econ8 - Submitted by Le, Thao (THAOLE2) on 10/24/2011...

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Submitted by Le, Thao (THAOLE2) on 10/24/2011 3:32:17 PM Points Awarded 19.50 Points Missed 0.50 Percentage 97.5% 1. In a market for a homogeneous good, if sellers and buyers can enter or exit a market freely , the market is most likely: A) an oligopoly. B) a monopolistically competitive market. C) a monopoly. D) a perfectly competitive market. Points Earned: 0.5/0.5 Correct Answer(s): D 2. Which of the following is the best example of a perfectly competitive firm? A) DeBeers Diamond Company B) your local cable T.V. company C) Tino's Italian Eatery, a local restaurant D) Jones's wheat farm in eastern Washington Points Earned: 0.5/0.5 Correct Answer(s): D 3.
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Farmer Brown sells her wheat in a perfectly competitive market. Suppose the current market price of wheat is $2.50 per bushel. A) Farmer Brown can sell as much wheat as she likes at $2.50 per bushel. B) Farmer Brown can charge any price for her wheat, but will maximize profit if she sells for less than $2.50. C) Farmer Brown should charge more than $2.50. D) Farmer Brown can charge more than $2.50 and still sell some wheat. Points Earned: 0.5/0.5 Correct Answer(s): A 4. You sell your good in a perfectly competitive market where the market price is $7.00. When you sell 100 units your total revenue is $700. When you sell 101 units: A) total revenue increases by less than $7. B) total revenue increases by exactly $7. C) total revenue increases by more than $7. D) total revenue may increase or decrease. Points Earned: 0.5/0.5 Correct Answer(s): B 5. Jerry's Quarry sells building stone in a perfectly competitive market. At its current level of building stone production, Jerry's Quarry has marginal costs equal to $45, and AVC is rising. If the market price of building stone is $50, Jerry's Quarry should: A) decrease its level of building stone production. B) continue producing its current level of production. C) increase its production of building stone. D) shut down and produce no building stone. Points Earned: 0.5/0.5 Correct Answer(s): C 6. Kevin's Golf-a-Rama sells golf balls in a perfectly competitive market. At its current level of golf ball production, Kevin has marginal costs equal to $2. If the market price of golf balls is $1, Kevin should: A) decrease the level of golf ball production. B) continue producing the current level of production.
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C) increase the production of golf balls. D) raise the price of its golf balls. Points Earned: 0.0/0.5 Correct Answer(s): A 7. Compact discs are sold in a perfectly competitive market. The current market price of compact discs is $15. If at the current level of production of compact discs you calculate that the marginal cost to your company is also $15, and that AVC is rising, in the short run your company should: A) produce more compact discs. B) produce fewer compact discs.
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econ8 - Submitted by Le, Thao (THAOLE2) on 10/24/2011...

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