Microeconomia 7-11

In perfect competition, the demand curve for an individual’s firm product is _________.

• downward sloping

• relatively elastic

• perfectly inelastic

• perfectly elastic

In the case of an increase in fixed costs, what will happen to the economic profits of the typical competitive firm? Economic profits will ________.

• not change

• increase

• decrease

• cannot tell

Regarding perfect competition, what does it mean when the goods sold by the firms in a market are homogeneous?

• Firms can produce similar goods with different inputs and different costs.

• The good sold by one firm is a perfect substitute of the good sold by another firm in the same market.

• The firms in the market are the same size.

• The goods sold by one firm are complements of the goods sold by another firm in another market.

The clothing and attire retail market has seen an increased number of firms entering the industry. Thus, there is a lot of competition in markets for many types of clothing. What is the result of this high amount of competition?

• Individual buyers and sellers cannot affect the market price

• Firms have a lot of flexibility in pricing their products.

• One individual firm can determine the market price.

• Some firms must necessarily leave.

In perfect competition, when will firms be able to earn economic profits?

• in the short run

• in the long run

• in the short and the long runs.

• in neither the short nor the long runs.

Imagine two firms with identical cost structures that do not exhibit economies of scale at high levels of production. One is competing in a perfectly competitive market and one is a monopoly. In the long run which of the following is true?

• The monopoly and the perfectly competitive firm will produce the same quantity

• The monopoly and the perfectly competitive firm will charge the same price

• The monopoly will charge a higher price than the perfectly competitive firm

• The monopoly will sell a higher quantity than the perfectly competitive firm

An increase in fixed costs for a monopoly will do which of the following?

• Increase the price

• Decrease the economic profits

• Lower the level of output

• Lower marginal revenue

Which of the following are characteristics of a true monopoly market?

I. Possibility for normal profits in the long run

II. Possibility for economic profits in the long run

III. No close substitutes to the good/service

IV. Legal, technological, or other barriers to market entry

• II only

• I, III, and IV

• II and IV

• I, II, III, and IV

Which of the following is true for a profit-maximizing monopolistic competitor?

• Marginal cost = price

• Marginal cost > marginal revenue

• Marginal cost = marginal revenue

• Marginal cost < marginal revenue

At the Fisherman’s Wharf in San Francisco, there are a lot of seafood vendors. Suppose that there are twenty vendors selling steamed crab. If Tommy’s crab shack sells 100 steamed crabs per day for $20 each, how much economic profit will Tommy earn in the long run? (Assume that the seafood vendors are operating in a monopolistically competitive market.)

• 2000

• 1000

• 0

• There's not enough information