Question

Please help me and review my answers for my quiz. Let me know which ones you believe to be right and wrong.


1. When P = AR = MR = AC = MC:

X economic profits are positive.
economic profits are zero.
economic profits are negative.
normal profits are zero.
normal profits are negative.

Question 2. A monopolist will try to operate:

X where marginal cost equals marginal revenue.
in the inelastic range of the demand curve.
where average revenue equals marginal revenue.
at the highest price on the demand curve.

Question 3. A firm in a(n) industry will have the most elastic demand curve:

X monopolistic
oligopolistic
monopolistically competitive
perfectly competitive

Question 4. A monopolist faces:

X a perfectly elastic demand curve.
a portion of the market demand curve.
an upward-sloping demand curve.
no demand curve, because demand is not important to the monopolist.
the market demand curve.

Question 5. Retail outlets operate in which of the following market structures?:

X perfect competition
monopolistic competition
oligopoly
monopoly
oligopsony

Question 6. Average revenue (AR):

X occurs when MC = MR.
equals TR/Q.
is greater than price when economic profits are present.
does not appear in the model of perfect competition.

Question 7. Which one of the following is NOT a basic assumption of the model of perfect competition?:

Many buyers
Many sellers
A differentiated product
Full information
X Mobile resources

Question 8. A firm in perfect competition is assumed to be:

a price leader.
a developer of new inventions.
X small in size, relative to the size of the industry.
large in size, relative to the size of the industry.

Question 9. A firm in a monopolistically competitive industry faces a downward-sloping demand curve because:

X the product is homogeneous.
the product is differentiated.
nonprice competition is missing.
barriers to entry are high.

Question 10. Anna Lopez sells timber in a perfectly competitive market. Incomes increase, and many people buy new homes; the market demand curve shifts to the right. In the short run, she should expect:

X the price of timber to remain unchanged.
profits to fall.
the price of timber to rise.
firms to leave the timber business.