Question 1 of 10
Perfect competition is characterized by:
A. rivalry in advertising.
B. fierce quality competition.
C. the inability of any one firm to influence price.
D. widely recognized brands.
Question 2 of 10
An industry that contains a firm that is the only producer of a good or service for which there are no close substitutes and for which entry by potential rivals is prohibitively difficult is:
A. a duopoly.
B. a monopoly.
C. an oligopoly.
D. perfect competition.
Question 3 of 10
Which of the following is true in a perfectly competitive market?
A. One unit of a good or service cannot be differentiated from any other on any basis.
B. Brand preferences exist but are very slight.
C. Barriers to entry are relatively strong.
D. Information is costly.
Question 4 of 10
The assumptions of perfect competition imply that:
A. individuals in the market accept the market price as given.
B. individuals can influence the market price.
C. the price will be a fair price.
D. the price will be low.
Question 5 of 10
Which of the following is true?
A. Price and average revenue are never equal.
B. Price and marginal revenue are seldom equal under conditions of perfect competition.
C. When a firm is operating under perfectly competitive market conditions, price and marginal cost will always be equal if the firm is maximizing profits.
D. Average revenue equals price times quantity.
Question 6 of 10
If a firm possesses monopoly power, it means that:
A. the firm can set its own price based on its output decision.
B. the firm's demand curve is always elastic.
C. the firm is necessarily a monopoly.
D. A and C are true.
Question 7 of 10
A. is the slope of the average revenue curve.
B. equals the market price in perfect competition.
C. is the change in quantity divided by the change in total revenue.
D. is the price divided by the changes in quantity.
Question 8 of 10
A natural monopoly exists whenever a single firm:
A. is owned and operated by the federal or local government.
B. is investor owned but granted the exclusive right by the government to operate in a market.
C. confronts economies of scale over the entire range of production that is relevant to its market.
D. has gained control over a strategic input of an important production process.
Question 9 of 10
Which of the following is (are) true?
A. A monopoly firm is a price taker.
B. MR> P if the demand curve is downward sloping.
C. MR = MC is a profit-maximizing rule for any firm.
D. All of the above are true.
Question 10 of 10
Perfect competition is important to study because it:
A. is a theoretical extreme used for analysis.
B. is a realistic model of a few key markets.
C. is a realistic model of many different markets.
D. avoids all real-world problems and complexities.