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1 | |
In perfectly competitive markets: |
| | A) | there are many buyers. |
| | B) | there is easy entry and exit for businesses. |
| | C) | a standard product is bought and sold. |
| | D) | there are many sellers. |
| | E) | all of the above |
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2 | |
In monopolistically competitive markets: |
| | A) | there are only a few buyers. |
| | B) | there are entry barriers for new businesses. |
| | C) | there are perceptible differences in the products sold by each business. |
| | D) | there are only a few sellers. |
| | E) | all of the above |
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3 | |
Oligopolies: |
| | A) | have only a few buyers. |
| | B) | exhibit easy entry and exit for businesses. |
| | C) | have only a few sellers. |
| | D) | are uncommon in the Canadian economy. |
| | E) | all of the above |
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4 | |
In monopolies: |
| | A) | there may or may not be entry barriers. |
| | B) | there are many close substitutes for the product that is bought and sold. |
| | C) | there are only a few buyers |
| | D) | there is only one seller. |
| | E) | all of the above |
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5 | |
Which of the following is not a possible entry barrier? |
| | A) | a patent |
| | B) | decreasing returns to scale |
| | C) | the market experience of established businesses. |
| | D) | the restricted ownership of resources |
| | E) | predatory pricing by established businesses |
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6 | |
Businesses in which type of market structure have the most market power? |
| | A) | monopoly |
| | B) | perfect competition |
| | C) | monopolistic competition |
| | D) | oligopoly |
| | E) | Businesses in all types of markets have the same market power. |
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7 | |
The business's demand curve in a perfectly competitive market is: |
| | A) | perfectly inelastic. |
| | B) | inelastic. |
| | C) | unit-elastic. |
| | D) | elastic. |
| | E) | perfectly elastic. |
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8 | |
For a perfect competitor: |
| | A) | marginal revenue and average revenue are both equal to the current price. |
| | B) | marginal revenue is below average revenue because of the price changes that accompany an adjustment in the business's output. |
| | C) | the business's demand curve is downward-sloping. |
| | D) | the business's demand curve is usually elastic. |
| | E) | the business's demand curve is usually inelastic. |
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9 | |
The profit-maximizing rule states that profit is maximized when: |
| | A) | total cost exceeds total revenue by the largest possible dollar amount. |
| | B) | marginal revenue exceeds marginal cost by the largest dollar amount. |
| | C) | marginal revenue and marginal cost are equal. |
| | D) | total revenue reaches its maximum value. |
| | E) | marginal revenue and total cost are equal. |
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10 | |
Which of the following statements applies to a profit-maximizing business? |
| | A) | If marginal cost exceeds price, then output must be increased to reach the profit-maximizing point. |
| | B) | If price exceeds marginal cost, then output must be increased to reach the profit-maximizing point. |
| | C) | If average cost is greater than price at the profit-maximizing output, then the business is making a positive profit. |
| | D) | If price exceeds average cost at the profit-maximizing output, then the business is making a loss. |
| | E) | If price and average cost are equal, the business is at its shutdown point. |
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11 | |
A perfect competitor reaches its breakeven point if: |
| | A) | price equals average cost at the business's profit-maximizing point. |
| | B) | price equals marginal cost at the business's profit-maximizing point. |
| | C) | price equals marginal revenue at the business's profit-maximizing point. |
| | D) | marginal cost equals marginal revenue at the business's profit-maximizing point. |
| | E) | price equals average variable cost at the business's profit-maximizing point. |
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12 | |
A perfect competitor will close down if: |
| | A) | the business fails to make a positive economic profit. |
| | B) | marginal revenue falls below marginal cost. |
| | C) | the price of its output falls below average cost. |
| | D) | the price of its output falls below average variable cost. |
| | E) | the price of its output falls below minimum marginal cost. |
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13 | |
The supply curve for an individual perfect competitor: |
| | A) | is its marginal cost curve above the business's breakeven point. |
| | B) | is derived from the supply curve for the market in which the individual operates. |
| | C) | shows what price the perfect competitor will choose to charge at every possible quantity supplied. |
| | D) | is its entire marginal cost curve. |
| | E) | is its marginal cost curve above the business's shutdown point. |
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14 | |
If businesses are making positive economic profits in a perfectly competitive industry, then in the long run: |
| | A) | other businesses enter the industry, raising price and the profits of existing firms. |
| | B) | other businesses enter the industry, raising price and reducing the profits of existing firms. |
| | C) | some businesses leave the industry, reducing price and the profits of existing firms. |
| | D) | other businesses enter the industry, reducing price and the profits of existing firms. |
| | E) | some businesses leave the industry, raising price and the profits of existing firms. |
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15 | |
The condition of minimum cost pricing is met: |
| | A) | when firms sell their output at a price equal to minimum average cost. |
| | B) | by perfectly competitive firms both in the short run and long run. |
| | C) | by perfectly competitive firms only in short run equilibrium. |
| | D) | when firms sell their output at a price equal to minimum marginal cost. |
| | E) | when firms sell their output at a price equal to minimum average variable cost. |
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16 | |
According to Karl Marx's theories: |
| | A) | surplus value decreases when the length of the working day increases. |
| | B) | Both labour and capital are important in the creation of value. |
| | C) | Surplus value rises when the wage rate falls. |
| | D) | The rate of exploitation is defined as the ratio of surplus value to the total value of goods produced. |
| | E) | The exploitation of workers will lessen as capitalism develops further. |
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2002 McGraw-Hill Higher Education