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:

Question 2 (1 point)

In the long run, firms will offer supply at the point where P = MR = MC if:

MC is rising
MC is falling
MC is constant
P > AC

Question 3 (1 point)

Graphically, competitive market supply is measured by the:

vertical difference of competitor demand curves
vertical sum of competitor demand curves
horizontal difference of competitor MC curves
horizontal sum of competitor MC curves

Question 4 (1 point)

For a firm in perfectly competitive market equilibrium:

MR < AR
P > AC
P > MR
P = MC

Question 5 (1 point)

Competition tends to be light when:

potential entrants are few
capital requirements are nominal
standards for skilled labor and other inputs are modest
regulatory barriers are modest

Question 6 (1 point)

In a perfectly competitive market:

sellers and buyers have perfect information
entry and exit are difficult
sellers produce similar, but not identical products
each seller can affect the market price by changing output

Question 7 (1 point)

The firm demand curve in a competitive market is:

upward sloping
downward sloping
horizontal
vertical

Question 8 (1 point)

A firm will earn normal profits when price:

equals average total cost
equals average variable cost
equals marginal cost
exceeds minimum average total cost

Question 9 (1 point)

In the short run, a perfectly competitive firm will shut down and produce nothing if:

excess profits equal zero
total cost exceeds total revenue
total variable cost exceeds total revenue
the market price falls below the minimum average total cost

Question 10 (1 point)

Perfect competition always prevails in markets with:

few buyers and sellers
many buyers and sellers
an even balance of power between sellers and buyers
a single buyer

Question 11 (1 point)

In perfectly competitive markets, profits are maximized when:

MC = AC
P > AC
MR = MC
MR = P

Question 12 (1 point)

Economic profit:

cannot be negative
can exceed the risk-adjusted normal rate of return
is less than the risk-adjusted normal rate of return
does not reflect the cost of owner-supplied inputs

Question 13 (1 point)

Market structure is not typically characterized on the basis of:

the number and size distribution of active buyers and sellers
potential entrants
exit barriers
government regulation

Question 14 (1 point)

Effects of market structure are not typically measured in terms of:

the prices paid by consumers
declining consumer popularity
employment opportunities
pace of product innovation

Question 15 (1 point)

Price and product quality competition tends to be vigorous when:

entry barriers are low
potential entrants are few
product quality information is scarce
the number of active sellers is few

Question 16 (1 point)

Industry cartels never:

give rise to price supports
spur entry when barriers to entry are low
spur exit when exit barriers are low
prompt inefficiency and waste

Question 17 (1 point)

The rate of return necessary to attract and retain capital investment is called:

ROE
economic losses
normal profit
economic profit

Question 18 (1 point)

In competitive market equilibrium, the firm's:

MR = MC and P > AR
MR = MC and P > AC
AR = AC and MR > MC
P = MR = AR = AC = MC

Question 19 (1 point)

At the point of minimum AVC:

MC is falling
MC is constant
MC is rising
MC = AVC

Question 20 (1 point)

So long as P > AVC, the competitive firm's short-run supply curve is equal to:

AVC
P
MC
none of these

Copyright 2008, by the Contributing Authors. Cite/attribute Resource. admin. (2009, January 27). Quiz 6. Retrieved November 23, 2009, 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.

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