PLEASE ANSWER ALL QUESTION BELOW (Topic) Price, Output, and Strategy: Pure Monopolistic Competition. 1. Which of the fol
Posted: Wed Jul 06, 2022 6:24 pm
PLEASE ANSWER ALL QUESTION BELOW
(Topic) Price, Output, and Strategy: PureMonopolistic Competition.
1. Which of the following statements is (are) trueconcerning a pure competition situation?
a. Its demand curve is represented by a vertical line.
b. Firms must sell at or below market price.
c. Marginal revenue is equal to price.
d. both b and c
both a and b
2. In pure competition:
a. the optimal price-output solution occurs at the point wheremarginal revenue is equal to price
b. a firm's demand curve is represented by a horizontal line
c. a firm is a price-taker since the products of every producerare perfect substitutes for the products of every otherproducer
d. a and b only
e. a, b, and c
3. In the short-run for a purely competitive market, amanufacturer will stop production when:
a. the total revenue is less than total costs
b. the contribution to fixed costs is zero or less
c. the price is greater than AVC
d. operating at a loss
e. a and b
4. In the purely competitive case, marginal revenue (MR)is equal to:
a. cost
b. profit
c. price
d. total revenue
e. none of the above
5. In long-run equilibrium, all firms in a purecompetition market situation operating under
a condition of certainty will have identical costs even thoughthey may use different
production and operation techniques.
a. true
b. false
6. If price exceeds average costs under purecompetition, _________ firms will enter the industry,supply will ______________, and price will be driven_____________.
a. more; decrease; down
b. more; decrease; up
c. more; increase; down
d. more; increase; up
e. none of the above
7. A firm in pure competition would shut downwhen:
a. price is less than average total cost
b. price is less than average fixed cost
c. price is less than marginal cost
d. price is less than average variable cost
8. In the long-run, firms in a monopolisticallycompetitive industry will
a. earn substantial economic profits
b. tend to just cover costs, including normal profits
c. seek to increase the scale of operations
d. seek to reduce the scale of operations
9. Uncertainty includes all of the following except_________.
a. unknown effects of deliberate actions
b. incomplete information as to the type of competitor
c. random disturbances
d. unverifiable claims
e. accidents due to weather hazards
10. Experience goods are products or services
a. that the customer already knows
b. whose performance is highly unusual
c. whose quality is undetectable when purchased
d. not likely to cause repeat purchases
e. all of the above
11. Buyers anticipate that the temporarywarehouse seller of unbranded computer equipment will
a. deliver high quality products consistent withexpectations
b. not attempt to establish any warranty enforcementmechanisms
c. offer several prices and qualities
d. produce only one quality
e. none of the above
12. All of the following are mechanisms which reduce theadverse selection problem except ___________
a. warranties from established enterprises with non-redeployable assets
b. high interest rates
c. large collateral requirements
d. brand names and product-specific promotions and retaildisplays
e. higher prices in repeat customer transactions
13. Asset specificity is largestwhen
a. value in first best use is large
b. value in second best use is large
c. customers choose their supplier at random
d. very valuable assets are non-redeploy able
e. customers are loyal to a particular seller
14. Under asymmetric information,
a. you never get what you pay for
b. you sometimes get cheated
c. you always get cheated
d. at best you get what you pay for
e. sellers make profits in excess of competitive returns
15. To escape adverse selection and elicit highquality experience goods buyers can
a. offer price premiums to new firms in the market
b. seek out unbranded goods
c. buy from generic storefronts that have leased temporaryspace
d. secure warranties from warehouse retailers
e. none of the above
16. The problems of asymmetric informationexchange arise ultimately because
a. one party to the exchange possesses different informationthan another
b. one party has more information than another
c. one party knows nothing
d. one party cannot independently verify the information ofanother
e. information is scarce
17. The market for "lemons" is one inwhich
a. the rational buyer discounts
b. the seller's product claims are unverifiable at the point ofpurchase
c. "the bad apples drive out the good"
d. the problem of adverse selection is rampant
e. all of the above
18. The fraudulent delivery of low-qualityexperience goods at high prices is more likely if
a. interest rates decline
b. information about notorious firms is speedilydisseminated
c. price premiums for allegedly high-quality increase
d. sellers invest in non-transferable reputation
e. none of the above
(Topic) Price, Output, and Strategy: PureMonopolistic Competition.
