Practice Exam2 Fall 2010

Practice Exam2 Fall 2010 - Practice Exam #2 Fall 2010...

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Unformatted text preview: Practice Exam #2 Fall 2010 Student: ___________________________________________________________________________ 1. Competitive firms cannot individually affect market price because: A. There is an infinite demand for their goods B. The market demand curve is flat or horizontal C. Their individual production is insignificant relative to the production of the industry D. The government exercises control over the market power of competitive firms 2. If a firm can change market prices by altering its output then it: A. Has market power B. Is a price taker C. Faces a horizontal demand curve D. Is a competitive firm 3. If Pepsi and Coke are the only two soft drink producers, they could be considered: A. A duopoly B. A monopoly C. An oligopoly D. Perfectly competitive firms 4. If there are only four companies that produce tennis balls, the market could be considered: A. A duopoly B. A monopoly C. An oligopoly D. Perfectly competitive 5. Which of the following is not an example of monopolistic competition? A. Lettuce farmers B. Fast-food restaurants C. Convenience stores D. Gasoline stations 6. An industry in which many firms produce similar products but each firm has significant brand loyalty is known as: A. Perfect competition B. A monopoly C. Monopolistic competition D. An oligopoly 7. A perfectly competitive firm is a price taker because: A. It has no control over the selling price of its product B. It has market power C. Market demand is downward sloping D. Its products are differentiated 8. A perfectly competitive firm currently sells 30,000 cartons of eggs at $1.25 each. If the firm wants to sell one more carton of eggs, the firm: A. Should raise its price above $1.25 B. Cannot sell an additional carton at any price because there are other egg farmers in the market C. Must sell the carton for less than $1.25 D. Should price the carton at $1.25 9. A flat or horizontal demand curve for a firm indicates that: A. The firm has no market power B. The law of demand does not apply in the market C. Price equals average total cost D. The firm is a monopoly 10. In the perfectly competitive catfish market, the market demand curve is: A. Flat (horizontal) B. The same as the demand curve faced by the firm C. Vertical D. Downward sloping 11. Marginal costs: A. Are the additional costs incurred in producing one more unit of output B. Fall as the rate of output increases C. Are constant for a perfectly competitive firm D. Are equal to total costs divided by total output 12. When the competitive firm maximizes profit, the marginal cost of an additional unit of output is always equal to the: A. Minimum of average total cost B. Minimum total cost C. Maximum total revenue D. Price 13. A profit-maximizing competitive firm wants to _____ the rate of output when marginal cost _____ price....
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Practice Exam2 Fall 2010 - Practice Exam #2 Fall 2010...

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