ECON 5370 EXAM 4 QUESTIONS AND CORRECT ANSWERS
100% VERIFIED
The main difference between perfect competition and monopolistic competition is:
a. The number of sellers in the market
b. The ease of entry and exit in the industry
c. The degree of information about market price
d. The degree of product differentiation
e. Whether it is the short run or the long run
D
Long distance telephone service has become a competitive market. The average cost
per call is $0.05 a minute, and it's declining. The likely reason for the declining price for
long distance service is:
a. Governmental pressure to lower the price
b. Reduced demand for long distance service
c. Entry into this industry pushes prices down
d. Lower price for a barrel of crude oil
e. Increased cost of providing long distance service
C
What is the profit maximization point for a firm in a purely competitive environment?
,a. The output where P = MC
b. The output where P < MC
c. The output where P > MC
d. The output where MR = MC
e. The output where AVC < P
A
All of the following are true for both competition and monopolistic competition in the
long run, except one of them. Which is it?
a. P = MC
b. P = AC
c. Economic profits become zero in the long-run
d. The barriers to entry and exit are relatively easy
e. None of the above is an exception
A
Which of the following statements is (are) true concerning a pure competition situation?
a. Its demand curve is represented by a vertical line.
b. Firms must sell at or below market price.
c. Marginal revenue is equal to price.
d. both b and c
,e. both a and b
D
In pure competition:
a. the optimal price-output solution occurs at the point where marginal revenue is equal
to price
b. a firm's demand curve is represented by a horizontal line
c. a firm is a price-taker since the products of every producer are perfect substitutes for
the products of every other producer
d. a and b only
e. a, b, and c
E
In the short-run for a purely competitive market, a manufacturer will stop production
when:
a. the total revenue is less than total costs
b. the contribution to fixed costs is zero or less
c. the price is greater than AVC
, d. operating at a loss
e. a and b
B
In the purely competitive case, marginal revenue (MR) is equal to:
a. cost
b. profit
c. price
d. total revenue
e. none of the above
C
In long-run equilibrium, all firms in a pure competition market situation operating under
a condition of certainty will have identical costs even though they may use different
production and operation techniques.
a. true
b. false
A
. If price exceeds average costs under pure competition, ____ firms will enter the
industry, supply will ____, and price will be driven ____.
100% VERIFIED
The main difference between perfect competition and monopolistic competition is:
a. The number of sellers in the market
b. The ease of entry and exit in the industry
c. The degree of information about market price
d. The degree of product differentiation
e. Whether it is the short run or the long run
D
Long distance telephone service has become a competitive market. The average cost
per call is $0.05 a minute, and it's declining. The likely reason for the declining price for
long distance service is:
a. Governmental pressure to lower the price
b. Reduced demand for long distance service
c. Entry into this industry pushes prices down
d. Lower price for a barrel of crude oil
e. Increased cost of providing long distance service
C
What is the profit maximization point for a firm in a purely competitive environment?
,a. The output where P = MC
b. The output where P < MC
c. The output where P > MC
d. The output where MR = MC
e. The output where AVC < P
A
All of the following are true for both competition and monopolistic competition in the
long run, except one of them. Which is it?
a. P = MC
b. P = AC
c. Economic profits become zero in the long-run
d. The barriers to entry and exit are relatively easy
e. None of the above is an exception
A
Which of the following statements is (are) true concerning a pure competition situation?
a. Its demand curve is represented by a vertical line.
b. Firms must sell at or below market price.
c. Marginal revenue is equal to price.
d. both b and c
,e. both a and b
D
In pure competition:
a. the optimal price-output solution occurs at the point where marginal revenue is equal
to price
b. a firm's demand curve is represented by a horizontal line
c. a firm is a price-taker since the products of every producer are perfect substitutes for
the products of every other producer
d. a and b only
e. a, b, and c
E
In the short-run for a purely competitive market, a manufacturer will stop production
when:
a. the total revenue is less than total costs
b. the contribution to fixed costs is zero or less
c. the price is greater than AVC
, d. operating at a loss
e. a and b
B
In the purely competitive case, marginal revenue (MR) is equal to:
a. cost
b. profit
c. price
d. total revenue
e. none of the above
C
In long-run equilibrium, all firms in a pure competition market situation operating under
a condition of certainty will have identical costs even though they may use different
production and operation techniques.
a. true
b. false
A
. If price exceeds average costs under pure competition, ____ firms will enter the
industry, supply will ____, and price will be driven ____.
