Econ Practice Test
Popular in Microeconomics
verified elite notetaker
verified elite notetaker
verified elite notetaker
CH 2503, Elementary Organic Chem 1
verified elite notetaker
verified elite notetaker
verified elite notetaker
Popular in Economcs
This 8 page Study Guide was uploaded by Brennan O'Donnell on Wednesday February 3, 2016. The Study Guide belongs to 1010 at a university taught by Toni Weiss in Fall 2015. Since its upload, it has received 69 views.
Reviews for Econ Practice Test
Report this Material
What is Karma?
Karma is the currency of StudySoup.
You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!
Date Created: 02/03/16
1. Which of the following is the closest to being a perfectly competitive firm? a. A flower vendor in New York b. Microsoft Corporation c. Ford Motor Company d. The campus bookstore e. The campus coffee shop 2. If a firm faces a horizontal demand curve, marginal revenue a. is constant regardless of how much output the firm produces b. decreases as the firm produces more output c. increases as the firm produces more output d. decreases if the firm produces less output e. is less than price at most possible output levels 3. When there are implicit costs of production a. accounting and economic profits are equal b. opportunity costs of production are zero c. accounting profit will exceed economic profit d. explicit costs of production are small e. economic profit will exceed accounting profit 4. If marginal costs exceeds marginal revenue a. the firm can increase profits by increasing output b. the firm will decrease profits by increasing output c. the firm is maximizing profits d. total cost exceeds total revenue e. average cost equals average revenue 5. When a firm engages in perfect price discrimination, a. marginal revenue is equal to price b. marginal revenue is below price c. marginal revenue is below marginal cost d. profits are reduced relative to a singleprice monopolist e. rentseeking behavior must occur 6. If market structures are ranked from the one in which firm(s) face the flattest demand curve to the one where they face the steepest, the correct order is a. monopoly, monopolistic competition, perfect competition b. monopolistic competition, perfect competition, monopoly c. monopolistic competition, monopoly, perfect competition d. perfect competition, monopoly, monopolistic competition e. perfect competition, monopolistic competition, monopoly 7. Which of the following determines the maximum price a firm may charge for a particular quantity of output? a. the firm’s supply curve b. opportunity costs c. explicit and implicit costs of production d. the minimum point of the average total cost curve e. the demand curve facing the firm 8. Economies of scale act as a barrier to entry because a. one large firm can supply the market at a higher average cost than many small firms could b. firms are not allowed by law to sell output below average cost c. large firms can buy inputs at a higher price than smaller firms could d. firms will not compete with a larger firm when there are differences in marginal cost e. one large firm can produce the market output at a lower average cost than many small firms 9. In the long run, monopolistically competitive firms earn zero economic profits because a. each firm produces a small share of total market output b. each firm produces a standardized product c. firms do not equate marginal cost and marginal revenue in the long run d. there is only one seller in the market e. entry of new firms eliminate profits 10.If total revenue falls as more output is produced, a. marginal revenue is negative b. marginal revenue is positive c. marginal cost is negative d. average revenue is negative e. total cost exceed total revenue 11.If P > ATC for a perfectly competitive firm, then a. the firm could increase profit by lowering its price b. the firm could increase profit by raising its price c. the firm is producing too much output d. the firm is making a profit e. profits are zero in the short run 12.For a firm that sells its output in an imperfectly competitive market, a. price exceeds marginal revenue b. marginal revenue exceeds price c. marginal cost exceeds price d. price equals marginal revenue e. marginal cost equals price 13.In game theory, a listing of the rewards or punishments that each player will receive for each possible combination of strategies is called a. the marginal strategy schedule b. the payoff matrix c. strategic planning d. the inputoutput matrix e. the game listing payoff 14.In the long run, a monopolistic competitor will a. always produce as efficiently as possible b. produce too little output to achieve minimum cost per unit c. use limit pricing to forestall competition d. earn economic profits e. standardize it’s product 15.When a firm incurs loses in the short run, the most important consideration in determining whether to continue producing is whether a. marginal cost equals marginal revenue b. average total cost is at its minimum c. revenues cover some of its fixed costs and all of its variable cost d. average variable cost is at its minimum e. total revenue exceeds total cost P5 P4 P3 P2 P1 16.The figure above shows the cost curves for Tova’s Tiaras, a perfectly competitive firm. When the price is ______, Tova’s Tiaras will be breaking even and when the price is ______, Tova’s Tiaras should shut down. a. P ;1P 4 b. P ;2P 5 c. P ;5P 2 d. P ;3P 2 e. P ;3P 1 17.Which of the following is always true for a perfectly competitive firm? a. Marginal revenue is below price b. Marginal revenue exceeds price c. The market demand curve is a horizontal line d. Price equals marginal revenue e. The market supply curve is a horizontal line 18.A monopolist that does not price discriminate will set the output level where a. P = MC b. P = MR c. TR = TC d. MR = MC e. P = ATC 19.Money that cigarette manufacturers spend on lobbying efforts in Washington, D.C. is an example of a. economies of scale b. rent seeking c. advertising d. government regulation e. public