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Quiz 6

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Question 1 (1 point)
If P = $8 and MC = $5 + 0. 2Q, the competitive firm's profit-maximizing level of output is:
  1. 5
  2. 0.2
  3. 8
  4. 15
Question 2 (1 point)
In the long run, firms will offer supply at the point where P = MR = MC if:
  1. MC is rising
  2. MC is falling
  3. MC is constant
  4. P > AC
Question 3 (1 point)
Graphically, competitive market supply is measured by the:
  1. vertical difference of competitor demand curves
  2. vertical sum of competitor demand curves
  3. horizontal difference of competitor MC curves
  4. horizontal sum of competitor MC curves
Question 4 (1 point)
For a firm in perfectly competitive market equilibrium:
  1. MR < AR
  2. P > AC
  3. P > MR
  4. P = MC
Question 5 (1 point)
Competition tends to be light when:
  1. potential entrants are few
  2. capital requirements are nominal
  3. standards for skilled labor and other inputs are modest
  4. regulatory barriers are modest
Question 6 (1 point)
In a perfectly competitive market:
  1. sellers and buyers have perfect information
  2. entry and exit are difficult
  3. sellers produce similar, but not identical products
  4. each seller can affect the market price by changing output
Question 7 (1 point)
The firm demand curve in a competitive market is:
  1. upward sloping
  2. downward sloping
  3. horizontal
  4. vertical
Question 8 (1 point)
A firm will earn normal profits when price:
  1. equals average total cost
  2. equals average variable cost
  3. equals marginal cost
  4. exceeds minimum average total cost
Question 9 (1 point)
In the short run, a perfectly competitive firm will shut down and produce nothing if:
  1. excess profits equal zero
  2. total cost exceeds total revenue
  3. total variable cost exceeds total revenue
  4. the market price falls below the minimum average total cost
Question 10 (1 point)
Perfect competition always prevails in markets with:
  1. few buyers and sellers
  2. many buyers and sellers
  3. an even balance of power between sellers and buyers
  4. a single buyer
Question 11 (1 point)
In perfectly competitive markets, profits are maximized when:
  1. MC = AC
  2. P > AC
  3. MR = MC
  4. MR = P
Question 12 (1 point)
Economic profit:
  1. cannot be negative
  2. can exceed the risk-adjusted normal rate of return
  3. is less than the risk-adjusted normal rate of return
  4. does not reflect the cost of owner-supplied inputs
Question 13 (1 point)
Market structure is not typically characterized on the basis of:
  1. the number and size distribution of active buyers and sellers
  2. potential entrants
  3. exit barriers
  4. government regulation
Question 14 (1 point)
Effects of market structure are not typically measured in terms of:
  1. the prices paid by consumers
  2. declining consumer popularity
  3. employment opportunities
  4. pace of product innovation
Question 15 (1 point)
Price and product quality competition tends to be vigorous when:
  1. entry barriers are low
  2. potential entrants are few
  3. product quality information is scarce
  4. the number of active sellers is few
Question 16 (1 point)
Industry cartels never:
  1. give rise to price supports
  2. spur entry when barriers to entry are low
  3. spur exit when exit barriers are low
  4. prompt inefficiency and waste
Question 17 (1 point)
The rate of return necessary to attract and retain capital investment is called:
  1. ROE
  2. economic losses
  3. normal profit
  4. economic profit
Question 18 (1 point)
In competitive market equilibrium, the firm's:
  1. MR = MC and P > AR
  2. MR = MC and P > AC
  3. AR = AC and MR > MC
  4. P = MR = AR = AC = MC
Question 19 (1 point)
At the point of minimum AVC:
  1. MC is falling
  2. MC is constant
  3. MC is rising
  4. MC = AVC
Question 20 (1 point)
So long as P > AVC, the competitive firm's short-run supply curve is equal to:
  1. AVC
  2. P
  3. MC
  4. none of these
Copyright 2008, by the Contributing Authors. Cite/attribute Resource . admin. (2009, January 27). Quiz 6. Retrieved January 07, 2011, from Free Online Course Materials — USU OpenCourseWare Web site: http://ocw.usu.edu/economics/managerial-economics/quiz6.htm. This work is licensed under a Creative Commons License Creative Commons License