1.The long - run is:

A.the time period in which new workers can be trained .

B.the time period in which all factors of production can be varied .

C.the time period in which the firm is guaranteed to earn a profit .

D.the time period in which new workers can be hired .

2.A perfectly competitive firm :

A.may realize either economic profit or losses in the long run .

B.cannot earn economic profit in the long run .

C.must earn an economic profit in the short run .

D.cannot earn economic profit in the short run .

board.

4.A perfectly competitive firm reaches a break - even point on the graphwhere :

A.marginal cost intersects the average variable cost curve .

B.marginal revenue cuts the horizontal axis .

C.total revenue equals total variable cost .

D.price equals average total cost .

6.For a monopolist the marginal revenue ( MR ) curve is:

A.below the demand curve .

B.above the demand curve .

C.equal to the supply curve .

D.equal to the demand curve .

7.If a firm in a purely competitive industry is confronted with an equilibriumprice of $ 5 , its marginal revenue :

A.will be less than $ 5 .

B.will also be $ 5 .

C.may be either greater or less than $ 5 .

D.will be greater than $ 5 .

8.If a purely competitive firm temporarily shuts down in the short run :

A.it will realize a loss equal to its total variable costs .

B.it will realize a loss equal to its total costs .

C.it will realize a loss equal to its total fixed costs .

D.its loss will be zero

9.The perfect competitor:

A.chooses the profit - maximizing price .

B.chooses the profit - maximizing quantity .

C.produces the quantity the market will purchase .

D.chooses a quantity that will make the most efficient use of its labor and capitalresources

10.Monopoly implies:

A.low profits .

B.no competition .

C.high costs .

D.low prices .

11.Suppose you find that the price of your product is less than minimum AVC .You should :

A.minimize your losses by producing where P = MC .

B.temporarily close down because total revenue exceeds total cost .

C.temporarily close down because your losses will exceed your total fixed costs , ifyou continue to produce .

D.maximize your profits by producing where P = MC

12.The market demand curve in a purely competitive industry is _the demand curve for a single firm in that industry is:

A.perfectly elastic , downsloping

B.downsloping , perfectly elastic

C.downsloping , perfectly inelastic

D.perfectly inelastic , perfectly elastic

15.The type of product sold by a monopolist:

A.can be either homogeneous ( identical ) or differentiated .

B.is neither homogeneous ( identical ) nor differentiated .

C.is differentiated .

D.is homogeneous ( identical ) .

16.To maximize profit the monopolist will:

A.produce where MR = MC and charge the price that corresponds to thatquantityon the demand curve .

B.produce where ATC is minimized and charge a price equal to marginal cost atthat quantity .

C.produce where marginal cost is minimized and charge a price equal to ATC atthat quantity .

D.produce where MR = MC and charge a price equal to marginal revenue.

17.When considering marginal revenue for the monopolist , which of thefollowing is FALSE ?

A.To sell more of a particular product , given the industry demand curve , themonopoly firm must lower the price .

B.Marginal revenue is the additional revenue realized from selling one more unit ofa good .

C.The more the monopolist wants to sell , the higher the price it has to charge inorder to make more profits .

D.For the monopolist , marginal revenue is always less than price except the firstunit .

18.Which of the following is NOT a characteristic of perfect competition ?

A.The market sets the price , so each firm is a price taker .

B.differentiated or heterogenous product

C.large number of buyers and sellers

D.easy entry and exit into the market

19.Which of the following is closest to a perfectly competitive market ?

A.handmade guitars

B.wheat

C.computer software

D.athletic shoes

20.Which of the following is not a barrier to entry ?

A.ownership of essential resources

B.low stastup costs

C.patents

D.economies of scale

21.Which of the following statements is true for the perfectly competitivefirm in the long - run ?

A.MC > P > ATC

B.P = MC = MR

C.P > MC and P = ATC

D.P > MC > ATC

22.Which of the following would be classified as a natural monopoly ?

A. A local electricitycompany

B.Microsoft

C.The only gas station in a small town in the middle of Kansas

D. Disneyland