Question

1.In long-run competitive market equilibrium, price equals _______ and economic profit is ______.

A. Minimum average variable cost; greater than zero

B. Minimum average total cost; zero

C. Maximum marginal cost; zero

D.Minimum fixed cost; greater than zero

2. Which of the following market structures has the highest barriers to entry?                    

A. Perfect competition                 

B. Monopoly                     

C. Monopolistic competition                      

D. Oligopoly

3. Which of the following is consistent with a competitive market?           

A. A small number of firms          

B. Exit of small firms when profits are high for large firms                              

C. Zero economic profit in the long run  

D. Marginal revenue lower than price for each firm

4. Monopolists are price:                             

A. Takers as are perfectly competitive firms.                       

B. Takers, but perfectly competitive firms are price makers.                         

C. Makers, but perfectly competitive firms are price takers.                         

D. Makers as are perfectly competitive firms.

5. For a monopolist, the demand curve facing the firm is:              

A. The same as for the perfectly competitive firm.                            

B. The same as the market demand curve.           

C. Always below marginal revenue.                        

D. Perfectly elastic.

6. For a monopolist, after the first unit of output, marginal revenue is always:                     

A. Constant.                      

B. Increasing.                    

C. Less than price.           

D. Greater than marginal cost.

7. Which of the following do a monopolist and a competitive firm have in common?                        

A. Predatory pricing.                      

B. Barriers to entry.                        

C. Marginal cost pricing.               

D. Profit-maximization rule.

8. The price charged by a profit-maximizing monopolist occurs at:                             

A. The minimum of the average total cost curve.

B. The price where marginal cost equals marginal revenue.         

C. A price on the demand curve above the intersection where marginal revenue equals marginal cost.

D. A price on the average cost curve below the point where marginal revenue equals marginal cost.

9, For a monopoly in long-run equilibrium, economic profits are likely to be:                        

A.Greater than zero.                      

B. Zero.

C. Less than zero.                            

D. Predatory.

10. The market supply of labor depends on the:

A. Number of employers.                            

B. Marginal revenue product of labor.                    

C. Price of the product being produced.                

D. Number of available workers.

11. Which of the following will not shift the labor supply curve to the right, ceteris paribus?                          

A. An increase in the wage rate.                

B. An increase in immigration.   

C. An improvement in working conditions.           

D. A number of college students decide to leave school and start working.

12. Which of the following is not an example of market failure?

A. Public goods.               

B. Government intervention.                     

C. Market power.                            

D. Externalities.

Answer 1

1,B Minimum average total cost; zero

2. B. Monopoly

3. C. Zero economic profit in the long run  

4. C. Makers, but perfectly competitive firms are price takers.

5. B. The same as the market demand curve.   

6. C. Less than price.   

7. D. Profit-maximization rule.

8. C. A price on the demand curve above the intersection where marginal revenue equals marginal cost.

9. A.Greater than zero.

10. D. Number of available workers.

11. A. An increase in the wage rate.   

12. B. Government intervention.