1. A perfectly competitive market arises when:
a) the market demand is small relative to the output of a firm,
b) there are many buyers but few sellers,
C) the market demand is very large relative to the output of one seller_
d) a firm has control over a unique resource.
2. For the perfectly competitive potato producers in Prince Edward island, the market demand curve rot potatoes is:
a) a horizontal line.
b) downward sloping.
c) nonexistent.
d) upward sloping.
3 In the short run, a perfectly competitive firm must decide:
a) the price to charge for its product, and the level of output that wilt maximize its economic profits or minimize its economic losses. only the level of output that wilt maximize its economic profits or minimize its economic losses,
c) only the price to charge for its product that will enable it to maximize its economic proil is or minimize its economic losses.
d) whether or not is should advertise.
4. Shama is producing candles in a perfectly competitive market, When she produces 500 ez.indlcs., her total cost is $250. if she produces one additional candle, her total cost increases to $260. In order to maximize her profit.. she should produce the additional candle:
a) if the market price for a candle is $12.
b) only if the market price exceeds at least $260 for a candle,
c) only if the market price exceeds at least $250 for a candle_
d) None of the above answers are correct,
5. The hog market is perfectly competitive, with thousands of hog fanners. In the I 990s, new warmers entered the hog market, driving the price of pork down. The economic pro lit of the initial hog farm-ers and in the long-run the initial hug farmers
a) increased; earned all even greater economic profit than initially
b) decreased; earned a normal profit,
e..) increased: carried a normal profit.
d) decreased; incurred au economic loss.
6. The cranberry market is perfectly competitive, Reports that consuming cranberries can lead to improved health result in a permanent increase in the demand for cranberries and an immediate upward jump in the price of cranberries, As time passes, the supply of cranberries will increase, so that the price of cranberries and the firms- economic
a) falls; profits will be eliminated
b) rises still higher; loss will be eliminated
c) rises still higher; profit will not change
d) falls, loss will be increased
7. The average cost curve of a natural monopoly:
a) is positively sloped until it crosses the demand curve.
b) intersects the demand curve while it is still negative sloped.
c) intersects the demand curve while it is positively sloped,
d) is the natural monopoly's supply curve.
8. In order for a hotel to successfully price discriminate so that senior citizens are given a discount, the hotel must be able to:
a) keep younger customers from rioting.
b) lower its prices to younger customers too.
c) prevent senior citizens from reselling their rooms to younger customers.
d) shift its demand curve rightward.
9. Which of the following statements is false?
a) A perfectly competitive market produces more output and charges a lower price than a monopo¬ly
b) A perfectly competitive firm produces where MR = MC but a monopoly produces where MR >
c) In a perfectly competitive market, the price is equal to the marginal cost, but in a market with a single-price monopoly, price exceeds marginal cost,
d) The consumer surplus is smaller for a market with .a monopoly than for a perfectly competitive market.
10. Comparing perfect competition to the single-price monopolist, we see that:
a) both producers are equally efficient in their use of resources.
b) the monopolist is actually more efficient in the use of resources.
c) perfect competition achieves efficiency in resource use while the monopolist does not.
d) the monopolist achieves efficiency in resource use while perfect competition does not.