Perloff-tb08-Ec300

Perloff-tb08-Ec300 - Chapter 8 Competitive Firms and...

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Chapter 8 Competitive Firms and Markets ± Multiple Choice 1) Economists define a market to be competitive when the firms (a) spend large amounts of money on advertising to lure customers away from the competition. (b) watch each other’s behavior closely. (c) are price takers. (d) All of the above. Answer: C Difficulty: 0 Topic: Competition Question Status: Revised 2) A market’s structure is described by (a) the number of firms in the market. (b) the ease with which firms can enter and exit the market. (c) the ability of firms to differentiate their product. (d) all of the above. Answer: D Difficulty: 0 Topic: Competition Question Status: New 3) If consumers view the output of any firm in a market to be identical to the output of any other firm in the market, the demand curve for the output of any given firm (a) will be identical to the market demand curve. (b) will be horizontal. (c) will be vertical. (d) cannot be determined from the information given. Answer: B Difficulty: 0 Topic: Competition Question Status: Revised
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158 Jeffrey Perloff • Microeconomics, Third Edition 4) In the absence of any government regulation on price, if a firm has no power to set price on its own, one can safely conclude (a) the demand curve for the firm’s product is horizontal. (b) there are many firms in the industry. (c) the market is in long-run equilibrium. (d) the firms in this industry are not profitable. Answer: A Difficulty: 2 Topic: Competition Question Status: Revised 5) In a perfectly competitive market, (a) firms can freely enter and exit. (b) firms sell a differentiated product. (c) transaction costs are high. (d) All of the above. Answer: A Difficulty: 0 Topic: Competition Question Status: Revised 6) In a competitive market, if buyers did not know all the prices charged by the many firms, (a) all firms still face horizontal demand curves. (b) firms sell a differentiated product. (c) demand curves can be downward sloping for some or all firms. (d) the number of firms will most likely decrease. Answer: C Difficulty: 1 Topic: Competition Question Status: Revised 7) Many car owners and car dealers describe their different cars for sale in the local newspapers and list their asking price. Many people shopping for a used car consider the different choices listed in the paper. The market for used cars could be described as (a) competitive. (b) perfectly competitive. (c) non-competitive. (d) having high transaction costs. Answer: A Difficulty: 1 Topic: Competition Question Status: Revised
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Chapter 8 Competitive Firms and Markets 159 8) Many car owners and car dealers describe their different cars for sale in the local newspapers and list their asking price. Many people shopping for a used car consider the different choices listed in the paper. The absence of which condition prohibits this market from being described as perfectly competitive? (a)
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This note was uploaded on 10/08/2010 for the course ECO 3101 taught by Professor Boyd during the Spring '10 term at FIU.

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Perloff-tb08-Ec300 - Chapter 8 Competitive Firms and...

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