Question

Question 1

Which of the following is not a characteristic of the structure of perfectly competitive markets?

Each individual firm is small in size relative to the overall market.

Few sellers.

Homogeneous product.

Easy, low cost entry and exit.

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Question 4

Marginal revenue is the change in:

total revenue resulting from a one unit change in output.

total revenue resulting from a change in marginal cost.

price resulting from a one unit change in output.

none of these.

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Question 5

Perfectly competitive markets are characterized by:

a small number of very large producers.

very strong barriers to entry and exit.

firms selling a homogeneous product.

all of these.

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Question 7

Price discrimination requires:

a firm to be a competitive firm.

a firm to be able to segment its customers based on different price elasticities of demand.

arbitrage.

that the product can be easily resold.

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Question 9

Compared to a perfectly competitive firm, a monopolist:

charges a higher price.

produces lower output.

fails to achieve an efficient allocation of resources.

all of these.

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Question 14

Which of the following is the best example of an oligopoly?

Area restaurants.

The automobile industry.

Agricultural markets free of government support.

Local utilities.

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Question 18

Since the demand for labor depends on the demand for the product labor produces, the demand for labor is called:

primary demand.

secondary demand.

dependent demand.

derived demand.

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Question 19

The demand for a factor of production depends on the:

supply of the factor.

supply of other factors of production.

demand for other factors of production.

demand for the products that it helps to produce.

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Question 20

Exhibit 11-2 Labor and output data

Labor    Output

0                 0

1             20

2             45

3             80

4             100

5             110

In Exhibit 11-2, the marginal product of the 4th unit of labor is equal to:

80.

45.

35.

100.

20.

Answer 1

1. Ans: Few sellers

Explanation:

There are large number of sellers in perfect competition market structure.

4. Ans: total revenue resulting from a one unit change in output.

Explanation:

Marginal revenue refers to change in total revenue resulting from a one unit change in output.

5. Ans: firms selling a homogeneous product.

Explanation:

Under perfect competition , there are large number of firms selling homogeneous product.

7. Ans: a firm to be able to segment its customers based on different price elasticities of demand.

Explanation:

For price discrimination a firm must  be able to segment its customers based on different price elasticities of demand.

9. Ans: all of these.

Explanation:

Compared to a perfectly competitive firm, a monopolist charges a higher price , produces lower output and fails to achieve an efficient allocation of resources.

14. Ans: The automobile industry.

18. Ans: derived demand.

19. Ans: demand for the products that it helps to produce.

20. Ans: 20

Explanation:

Marginal product = Change in output / Change in unit of labor

Labor	Output	Marginal Product
0	--	--
1	20	20
2	45	25
3	80	35
4	100	20
5	110	10