1.A sudden increase in the market demand in a competitive industry leads to

a.Economic losses in the short-run and zero economic profits in the long-run

b.Positive economicprofits in the short-run and zero economic profits in the long-run

c.New firms being attracted to the industry

d.Both B&C

2.A supply curve slopes upwards because

a.the higher the price the higher the quantity that the sellers are willing to supply

b.the higher the price the lower the quantity that the sellers are willing to supply

c.the quantity supplied in insensitive to price

d.an increase in price brings the quantity sold down to zero

3.Changes in the price of a product can cause

a.A movement along the demand curve

b.A shift of the demand curve

c.A shift of the supply curve

d.All of the above

4.Shortages or excessdemand of a product exerts __________pressure on prices

a.Zero

b.Downward

c.No

d.Upward

5.In the IO perspective it is important to enter an industry with

a.Low supplier power

b.Low threat from substitutes

c.Low levels of rivalry between firms

d.All of the above

6.If a firm in a perfectly competitive industry is experiencing higher than normal returns (i.e., making economic profits),

a.Some firms will enter the industry and price will fall

b.Some firms will leave the industry and price will fall

c.Some firms will enter the industry and price will rise

d.Some firms will leave the industry and price will rise

7.The resource based perspective indicates that firms exhibit different performances within the same industry because

a.Some firms sell goods that have a more elastic demand

b.Some firms have organizational structures that can be duplicated

c.Some firms sell goods that have a perfectly elastic demand

d.Some firms have better resources than others

8.If the price of flour increases, we would most likely expect, in the short run, for

a.Demand for bread to shift to the right and supply to stay the same resulting in an increase in the price of bread

b.Demand for bread to shift to the left and supply to stay the same resulting in a decrease in the price of bread

c.Demand for bread to stay the same and supply to shift to the left resulting in an increase in the price of bread

d.Demand for bread to stay the same and supply to shift to the right resulting in a decrease in the price of bread

9.In the short run, an increase in consumer income will most likely result in

a.A movement along the demand curve for chocolate

b.A shift in the supply curve for chocolate

c.A shift in the demand curve for chocolate

d.A shift in both the demand and supply curves for chocolate

10.Firms in competitive markets have _________ and firms in monopoly markets have ________

a.Flat demand curves; Flat demand curves

b.Downward sloping demand curves; Downward sloping demand curves

c.Flat demand curves; Downward sloping demand curves

d.Downward sloping demand curves; Flat demand curves

11.A monopolistically competitive market has:

a.Many firms that produce identical products

b.A few firms that produce goods that are close substitutes

c.A single firm that produces a unique good with no close substitutes

d.Many firms that produce goods that are close substitutes

e.None of the above