Question:

When the perfectly competitive firm and industry are both in long-run equilibrium

A.

P = MR = SMC = LMC

B.

P = MR = SAC = LAC \\

C.

P = MR = lowest point on the LAC curve

D.

all of the above.

Answer» d. all of the above.

Question:

The market in which there is a single seller is called

A.

Oligopoly

B.

Monopsony

C.

Monopoly

D.

Nine of the above

Answer» c. Monopoly

Question:

The equilibrium level of output for a perfectly competitive marketis

A.

MC = AC

B.

MC = MR

C.

TC = TR

D.

None of the above

Answer» b. MC = MR

Question:

Profit maximization for a perfectly competitive firm is at the quantity where

A.

price equals marginal revenue

B.

the difference between price and marginal cost is the greatest

C.

price equals marginal cost

D.

marginal cost is at a minimum

Answer» c. price equals marginal cost

Question:

Given the supply of a commodity, in the market period, the price ofa commodity is determined by

A.

The market demand curve alone

B.

The market supply curve alone

C.

The market demand curve and the market supply curve

D.

None of the above

Answer» a. The market demand curve alone

Question:

Monopolistic competition is characterized by

A.

Few firms’ selling differentiated products

B.

Many firms selling homogeneous product

C.

Few firms selling homogeneous product

D.

Many firms selling differentiated products

Answer» d. Many firms selling differentiated products

Question:

When AR passes through some point between minimum AVC and AC, it is called:

A.

Supernormal profit

B.

Loss

C.

Breakeven point

D.

Minimising losses

Answer» d. Minimising losses

Question:

According to economic pricing theory, the basic objective of every pricing strategy

A.

is to reduce prices in order to increase consumer surplus and the quantity sold

B.

to raise prices in order to reduce consumer surplus

C.

sell at a price and quantity where total revenue is maximized

D.

to capture consumer surplus and convert it to additional profit for the firm

Answer» d. to capture consumer surplus and convert it to additional profit for the firm

Question:

Which of the following statements about industries that are oligopolies is false

A.

firms in these industries may attempt to cooperate

B.

firms in these industries are interdependent

C.

the fact that there is more than one firm in an oligopoly means that there are no barriers to entry

D.

an oligopoly with two firms is called a duopoly

Answer» c. the fact that there is more than one firm in an oligopoly means that there are no barriers to entry

Question:

In the market period, market supply curve is

A.

Perfectly elastic

B.

Perfectly inelastic

C.

Elastic

D.

Inelastic

Answer» b. Perfectly inelastic