Question 1

In an constant cost industry, a fall in demand will lead input prices to ______________ as firms _____________ the market.

a. increase, exit

b. decrease, exit

c. increase, enter

d. decrease, enter

e. none of these

Question 2

Which assumption is key in Perfect Competition as we move from short-run to long-run equilibrium?

a. Perfect Factor mobility

b. Perfect information

c. many buyers

d. many sellors

e. none of these.

Question 3

Super-normal profits in a perfectly competitive industry will cause _______ until profits become _________.

a. entry, negatve

b. exit, zero

c. entry, zero

d. exit, negative

e. none of these.

Question 4

It is not possible in the long-run in perfect competition to to get a lower market price.

a. True

b. False

Question 5

In an increasing cost industry, a fall in demand will lead input prices to ______________ as firms _____________ the market.

a. increase, exit

b. decrease, exit

c. increase, enter

d. decrease, enter

e. None of these.

Question 6

In the long-run in perfect competition if a firm lowers its price to increase sales

a. It will lose money and have to exit as the price would be below average variable cost

b. earn positive economic profit by selling more units

c. increase profit becuase while it loses money on each unit, the firm will make it up in volume.

d. It will lose money and have to exit

e. None of these

Question 7

A franchise is the same as

a. a license to operate a particular business

b. a barrier to entry

c. a not necessarily guarantee of quality

d. All of these

e. None of these.

Question 8

If a firm is operating with Diseconomies of Scale in order to reduce per-unit costs they should

a. Increase production

b. decrease production

c. keep production the same

d. we cannot tell with this information.

Question 9

A firm in perfect competition in the long run would be expected to operate with

a. increaesing economiesw of scale

b. decreasing economies of scale

c. constant economies of scale

d. none of these

e. we cannot tell,

Question 10

if Average Costs fall as production increases we can say the firm

a. is a natural monopoly

b. has economies of scale

c. has economies of scope

d. has decreasing returns to scale

e. All of these

f. none of these.

Question 11

A monopolist woud advertise to

a. discourage entry

b. increase sales and therefore profit

c. none of these

d. both of these

Question 12

Which of these are monopoly characteristics of Monopolistic Competition?

a. easy entry and exit

b. long-run profit

c. price greater than marginal cost

d. product homogenatity

e. All are of these are

f. none of these are

Question 13

Would we expect to see a single firm in perfect competition advertise

a. Yes, very important to get one's name before the pubic

b. Yes, it's important to be sure people know your product

c. No, it is costly to advertise and the price is already at its lowest cost point

d. No, as the good is the same as everyone else's, the firm cannot distinguish its good from others

e. Both yes answers are correct

f. Both No answers are correct