Q14 Which of the following is closest to a perfectly competitive market? a computer software b athle

Q14 Which of the following is closest to a perfectly competitive market?

a computer software

b athletic shoes

c wheat

d handmade guitars

Q16 The profit maximizing level of production

a is not measurable for a perfectly competitive firm

b is where the difference between marginal revenue and marginal cost is maximized

c ignores the relation of total revenues and total costs

d is the quantity at which marginal revenue equals marginal cost

Q23 For the monopolistic competitor, which is INCORRECT?

a The profit maximizing rate of output is where the marginal cost curve intersects the marginal revenue curve

b The marginal revenue curve is downward sloping and lies below the demand curve

c Because the firm has some control over price, its demand curve slopes downward

d If the firm in a monopolistically competitive industry were making economic losses, firms would enter the industry

Q24 Profitable price discrimination involves

a charging a higher price to new customers and a low price to old ones

b charging a higher price to wealthier customers

c charging a higher price for goods that cost more to produce

d charging a higher price to customers with a relatively low elasticity of demand

Q28 Signaling occurs as part of

a noncooperative behavior

b advertising

c price leadership

d opportunistic behavior

Q36 External costs can be defined as

a the cost of providing all public goods and services

b the sum of all private production costs

c the cost of running the federal government

d the cost associated with private production, but partially borne by society

Q37 What would happen in a free market system when production of a good generates negative externalities?

a There would be a shortage of the good

b The equilibrium quantity of the good would be more than the efficient amount

c The equilibrium quantity of the good would be less than the efficient amount

d There would be a surplus of the good

Q38 Which of the following is an incidence of market failure?

a Firms change their production plans in response to a tax

b The price of a good exceeds the opportunity cost of producing it

c The firm producing the good is earning zero economic profit

d Consumers change their buying habits in response to a tax

Q39 Which one of the following is TRUE?

a Private goods are subject to the principle of rival consumption

b Public goods are those that generate positive externalities

c Public goods are a subset of private goods

d Private goods are produced for a local market; public goods are produced for a national market

 

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