Macro Economic - Subject Matter Experts Only Please!1. There are a large number of firms in perfect competition. What is the significance of that?a. Each firm has great deal of discretion in setting prices.b. Whether there are 100 or 101 firms in the industry, the market price will be the same.c. That automatically makes goods the same (homogenous).d. That makes necessary a good deal of communication and coordination among firms. Therefore there tend to be strong trade associations in perfectly competitive industries.2. In perfect competition, the marginal revenue line is the same as the _________, and is a_______ line.3. In short-run equilibrium, a perfectly competitive firm produces 150 pencils at an averagecost of 12 cents each and receives $30 from selling them. Which of the followingstatements is INCORRECT?
4. Profits are maximized where MR = MC. However, sometimes MR = MC shows wherelosses are minimized.5. A firm is still in the increasing returns portion of its short-run marginal cost curve. Therefore it has in this regiona. an increasing marginal cost curve.b. a decreasing marginal cost curve.c. a constant marginal cost curve.d. an inverted average total cost curve.6. In a pure monopoly, there are7. The marginal revenue curve in monopoly is __________. The implication of this is that ________.
8. Imagine a monopoly firm is making economic profits to start with. Then the average total cost curve shifts upward, but the demand curve does not shift. The cost curve shifts so far up that now Price = Average Total Cost. Now the monopoly firm, which still has barriers to entry
You've reached the end of your free preview.
Want to read all 15 pages?