chapter 10 questions and answers

chapter 10 questions and answers - 05/05/2010 07:03:00...

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05/05/2010 07:03:00 C HAPTER 8 1T HE F IRM AND THE I NDUSTRY U NDER P ERFECT C OMPETITION TRUE-FALSE QUESTIONS PERFECT COMPETITION DEFINED 1. Perfect competition is an ideal market structure. ANSWER T, M, R 2. Perfectly competitive markets have absolutely no  drawbacks. ANSWER F, M, R 3. Perfect competition forms one extreme of the market  structure spectrum. ANSWER T, E, R 4. Perfect competition is characterized by numerous  firms. ANSWER T, E, R 5. It is relatively easy for a firm to enter a perfectly  competitive market. ANSWER T, M, R 3
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4 Chapter 8/The Firm and the Industry Under Perfect Competition 6. Perfectly competitive markets feature relatively high  barriers to entry. ANSWER F, E, R 7. Under the theory of perfect competition, firms and  buyers know the availability and prices associated with all  products in the market. ANSWER T, M, R 8. Under perfect competition, firms are relatively  ignorant of the actions of their competitors. ANSWER F, E, R 9. In perfect competition there are differences in the  products sold by various firms. ANSWER F, M, R 10. In the long run, a perfectly competitive industry tends  to develop differentiated products. ANSWER F, D, R 11. Perfectly competitive firms are known for being  “price makers.”
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Chapter 8/The Firm and the Industry Under Perfect Competition 5 ANSWER F, E, R 12. The market for toothpaste is a good example of perfect  competition. ANSWER F, E, A 13. Perfectly competitive markets are not the best at  producing the goods that are desired by consumers. ANSWER F, E, R 14. Perfectly competitive markets are not the most  efficient type. ANSWER F, E, R THE COMPETITIVE FIRM 15. A perfectly competitive firm is a “price taker” because  it cannot sell its product for more than the market price. ANSWER T, E, R 16. A perfectly competitive firm is a “price maker.” ANSWER F, M, R 17. A perfectly competitive firm may, under some  circumstances, be able to affect the market price.
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6 Chapter 8/The Firm and the Industry Under Perfect Competition ANSWER F, E, R 18. A perfectly competitive firm has a horizontal demand  curve because it can sell as much as it wants at the market price. ANSWER T, E, R 19. The demand curve of a perfectly competitive firm is  vertical. ANSWER F, E, R 20. In perfect competition, a firm’s marginal revenue  equals the price of the product. ANSWER T, D, A
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chapter 10 questions and answers - 05/05/2010 07:03:00...

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