Question

16. In pure competition, price is determined where the market

A. Demand and supply curves intersect

B. Total cost is less than total revenue.

C. Average total cost equals total variable cost.

D. Demand intersects the individual firm's marginal cost curve.

20.  Long-run competitive equilibrium

A. Is realized only in constant-cost industries.

B. Is not economically efficient

C. Will never change once it is realized

D. Results in zero economic profit.

21. Marginal product is

A. The change in total revenue attributable to the employment of one more worker.

B. The change in total output attributable to the employment of one more worker.

C. Total product divided by the number of workers employed.

D. The change in total cost attributable to the employment of one more worker

24. Oligopoly is more difficult to analyze than other market models because

A. of mutual interdependence and the fact that oligopoly outcomes are less certain than in other market models

B. The marginal cost and marginal revenue curves of an oligopolist play no part in the determination of equilibrium price and quantity.

C. unlike the firms of other market models, it cannot be assumed that oligopolists are profit maximizers.

D. the number of firms is so large that market behavior cannot be accurately predicted.

30. The demand curve confronted by the individual, purely competitive firm is

A. Perfectly inelastic

B. Relatively elastic, that is, the elasticity coefficient is greater than unity

C. Relatively inelastic, that is, the elasticity coefficient is less than unity.

D. Perfectly elastic.

35. The short run is characterized by

A. Zero fixed costs.

B. Plenty of time for firms to either enter or leave the industry.

C. Fixed plant capacity.

D. Increasing but not diminishing returns.

Answer 1

16. In pure competition, price is determined where the market

A. Demand and supply curves intersect

Explanation :

In perfect competition price determined where market demand and market supply intersect each other.

When demand intersects marginal cost curve, furn decides how much quantity should be produced.

20. Long-run competitive equilibrium

D. Results in zero economic profit.

Explanation : when there is positive economic profit in the market, new firm enters the market. And when there is negative profits in the market, firm exits the market. At the end of this exit and entry process, in long run firm in perfect competition earns zero economic profit. They produce at efficient quantity.

21. Marginal product is

B. The change in total output attributable to the employment of one more worker.

Explanation :marginal cost is change in total cost divided by the change in output. Marginal product is change in total product divided by change in labor.

24. Oligopoly is more difficult to analyze than other market models because

A. of mutual interdependence and the fact that oligopoly outcomes are less certain than in other market models

Explanation : there are few firms in the market. So they can make cartel and act like monopoly. But there is chances to cheat. So it is difficult to remain mutual interdependence.

Only oligopoly has this characteristic.

30. The demand curve confronted by the individual, purely competitive firm is

D. Perfectly elastic.

Explanation : firms are price taker. So they can't charge more than market price. That's why they face horizontal demand curve that is perfectly elastic demand curve.

35. The short run is characterized by

C. Fixed plant capacity.

Explanation : we can not change plant capacity in short run because it requires more money and time.