Question 1

A perfect competition market is characterised by all of the following EXCEPT:

Group of answer choices

Heavy advertising by individual sellers

Identical products

Sellers are price takers

A horizontal demand curve for individual sellers

Question 2

Both buyers and sellers are price takers in a perfectly competitive market because

Group of answer choices

the price is determined by government intervention and dictated to buyers and sellers

each buyer and seller know it is illegal to conspire to affect price.

both buyers and sellers in a perfectly competitive market are concerned for the welfare of others.

each buyer and seller is too small relative to others to independently affect the market price.

Question 3

Tayne is a rice farmer. Assume that the market for rice is perfect competition. This means Tayne will maximise profit by choosing:

Group of answer choices

to produce the quantity at which average fixed cost is minimised

to produce the quantity at which marginal cost is equal to average total cost

to produce the quantity at which the market price is equal to his marginal cost

to produce the quantity at which average revenue is equal to average variable cost.

Flag question: Question 4

Question 4

Declan's business operates in a perfect competition market. As a result, Declan has been making ZERO economic profit. If Declan wants to make an economic profit, he has to:

Group of answer choices

Try to differentiate his product from other competitors to increase the demand for his product.

Try to lower down his average total cost to below the current market price.

Wait for some competitors to exit the market and take over their customers

None of the above

Question 5

The reason that the coffeehouse market is monopolistically competitive rather than perfectly competitive is because

Group of answer choices

Barriers to entry are very low

There are many firms in the market

Products are differentiated

Entry into the market is blocked

Question 6

Tyler Fashion Store sells 7 pairs of jeans per day when it charges $100 per pair. It sells 8 pairs of jeans per day at a price of $90 per pair. The marginal revenue of the 8thpair of jeans is:

Group of answer choices

$20

$90

$100

$700

Question 7

Cooper's business operates in a monopolistic competition market. Cooper recently moved to decrease his price. He then realised that his total revenue increased as a result. Which of the following explains what happened to Cooper's business?

Group of answer choices

The decrease in price shifted the demand curve to the right, helping Cooper earn more revenue

The output effect of the price change was greater than the price effect

The demand for Cooper's products was inelastic, thus, a decrease in price helped boost revenue

None of the above

Question 8

Arielle's business operates in a monopolistic competition market. Arielle used to enjoy making some economic profits. However, the entry of new suppliers recently has driven her economic profit down to zero. What should Arielle do in response?

Group of answer choices

Arielle should shut down her business since economic profit is now zero. Given her talent and effort, there will be opportunities for her to make economic profits in other sectors.

Arielle should continue to run her business like normal. Zero economic profit means that she is making as much money from her current business as any other alternative available to her.

Arielle should push to increase her output in the hope of lowering down the average total cost. With cost being lower, there will be rooms for economic profit to emerge.

None of the above is correct.

Question 9

Which of the following is an example of a monopoly firm?

Group of answer choices

Maorui Bistro, which is the only Chinese restaurant around Swinburne

Declan Gas, which is the only petrol station within the 1km radius around Swinburne

Ausnet Services, which is the only electricity distributor for Melbourne's eastern suburbs

All of the above are examples of a monopoly firm.

Question 10

Consider the following data for a monopoly firm. The profit-maximising price charged is $40. The intersection between the marginal revenue and marginal cost curves occurs where output is 20 unites and marginal cost is $25. Average total cost for 20 units of outputs is $15. What is the current amount of profit that this monopoly firm earns?

Group of answer choices

$40

$200

$300

$500