1.If the equilibrium price in a perfectly competitive market for walnuts is $4.99 per pound, Then an individual firm in this market can

Select one:

a.not sell additional walnuts unless the firm lowers its price.

b.should an additional pound of walnuts at $4.99.

c.not sell additional walnuts at any price because the market is at equilibrium.

d.sell more only by increasing its advertising budget.

2.According to the law of the diminishing returns, if other things remain same then beyond some point

select one:

a)Returns on stock and bonds diminish with higher security prices

b)output of any good increases as more of a variable input is used

c)marginal physical product of a factor of production diminishes as more of it is employed with a given quantity of other inputs

d)addition to total utility diminishes as more units of a good are consumed

3. In the perfect competition

Select one:

a)every year, owners are likely to earn economic losses

b)every year, owners are likely to earn economic profits

c)there are many firms and several buyers or sellers have market power

d)there are many firms and no buyer or seller has market power

4. All of the below are included in the perfectly competitive market except

select one:

a)large advertising budgets

b)low entry barriers

c)many forms

d)identical product

5. the short run is the time period

Select one:

a)in which only the amount of capital may be alerted

b)in which some costs are fixed

c)necessary so that profits can be earned from production

d)Over which an investment decision can be made

6. when a firm changes market prices by changing its output, then it

select one:

a)is a competitive firm

b)has market power

c)faces a horizontal demand curve

d)is a price taker

7. in the below list, what better explains why the low of deminishing returns will not apply in the long run?

Select one :

a)in the long run, firms have enough time to find the most qualified workers

b)all factors of production are fixed in the long run

c)In the long run, firms can increase the availability office space and equipment to keep up with the income in the variable inputs

8. which of the following is true about a competitive market supply curve?

select one:

a)it is vertical

b)it is horizontal

c)it is downward sloping to the right

d)it is the sum of the marginal cost curves of all forms

9. if a perfectly competitive firm is producing a rate of outward twitch MC exceeds price, then the firm

select one:

a)must have an economic loss

b)can increase its profits by increasing output

c)can increase its profit by decreasing output

10. a typical production function Demonstrated

select one:

a)output capacity of the entire economy

b)maximum quantity of inputs required to produce a given quantity of output

c)maximum amount of output that can be obtained from alternative combinations of input

d)maximum output of a good attainable from different combinations of factor input

11. Do you agree with the statement that consecutive new entrants in a perfectly competitive market will push the market into long-run equilibrium? Why?

12. What are the different decision rules used by the firms in the competitive market and profit and production maximizations?