1. Which of the following statements is (are) trueconcerning a pure competition situation?
a. Its demand curve is represented by a vertical line.
b. Firms must sell at or below market price.
c. Marginal revenue is equal to price.
d. both b and c
both a and b
2. In pure competition:
a. the optimal price-output solution occurs at the point wheremarginal revenue is equal to price
b. a firm's demand curve is represented by a horizontal line
c. a firm is a price-taker since the products of every producerare perfect substitutes for the products of every otherproducer
d. a and b only
e. a, b, and c
3. In the short-run for a purely competitive market, amanufacturer will stop production when:
a. the total revenue is less than total costs
b. the contribution to fixed costs is zero or less
c. the price is greater than AVC
d. operating at a loss
e. a and b
4. In the purely competitive case, marginal revenue (MR)is equal to:
a. cost
b. profit
c. price
d. total revenue
e. none of the above
5. In long-run equilibrium, all firms in a purecompetition market situation operating under
a condition of certainty will have identical costs even thoughthey may use different
production and operation techniques.
a. true
b. false
6. If price exceeds average costs under purecompetition, _________ firms will enter the industry,supply will ______________, and price will be driven_____________.
a. more; decrease; down
b. more; decrease; up
c. more; increase; down
d. more; increase; up
e. none of the above
7. A firm in pure competition would shut downwhen:
a. price is less than average total cost
b. price is less than average fixed cost
c. price is less than marginal cost
d. price is less than average variable cost
8. In the long-run, firms in a monopolisticallycompetitive industry will
a. earn substantial economic profits
b. tend to just cover costs, including normal profits
c. seek to increase the scale of operations
d. seek to reduce the scale of operations
9. Uncertainty includes all of the following except_________.
a. unknown effects of deliberate actions
b. incomplete information as to the type of competitor
c. random disturbances
d. unverifiable claims
e. accidents due to weather hazards
10. Experience goods are products or services
a. that the customer already knows
b. whose performance is highly unusual
c. whose quality is undetectable when purchased
d. not likely to cause repeat purchases
e. all of the above
11. Buyers anticipate that the temporarywarehouse seller of unbranded computer equipment will
a. deliver high quality products consistent withexpectations
b. not attempt to establish any warranty enforcementmechanisms
c. offer several prices and qualities
d. produce only one quality
e. none of the above
12. All of the following are mechanisms which reduce theadverse selection problem except ___________
a. warranties from established enterprises with non-redeployable assets
b. high interest rates
c. large collateral requirements
d. brand names and product-specific promotions and retaildisplays
e. higher prices in repeat customer transactions
13. Asset specificity is largestwhen
a. value in first best use is large
b. value in second best use is large
c. customers choose their supplier at random
d. very valuable assets are non-redeploy able
e. customers are loyal to a particular seller
14. Under asymmetric information,
a. you never get what you pay for
b. you sometimes get cheated
c. you always get cheated
d. at best you get what you pay for
e. sellers make profits in excess of competitive returns
15. To escape adverse selection and elicit highquality experience goods buyers can
a. offer price premiums to new firms in the market
b. seek out unbranded goods
c. buy from generic storefronts that have leased temporaryspace
d. secure warranties from warehouse retailers
e. none of the above
16. The problems of asymmetric informationexchange arise ultimately because
a. one party to the exchange possesses different informationthan another
b. one party has more information than another
c. one party knows nothing
d. one party cannot independently verify the information ofanother
e. information is scarce
17. The market for "lemons" is one inwhich
a. the rational buyer discounts
b. the seller's product claims are unverifiable at the point ofpurchase
c. "the bad apples drive out the good"
d. the problem of adverse selection is rampant
e. all of the above
18. The fraudulent delivery of low-qualityexperience goods at high prices is more likely if
a. interest rates decline
b. information about notorious firms is speedilydisseminated
c. price premiums for allegedly high-quality increase
d. sellers invest in non-transferable reputation
e. none of the above