Barclay Econ Mkt Struc 7

When there is a perfect competition, each individual firm is too small to 

• influence price
• influence sales
• influence demand
• influence supply

All of the following are characteristics of monopolistic competition EXCEPT

• downward sloping demand curve for each firm.
• no market power among individual firms.
• slightly differentiated products.
• low entry barriers.

An example of a commodity is

• a one-of-a-kind brand
• a copyrighted book
• a bushel of wheat
• an automobile

Suppose the market for soybeans is perfectly competitive. What would happen if Farmer Brown raised the price for his soybeans?

• He would sell no beans.
• He would increase his profits.
• His supply curve for soybeans would shift to the right.
• His supply curve for soybeans would shift to the left.

Suppose the market for soybeans is perfectly competitive. What would happen if Farmer Brown raised the price for his soybeans?

• He would sell no beans.
• He would increase his profits.
• His supply curve for soybeans would shift to the right.
• His supply curve for soybeans would shift to the left.

Suppose the market for soybeans is perfectly competitive. What would happen if Farmer Brown raised the price for his soybeans?

• He would sell no beans.
• He would increase his profits.
• His supply curve for soybeans would shift to the right.
• His supply curve for soybeans would shift to the left.

All of the following are features of perfect competition EXCEPT

• many buyers and sellers
• differentiated products
• buyers that are fully informed about price, quality, and availability of products.
• easy entry into & exit from the industry

Farmers operate in a perfectly competitive market. Why?

• Farmers can control the output on their own land.
• Farmers can sell their produce directly to consumers.
• The amount one farmer sells has no affect on the market price.
• The amount one farmer sells affects the price another farmer can charge.

A firm that can lower its average cost per unit by selling more is operating with

• efficiency
• diseconomies of scale
• collusion
• excess capacity

Compared with competing firms, cartels usually

• produce more
• thrive more in the United States
• charge less
• earn more profit.