Question 1

Economic profits are not possible in the short run in:

Accepted Answer

A)   purely competitive markets.
B)   monopolistically competitive markets.
C)   purely competitive and monopolistically competitive markets.
D)   none of the above.

Question 2

Financial, legal, technical, or other factors that prevent firms from entering a market to compete are called _______________________.

Accepted Answer

The answer of Financial, legal, technical, or other factors that...

Question 3

A seller that evaluates the costs and revenues of operating at different points on its downward-sloping demand curve in order to find the point where profit is maximized is a:

Accepted Answer

A)   price taker.
B)   follower firm.
C)   price searcher.
D)   pure competitor.

Question 4

In the past, when a particular small bank in the Midwest changed its prime interest rate, other banks in the United States changed their prime rates as well. This is an example of:

Accepted Answer

A)   price leadership.
B)   cost-plus pricing.
C)   marginal cost pricing.
D)   the kinked demand curve model.

Question 5

-The firm represented in this figure is:

Accepted Answer

A)   a monopolist.
B)   an oligopolist.
C)   a pure competitor.
D)   a monopolistic competitor.

Question 6

The main factor allowing excess profit over the long run in certain market structures is:

Accepted Answer

A)   price taking.
B)   barriers to entry.
C)   product differentiation.
D)   no mutual interdependence.

Question 7

Mutual interdependence, where firms respond to the actions of other firms in their market, occurs in:

Accepted Answer

A)   oligopolistic markets.
B)   monopolized markets.
C)   monopolistically competitive markets.
D)   all of the above.

Question 8

Why is a monopolistic competitor's demand curve downward sloping while a purecompetitor's is not?

Accepted Answer

A monopolistic competitor is s...

Question 9

In Application 13.2, "The Farmer's Almanac: It's a Necessity,"

Accepted Answer

A)   it was pointed out that the almanac gives farmers a sure way to predict where corn and wheat prices are headed.
B)   farmers' decisions about selling their crops are complicated by weather, family necessities, foreign crops, and other factors.
C)   supply and demand fluctuate less in the market for corn than for any other crop.
D)   all of the above.

Question 10

Which of the following statements is true?

Accepted Answer

A)   Nonprice competition can increase businesses' costs and can lead to higher prices for buyers.
B)   Business firms are attracted to nonprice competition because it provides a way to increase product demand.
C)   By highlighting differences and playing down similarities, nonprice competition helps an individual firm make its product appear unique.
D)   All of the above.

Question 11

-The firm in this figure is operating in the long run. According to this figure, this firm is earning:

Accepted Answer

A)   a loss, and will go out of business.
B)   excess profit, and is operating less efficiently than it would if it were a pure competitor.
C)   a normal profit, and is operating as efficiently as it would if it were a pure competitor.
D)   a normal profit, and is operating less efficiently than it would if it were a pure competitor.

Question 12

If, over the long run, an increase in the number of sellers in a purely competitive market causes a decrease in price, you would expect that, before the decrease in price, sellers in the market were:

Accepted Answer

A)   losing money.
B)   just breaking even.
C)   earning excess profits.
D)   just earning enough to cover their normal profits.

Question 13

In pure competition, the market demand curve for a product:

Accepted Answer

A)   and the demand curve for an individual seller's product are both horizontal.
B)   and the demand curve for an individual seller's product are both downward sloping.
C)   is downward sloping, but the demand curve for an individual seller's product is horizontal.
D)   is horizontal, but the demand curve for an individual seller's product is downward sloping.

Question 14

What are some different ways a firm can engage in nonprice competition?

Accepted Answer

Firms can compete over packagi...

Question 15

The market structure characterized by many small firms, each attempting to differentiate its product through nonprice methods, is:

Accepted Answer

A)   oligopoly.
B)   monopoly.
C)   pure competition.
D)   monopolistic competition.

Question 16

A seller in monopolistic competition would:

Accepted Answer

A)   lose all of its buyers if it raised its price.
B)   lose some, but not all, of its buyers if it raised its price.
C)   never lower its price because it can sell as much as it wishes at the current price.
D)   never lower its price because once the price is lowered it can never be raised again.

Question 17

In the metropolitan Detroit area, there are large numbers of Chinese restaurants offering somewhat different tasting foods and portion sizes. This market is:

Accepted Answer

A)   purely competitive.
B)   monopolistically competitive.
C)   an example of oligopoly.
D)   price-taker market.

Question 18

Which of the following statements about a monopolistically competitive seller is FALSE?

Accepted Answer

A)   The seller produces a differentiated product while a pure competitor does not.
B)   The seller earns economic profit over the long run while a pure competitor does not.
C)   The seller faces a downward-sloping demand curve for its product while a pure competitor does not.
D)   The seller operates at greater than minimum average total cost in the long run while a pure competitor does not.

Question 19

As a seller in pure competition offers more of its product for sale:

Accepted Answer

A)   both the price of its product and its marginal revenue fall.
B)   both the price of its product and its marginal revenue remain unchanged.
C)   the price of its product falls, but its marginal revenue remains unchanged.
D)   the price of its product remains unchanged, but its marginal revenue falls.

Question 20

If a purely competitive firm's demand curve lies below its average total cost curve, the firm is:

Accepted Answer

A)   breaking even.
B)   sustaining a loss.
C)   operating in the long run.
D)   earning an economic profit.

Exam 13: Competition and Market Structures

Economic profits are not possible in the short run in:

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The market structure characterized by many small firms, each attempting to differentiate its product through nonprice methods, is:

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In the past, when a particular small bank in the Midwest changed its prime interest rate, other banks in the United States changed their prime rates as well. This is an example of:

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The main factor allowing excess profit over the long run in certain market structures is:

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In Application 13.2, "The Farmer's Almanac: It's a Necessity,"

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A seller in monopolistic competition would:

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Which of the following statements is true?

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In pure competition, the market demand curve for a product:

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-The firm represented in this figure is:

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In the metropolitan Detroit area, there are large numbers of Chinese restaurants offering somewhat different tasting foods and portion sizes. This market is:

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Financial, legal, technical, or other factors that prevent firms from entering a market to compete are called _______________________.

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If, over the long run, an increase in the number of sellers in a purely competitive market causes a decrease in price, you would expect that, before the decrease in price, sellers in the market were:

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What are some different ways a firm can engage in nonprice competition?

Correct AnswerverifiedFirms can compete over packagi...View AnswerShow Answer

A seller that evaluates the costs and revenues of operating at different points on its downward-sloping demand curve in order to find the point where profit is maximized is a:

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-The firm in this figure is operating in the long run. According to this figure, this firm is earning:

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Mutual interdependence, where firms respond to the actions of other firms in their market, occurs in:

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Which of the following statements about a monopolistically competitive seller is FALSE?

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If a purely competitive firm's demand curve lies below its average total cost curve, the firm is:

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As a seller in pure competition offers more of its product for sale:

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Why is a monopolistic competitor's demand curve downward sloping while a purecompetitor's is not?

Correct AnswerverifiedA monopolistic competitor is s...View AnswerShow Answer

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Firms can compete over packagi...
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A monopolistic competitor is s...
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