MULTIPLE CHOICE. Choose The One Alternative That Best Completes The Statement or Answers The Question
MULTIPLE CHOICE. Choose The One Alternative That Best Completes The Statement or Answers The Question
MULTIPLE CHOICE. Choose The One Alternative That Best Completes The Statement or Answers The Question
Econ 1013 F 2013
Name 2nd MT
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1) Which of the following is NOT a determinant of market structure? 1)
A) The number of sellers.
B) The capital-labour ratio of the firm.
C) The ease of entering the industry.
D) The market share of the sellers.
E) The nature of the product.
Consider the following short-run cost curves for a perfectly competitive firm.
FIGURE 9-1
2) Refer to Figure 9-1. The diagram shows cost curves for a perfectly competitive firm. If the 2)
market price is P3, the profit-maximizing firm in the short run should
A) produce output A.
B) produce output F or shut down, as it doesnʹt matter which.
C) produce output D.
D) shut down because more profits could be earned in another industry.
E) produce output F.
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Consider the following short-run cost curves for a perfectly competitive firm.
FIGURE 9-2
3) Refer to Figure 9-2. If the current market price is $6, the profit-maximizing output for this 3)
firm is
A) 100 units. B) 200 units. C) 300 units. D) 400 units. E) 500 units.
4) Refer to Figure 9-2. If the market price is $2, the firm will 4)
A) shut down and suffer a loss equal to its fixed cost.
B) produce 200 units and make a loss equal to its total fixed cost.
C) produce 300 units and make a loss equal to total variable cost.
D) continue operating in the short run and suffer a loss that is less than its fixed cost.
E) shut down and make zero profit.
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Consider the following cost curves for two perfectly competitive firms, A and B.
FIGURE 9-4
5) Refer to Figure 9-4. Firms A and B are in the same industry. Choose the statement that best 5)
describes the situation facing the two firms.
A) Firm A is suffering losses and will be shut down immediately; Firm B will be shut down
if the price falls any further.
B) Firm A is making losses but remains producing as long as price falls no further; Firm B is
producing at lower cost and is earning economic profits.
C) Firm A and Firm B are both suffering economic losses and will soon exit the industry.
D) Firm A and Firm B are both earning positive economic profits; new firms will likely enter
the industry.
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Consider the following short-run cost curves for a perfectly competitive firm.
FIGURE 9-2
6) Refer to Figure 9-2. The short-run supply curve for this perfectly competitive firm is its 6)
A) ATC curve at and above $3.
B) marginal cost curve at and above $1.50.
C) AVC curve at and above $1.50.
D) marginal cost curve at and above $3.
E) entire marginal cost curve.
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Suppose a monopolist faces the demand curve and cost curves shown below.
FIGURE 10-4
7) Refer to Figure 10-4. A profit-maximizing single-price monopolist would produce the 7)
quantity
A) Q1. B) Q4. C) Q3. D) Q2. E) Q0.
8) One similarity between a monopoly and a firm in perfect competition is that both 8)
A) are profit maximizers.
B) face the entire market demand curve.
C) have market power.
D) set their selling price.
E) choose their output independent of demand.
9) A monopolistic firm faces a downward-sloping demand curve because 9)
A) there are a large number of firms in the industry, all selling the same product.
B) the monopolistic firm can exploit economies of scale.
C) marginal revenue is negative throughout the feasible range of output.
D) the demand for its product is always inelastic.
E) the market price is affected by the amount sold by a monopolistic firm.
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The diagram below shows a pharmaceutical firmʹs demand curve and marginal cost curve for a new heart medication for which the
firm holds a 20-year patent on its production.
FIGURE 10-5
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The diagram below shows selected cost and revenue curves for a firm in a monopolistically competitive industry.
FIGURE 11-1
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FIGURE 11-2
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The diagram below shows demand and cost curves for a monopolistically competitive firm.
FIGURE 11-3
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FIGURE 11-2
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23) If a competing firm is able to overcome an entry barrier of a monopolized industry, the 23)
demand curve of the single firm already in the industry will
A) shift to the right.
B) shift to the left and become more elastic.
C) shift to the left.
D) become less elastic.
E) remain the same in spite of the entry of the other firm.
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Consider the following short-run cost curves for a perfectly competitive firm.
FIGURE 9-1
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29) Under perfect competition, the demand curve facing an individual firm is 29)
A) downward sloping.
B) upward sloping.
C) a rectangular hyperbola.
D) infinitely price elastic.
E) the same as the industryʹs demand curve.
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Answer Key
Testname: ECON 1013 2ND MT F 2013
1) B
2) E
3) D
4) D
5) B
6) B
7) E
8) A
9) E
10) E
11) A
12) C
13) B
14) C
15) B
16) A
17) C
18) D
19) D
20) E
21) B
22) B
23) B
24) A
25) E
26) D
27) D
28) C
29) D
30) A
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