Mid Term 2 Quiz

Which of the following is NOT a feature of a perfectly competitive market?

• A large number of sellers

• Free-entry of new sellers

• A small number of buyers who buy large quantities.

• The sellers have no ability to influence the market price

The marginal cost curve is the slope of the average cost curve.

• True

• False

A firm in a competitive market observing a rival firm raising its price​ will:

• increase production because it knows that consumers will substitute toward its relatively less expensive product.

• lower its price and capture the entire market.

• ignore its​ rival's action.

Which market structure best describes​ the industry of auto industry?

• Oligopoly

• Monopoly

• Perfect Competition

• Monopolistic Competition

If the production function has increasing returns to scale, the marginal cost (of the long-run cost function) is decreasing.

• True

• False

A time period when at least one factor of production is held constant is called

• Market period

• Very short period

• Short run

• Long run

The gap between ATC and AVC is 

• MC.

• AFC.

• TFC.

• constant throughout.

Should a firm shut down if its weekly revenue is ​$1,000​, its variable cost is ​$900​, and its fixed cost is ​$1,100​, of which ​$150 is avoidable if it shuts​ down? ​ Why? The firm should

• produce because revenue of ​$1,000 is greater than variable costs.

• because revenue of ​$1,000

  is less than avoidable costs

• because revenue of

  ​$1,000 is less than fixed costs

At the cost-minimizing point, the isocost line are ________ to the
isoquant.

• parallel

• tangent

• negative

• positive

The Isocost line is sloped ________

• negatively

• Positively