Question 1:

A perfectly competitive business reaches a breakeven point where:

Select one:

a.marginal cost intersects the average variable cost curve

b.total revenue equals variable cost

c.price equals minimum average cost

d.normal profits are zero

e.marginal cost is at a minimum

Question2

If the four-firm concentration ratio for industry X is 80, this means that:

Select one:

a.the four largest firms account for 80 percent of total sales

b.the industry is monopolistically competitive

c.the industry is perfectly competitive

d.each of the four largest firms accounts for 20 percent of total sales

e.the four largest firms account for 20 percent of total sales

Question3

A perfectly competitive seller is:

Select one:

a.sometimes a price-taker, but usually a price-maker

b.a price-taker

c.a price-maker

d.neither a price-maker nor a price-taker

e.both a price-maker and a price-taker

Question4

A monopolist's demand curve:

Select one:

a.has two separate linear segments with different slopes

b.coincides with its marginal revenue curve

c.lies above its marginal revenue curve

d.is kinked at the profit-maximizing price

e.lies below its marginal revenue curve

Question5

Decreasing returns to scale occur when a business:

Select one:

a.increases output by the same percentage as it increases all inputs for a certain product

b.decreases inputs to produce a higher percentage increase in output

c.increases inputs in order to produce a smaller percentage increase in output

d.increases inputs by a given percentage to increase output by a higher percentage

e.decreases both inputs and output simultaneously