
A firm is said to have "market power" only when correct answers it has the ability to
influence the price of its product
The theory of perfect competition is built on several assumptions, including that correct
answers any firm can easily enter or leave the industry
An example of a product that could most closely satisfy the homogeneous product
assumption
of perfect competition is correct answers barley
If a firm in a perfectly competitive market were to raise its price, its correct answers revenue
would fall dramatically
Given the usual assumptions about perfect competition, a perfectly competitive firm correct
answers can sell as much of its product as it wishes at the market price
A firm in a perfectly competitive market correct answers has no power to influence the
market price
In order to decide the appropriate output to produce, the manager of a perfectly competitive
firm needs to know correct answers the prevailing market price for the firm's output
When economists say that a firm is a "price taker" they mean that correct answers the firm
can alter its rate of production and sales without affecting the market price of the
product
Suppose XYZ Corp. is a profit-maximizing firm that is producing and selling 1 billion
disposable wooden chopsticks per month at a price of $0.04 per unit. Further, suppose market
demand for this product is 1.5 billion units per month. What can we conclude about market
structure in this case? correct answers This is not a perfectly competitive market because
XYZ Corp is large relative to the size of
the industry
Why will a perfectly competitive firm not sell its product below the prevailing market price?
correct answers It can sell all it wishes at the market price
The demand curve facing a perfectly competitive firm correct answers is almost perfectly
elastic at the market price
, If the demand curve faced by a firm is downward sloping, we can reasonably believe that the
correct answers firm can influence the price of the product it sells
The market demand curve for a perfectly competitive industry is typically correct answers
downward sloping
Under perfect competition, the demand curve facing an individual firm is correct answers
infinitely price elastic
The perfectly elastic demand curve faced by a competitive firm means that correct answers
the product's price will be unaffected by any realistic change in the firm's level of output
The demand curve facing a perfectly competitive firm depends on correct answers market
demand and the market supply curve
When economists say that a perfectly competitive firm is a "quantity adjuster," they mean
that correct answers it adjusts its output in response to changes in prices
When a firm is referred to as a "price taker," correct answers the firm can alter its rate of
production and sales without affecting the market price of the
product
Total revenue (TR) for an individual firm in a perfectly competitive market equals correct
answers p × q
Average revenue (AR) for an individual firm in a perfectly competitive market equals correct
answers (p × q)/q
For any firm operating in any market structure, marginal revenue is defined as correct
answers the change in total revenue resulting from the sale of an additional unit of the
product
Any firm's average revenue is defined as correct answers total revenue divided by the number
of units sold
A perfectly competitive firm's demand curve coincides with correct answers both its marginal
and average-revenue curves
A perfectly competitive firm's demand curve correct answers is a horizontal line where P =
AR = MR
For any firm operating in any market structure, marginal revenue (MR) equals correct
answers △(p × q)/△q
In the short run, the profit-maximizing behaviour for a price-taking firm requires it to operate
where correct answers P = MC, given that P is greater than or equal to AVC
For a given market price, a competitive firm's total-revenue curve correct answers is a
positively sloped straight line, starting from the origin
