ECON 300 FINAL EXAM QUESTIONS
WITH CORRECT ANSWERS
Perfect |competition |is |characterized |by |- |CORRECT |ANSWER✔✔-the |inability |of |any |one |firm |
to |influence |price
The |slope |of |the |total |cost |curve |is |- |CORRECT |ANSWER✔✔-marginal |cost
Marginal |revenue |is |a |firm's |- |CORRECT |ANSWER✔✔-ratio |of |the |change |in |total |revenue |to |
the |change |in |output.
If |a |perfectly |competitive |firm |is |producing |a |quantity |at |which |price |equals |marginal |cost,
profit: |- |CORRECT |ANSWER✔✔-is |maximized
If |the |price |is |consistently |below |the |average |variable |cost, |then |in |the |short |run |a |perfectly
competitive |firm |should: |- |CORRECT |ANSWER✔✔-shut |down
The |short-run |supply |curve |for |a |perfectly |competitive |firm |is: |- |CORRECT |ANSWER✔✔-the |
marginal |cost |curve |above |the |shut-down |price.
If |the |price |is |less |than |the |average |variable |cost |at |the |profit-maximizing |quantity |of |output
in |the |short |run, |a |perfectly |competitive |firm |will: |- |CORRECT |ANSWER✔✔-shut |down |
production.
, In |perfectly |competitive |long-run |equilibrium: |- |CORRECT |ANSWER✔✔-all |firms |produce |at |the
|minimum |point |of |their |average |total |cost |curves.
An |industry |with |a |single |producer |that |sells |a |single |product |with |no |substitutes |is |a: |- |
CORRECT |ANSWER✔✔-monopoly
In |contrast |with |perfect |competition, |a |monopolist: |- |CORRECT |ANSWER✔✔-may |have |
economic |profits |in |the |long |run.
Compared |to |a |perfectly |competitive |market, |a |monopolist |will |produce |________ |and
charge |a |________ |price. |- |CORRECT |ANSWER✔✔-less; |higher
Most |electric, |gas, |and |water |companies |are |examples |of |- |CORRECT |ANSWER✔✔-natural |
monopolies.
You |own |a |lemonade |stand |in |a |competitive |lemonade |market, |and |as |such, |you |are |a |
pricetaking
firm. |Which |of |the |following |events |would |most |likely |increase |your |market |power? |- |
CORRECT |ANSWER✔✔-You |own |exclusive |rights |to |harvest |lemons |from |all |domestic |citrus |
orchards.
A |natural |monopoly |exists |whenever |a |single |firm: |- |CORRECT |ANSWER✔✔-has |economies |of |
scale |over |the |entire |range |of |production |that |is |relevant |to |its |market.
Situations |in |which |the |more |users |of |a |product |there |are, |the |more |useful |the |product
becomes |are: |- |CORRECT |ANSWER✔✔-network |effects
The |demand |curve |for |a |monopoly |is: |- |CORRECT |ANSWER✔✔-above |the |marginal |revenue |
curve.
WITH CORRECT ANSWERS
Perfect |competition |is |characterized |by |- |CORRECT |ANSWER✔✔-the |inability |of |any |one |firm |
to |influence |price
The |slope |of |the |total |cost |curve |is |- |CORRECT |ANSWER✔✔-marginal |cost
Marginal |revenue |is |a |firm's |- |CORRECT |ANSWER✔✔-ratio |of |the |change |in |total |revenue |to |
the |change |in |output.
If |a |perfectly |competitive |firm |is |producing |a |quantity |at |which |price |equals |marginal |cost,
profit: |- |CORRECT |ANSWER✔✔-is |maximized
If |the |price |is |consistently |below |the |average |variable |cost, |then |in |the |short |run |a |perfectly
competitive |firm |should: |- |CORRECT |ANSWER✔✔-shut |down
The |short-run |supply |curve |for |a |perfectly |competitive |firm |is: |- |CORRECT |ANSWER✔✔-the |
marginal |cost |curve |above |the |shut-down |price.
If |the |price |is |less |than |the |average |variable |cost |at |the |profit-maximizing |quantity |of |output
in |the |short |run, |a |perfectly |competitive |firm |will: |- |CORRECT |ANSWER✔✔-shut |down |
production.
, In |perfectly |competitive |long-run |equilibrium: |- |CORRECT |ANSWER✔✔-all |firms |produce |at |the
|minimum |point |of |their |average |total |cost |curves.
An |industry |with |a |single |producer |that |sells |a |single |product |with |no |substitutes |is |a: |- |
CORRECT |ANSWER✔✔-monopoly
In |contrast |with |perfect |competition, |a |monopolist: |- |CORRECT |ANSWER✔✔-may |have |
economic |profits |in |the |long |run.
Compared |to |a |perfectly |competitive |market, |a |monopolist |will |produce |________ |and
charge |a |________ |price. |- |CORRECT |ANSWER✔✔-less; |higher
Most |electric, |gas, |and |water |companies |are |examples |of |- |CORRECT |ANSWER✔✔-natural |
monopolies.
You |own |a |lemonade |stand |in |a |competitive |lemonade |market, |and |as |such, |you |are |a |
pricetaking
firm. |Which |of |the |following |events |would |most |likely |increase |your |market |power? |- |
CORRECT |ANSWER✔✔-You |own |exclusive |rights |to |harvest |lemons |from |all |domestic |citrus |
orchards.
A |natural |monopoly |exists |whenever |a |single |firm: |- |CORRECT |ANSWER✔✔-has |economies |of |
scale |over |the |entire |range |of |production |that |is |relevant |to |its |market.
Situations |in |which |the |more |users |of |a |product |there |are, |the |more |useful |the |product
becomes |are: |- |CORRECT |ANSWER✔✔-network |effects
The |demand |curve |for |a |monopoly |is: |- |CORRECT |ANSWER✔✔-above |the |marginal |revenue |
curve.
