Which of the following isnotan assumption of the theory of perfect competition?

Question 1 options:

a)	Each firm produces and sells differentiated products.

b)	There is easy entry and exit into the market.

c)	There are many sellers and many buyers, none of whom have a large market share.

d)	Sellers are all price takers.

Question 2

The perfectly competitive firm will produce a profit-maximizing level of output for which

Question 2 options:

a)	average variable cost is at a minimum.

b)	marginal cost equals marginalrevenue.

c)	average fixed cost is at a minimum.

d)	average total cost is at minimum.

Question 3

Which of the following can shift the demand for labor?

Question 3 options:

a)

Wage rate

b)	Changes in price of output

c)	Changes in technology

d)

b and c

Question 4

Firms are in a situation ofInterdependencewhen

Question 4 options:

a)	they must depend on advertising to maintain consumers' interest in their product.

b)	They are independent of one another and are essentially price takers.

c)	They are so large and powerful that they do not need to consider how their actions will affect their rivals.

d)	a firm's decision can significantly affect decisions made by rival firms.

Question 5

In monopolistic competition, firms can compete in terms of

Question 5 options:

a)

packaging

b)	quality of product.

c)

services

d)

location

e)	all of the above

Question 6

Question 6 options:

a)

F.

b)

E.

c)

N.

d)

P.

Question 7

A firm's labor demand curve is also its __________ curve.

Question 7 options:

a)	average physical product (APP)

b)	marginal physical product (MPL)

c)	marginal revenue product (VMRP)

d)	none of the above.

Question 8

For any firm, if at profit maximizing level of output, price is above average total cost (ATC), the firm is

Question 8 options:

a)	minimizing total fixed costs

b)	taking an economic loss.

c)	earning an economic profit.

d)	minimizing total variable costs.

Question 9

Suppose Sally is selling lemonade and she sells each of her buyers the refreshment for the price that each different buyer is willing to pay. Sally is practicing

Question 9 options:

a)	perfect price discrimination.

b)	price discrimination with two different prices.

c)	price discrimination with three different prices.

d)	price discrimination with four different prices.

Question 10

The socially optimal quantity of pollution is

Question 10 options:

a)	the quantity of the good/pollution that society would choose if all costs of the good were fully accounted for.

b)	the quantity of the good/pollution that society would choose if all benefits of the good were fully accounted for.

c)	the quantity of the good/pollution that society would choose if all costs and all benefits of the good were fully accounted for.

d)	none of the above.

Question 11

The marginal social cost of a unit of pollution is:

Question 11 options:

a)	the additional cost imposed on society by that unit.

b)	easy to calculate, since pollution is costly.

c)	often overestimated.

d)	constant as more of a good is produced.

Question 12

Marginal revenue is equal to __________ divided by __________.

Question 12 options:

a)	total revenue; total quantity of output

b)	marginal cost; wages

c)	change in total revenue; total quantity of output

d)	change in total revenue; change in quantity of output

e)	change in quantity of output; change in total revenue

Question 13

A cartel is an organization of firms

Question 13 options:

a)	dominated by one firm, which is usually referred to as the price taker.

b)	that attempts to increase total industry demand for their product.

c)	an agreement among several producers to restrict output in order to increase joint profit.

d)	that deliberately attempts to disrupt the market for political reasons.

Question 14

The market for dentists in most communities can be considered a ________ because there are a large number of similar but not identical substitutes in the market

Question 14 options:

a)	monopolistic competition

b)	a monopoly

c)	perfect competition

d)	an oligopoly

Question 15

By definition market failure is a situation in which

Question 15 options:

a)	the market fails to produce an "optimal" level of output.

b)	there are too many buyers but not enough sellers.

c)	prices are too high for "average" people to buy necessities.

d)	there is a question over the quality of a product for sale.

Question 16

External cost is

Question 16 options:

a)	a benefit that an individual or firm confers on others without receiving compensation.

b)	an uncompensated cost that an individual or firm imposes on others.

c)	a cost to society when not enough of a good is produced.

d)	cost of producing goods in other countries when it should be produced domestically.

Question 17

The measles vaccine provides both private benefits to individuals and positive external benefits to other members of society. As a result, without government intervention:

Question 17 options:

	too many doses of the vaccine would be produced, since its external benefits would not be considered.
	too few doses of the vaccine would be produced, since its external benefits would not be considered.
	the optimal amount of the vaccine would be produced, since its external benefits would not be considered.
	too few doses of the vaccine would be produced, since its marginal social benefits would be overstated.

Question 18

The difference between private goods and public goods is that

Question 18 options:

a)	private goods are consumed by private individuals whereas public goods are not consumed by private individuals.

b)	private goods often yield externalities, but public goods do not.

c)	Private goods are all services, but public goods are all manufactured.

d)	public goods are nonrival in consumption whereas private goods are rival in consumption.

Question 19

When income effect is the dominant factor, an increase in the wage rate

Question 19 options:

a)	shifts the supply curve of labor rightward.

b)	increases the quantity supplied of labor.

c)	shifts the supply curve of labor leftward.

d)	decreases the quantity supplied of labor.

Question 20

If a monopolistically competitive produces a quantity of output that generatesMC>MR,then the marginal decision rule says that profit:

Question 20 options:

	can be increased by increasing output.
	can be increased by decreasing output.
	can be increased by decreasing the price.
	is maximized only ifMC=P.

Question 21

If the consumption of a good, like an apple, by one person reduces the amount of it that can be consumed by others, the good is

Question 21 options:

a)	rival in consumption

b)	Non-rival in consumption

c)	excludable

d)	nonexcludable

Question 22

Consider the labor market for accountants. If fewer people were to earn degrees in accounting, we should see

Question 22 options:

a)	shift to the left of the labor supply curve.

b)	shift to the right of the labor demand curve.

c)	increase in the quantity of labor supplied along a stable labor supply curve.

d)	increase in the quantity of labor demanded along a stable labor demand curve.

Question 23

Larger population tends to shift the labor supply curve rightward at any given wage rate.

Question 23 options:

	True
	False

Question 24

Barriers to entry include ownership of a scarce resource, patents, diseconomies of scale, and technological superiority.

Question 24 options:

	True
	False

Question 25

According to the substitution effect, as the wage rate increases the monetary reward from working increases and workers will want to work more.

Question 25 options:

	True
	False

Question 26

Monopolies never produce a level of output where their marginal cost equals their marginal revenue, only firms in a perfectly competitive markets do.

Question 26 options:

	True
	False

Question 27

In a perfectly competitive market, the market demand curve is horizontal.

Question 27 options:

	True
	False

Question 28

Price ($/ton) SUS A 350 - Domestic market price B 300 World price + tariff 200 world price 100 J Dus 5 10 15 20 Quantity of Sugar (milliontons)