microeconomics midterm exam study guide pt.2

125.)
A firm that has little ability to influence market prices operates in a

• a. competitive market.

• b. strategic market.

• c. thin market.

• d. power market.

126.)
Free entry means that

• a. the government pays any entry costs for individual firms.

• b. government-funded research lowers the costs of patents and other barriers to entry.

• c. a firm's marginal cost is zero.

• d. no legal barriers prevent a firm from entering an industry.
  

127.) When buyers in a competitive market take the selling price as given, they are said to be

• a. market entrants.

• b. monopolists.

• c. free riders.

• d. price takers.

128.)
Why does a firm in a competitive industry charge the market price?

• a. If a firm charges less than the market price, it loses potential revenue.

• b. If a firm charges more than the market price, it loses all its market power.

• c. The firm can only sell limited number of units of output, so it wants to sell at the market price in order tolower its costs.

• d. All of the above are correct.

129.) Suppose a firm in a competitive market reduces its output by 20 percent. As a result, the price of its output is likely to

• a. increase.

• b. remain unchanged.

• c. decrease by less than 20 percent.

• d. decrease by more than 20 percent.

130.) Which of the following statements regarding a competitive market is not correct?

• a. There are many buyers and many sellers in the market.

• b. Because of firm location or product differences, some firms can charge a higher price than other firms andstill maintain their sales volume.

• c. Price and average revenue are equal.

• d. Price and marginal revenue are equal.

131.) Which of the following firms is the closest to being a perfectly competitive firm?

• a. the New York Yankees

• b. Apple, Inc.

• c. DeBeers diamond wholesalers

• d. a wheat farmer in Kansas

132.) For a firm in a competitive market, an increase in the quantity produced by the firm will result in

• a. a decrease in the product’s market price.

• b. an increase in the product’s market price.

• c. no change in the product’s market price.

• d. either an increase or no change in the product’s market price depending on the number of firms in the market.

133.) Refer to Table 14-1.

The price and quantity relationship in the table is most likely a demand curve faced by a firm in a

• a. monopoly.

• b. concentrated market.

• c. competitive market.

• d. strategic market.

134.) Refer to Table 14-2.

This firm maximizes total revenue by producing

• a. 1 units.

• b. 3 units.

• c. 5 units.

• d. as many units as possible.