relations 20.Which of the following would prevent a market from being classified as perfectly competitive? a. There are many buyers and sellers in the market b. It is easy for new firms to enter the industry c. It is easy for existing firms to exit the industry d. Buyers perceive significant differences among the products of different sellers e. Each buyer purchases only a tiny fraction of the total market quantity 21.A firm that operates in a perfectly competitive market a. controls its own price, but accepts its output level as given b. controls both its own price and its own output level c. controls its own output level, but accepts its price as given d. accepts both its output level and its price as given e. control its own price its own output level, and its own costs 22.In order to maximize profit, a perfectly competitive firm should select the level of output where a. marginal revenue equals price b. marginal cost equals marginal revenue c. price exceeds marginal cost d. price exceeds marginal revenue e. total revenue equals total cost. 23.A singleprice monopoly with the same market demand and cost structure as a perfectly competitive market will produce a. the same output level at the same price as the perfectly competitive market b. less because the monopolist maximizes profit where price equals marginal cost c. less since the monopolist’s marginal revenue curve lies below its demand curve d. more because the monopolist will produce more efficiently e. more because the monopolist’s marginal cost curve slopes upward 24.A monopolist will a. always produce where demand is elastic b. always produce where demand is inelastic c. always produce where marginal revenue is negative d. always produce where marginal cost is negative e. ignore marginal revenue as long as average revenues are positive 25.A market in which a small number of strategically interdependent firms produce the dominant share of output is called a. perfect competition b. a monopoly c. monopolistic competition d. regulate e. an oligopoly 26.All of the following are forms of price discrimination, except one. Which is the exception? a. centsoff coupons for use at the grocery store b. different prices for movie tickets for children and adults c. making airline reservations 30 days in advance and receive a lower rate d. different prices for prescription drugs for senior citizens and others e. different prices of “2 day delivery” and “next day air delivery” 27.A monopolist is earning an economic profit. At the present output level, MR = $35 and MC = $30. Which of the following should the firm do to increase profit a. raise output and lower price b. do not change price or output c. raise price and raise output d. raise price and lower output e. lower price and lower output 28.In addition to shifting its demand curve to the right, a firm may engage in advertising in order to a. make its demand curve more elastic b. increase elasticity of its supply curve c. discourage competition d. make its demand curve less elastic e. decrease consumer awareness 29.All of the following, except one, are characteristics of monopolistic competition. Which is the one exception? a. There is a large number of sellers b. each seller faces a horizontal demand curve for it product c. there are no significant barriers to entry or exit d. seller produce differentiated products e. there is a large number of buyers 30.Which of the following is NOT accurate when a firm has shut down in the short run? a. variable cost is zero b. total revenue is zero c. total cost exceeds total revenue d. total cost is zero e. fixed cost is positive 31.Gerhardt worked at a factory where he earned $20,000 per year. One day, he quit his job and opened a bumper sticker business. After one year, his business earned $60,000 in sales revenue and he incurred $30,000 in direct business expenses. If he received no salary from the new business, his accounting profit is ________ and his economic profit is __________. a. $10,000; $30,000 b. $60,000; $40,000 c. $30,000; $10,000 d. $20,000; $10,000 e. $10,000; $20,000 32.Collusive arrangements tend to collapse when a. there is a small number of sellers b. the benefits of cheating are great and the costs are low c. inflation is high d. interest rates are low e. there is powerful price leader 33.In the long run, equilibrium for a monopolistically competitive firm resembles equilibrium for a monopoly in the sense that a. both the monopolist and the average monopolistically competitive firm are able to earn economic profits b. marginal cost exceeds marginal revenue c. price equals marginal cost d. price exceed marginal cost e. average revenue exceeds price 34.If a cartel is formed in order to maximize the total profits of its members, it will a. charge the monopoly price, but produce more output than a monopoly would b. produce the monopoly output, but charge a lower price than a monopoly would c. charge the same price and produce the same quantity that a monopoly would d. charge a higher price and produce more output than a monopoly would e. charge the monopoly price, but total output may by higher or lower than a monopoly’s 35.Suppose the market price exceeds the typical perfectly competitive firm’s short run average total cost. What will happen to this market in the long run? a. The market demand curve will shift to the left as firms exit. b. The market supply curve will shift to the left as firms exit. c. The market demand curve will shift to the right as firms enter. d. Both the market demand and supply curves will shift to the left as firms exit. e. The market supply curve will shift to the right as firms enter. Key: 1. a; 2. a; 3. c; 4. b; 5. a; 6. e; 7. e; 8. e; 9. e; 10. a; 11. d; 12. a; 13. b; 14. b; 15. c; 16. e 17. d; 18. d; 19. b; 20. d; 21. c; 22. b; 23. c; 24. a; 25. e; 26. e; 27. a; 28. d; 29. b; 30. d; 31. c; 32. b; 33. d; 34. c; 35. e
Are you sure you want to buy this material for
You're already Subscribed!
Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'