ECON 201 Week 6 Quiz

ECON 201 Week 6 Quiz | american-public-university-system

Quiz Submissions - Week 6 Quiz (Chapter 9 & 10)

Question 1                         

Perfect competition is characterized by:

·         rivalry in advertising.

·         fierce quality competition.

·         the inability of any one firm to influence price.

·         widely recognized brands.

Question 2                         

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.

Question 3                         

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.

Question 4                         

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.

Question 5                         

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.

Question 6                         

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.

Question 7                         

Marginal revenue:

·         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.

Question 8                         

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.

Question 9                         

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.

Question 10                      

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

Question 11                      

(Exhibit: A Perfectly Competitive Firm in the Short Run) The firm's total cost of producing its most profitable level of output is:

·         BS.

·         DK.

·         0FKD.

·         0ESB.

Question 12                      

(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:

·         0GLD.

·         0GHB.

·         BH.

·         DL.

Question 13                       

(Exhibit: A Perfectly Competitive Firm in the Short Run) The firm's total economic profit at its most profitable level of output is:

·         0GHB.

·         EFJS.

·         EGHS.

·         FGLK.

Question 14                      

 (Exhibit: A Perfectly Competitive Firm in the Short Run) The firm will shut down in the short run if the price falls below:

·         0G.

·         0F.

·         0E.

·         0P.

·         Computing Monopoly Profit

Question 15                      

 (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

Question 16                      

(Exhibit: Computing Monopoly Profit) In order to obtain maximum profits, the monopoly should produce the output determined by point _______ .

·         G

·         N

·         H

·         K

Question 17                      

(Exhibit: Computing Monopoly Profit) Total economic profit at the profit-maximizing level of output is:

·         EF.

·         EF times Q.

·         price minus average total cost times the quantity where MR = MC.

·         described by B and C.

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