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Unformatted text preview: Practice Problems Chapter 8: Competition MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Firms that exhibit price- taking behavior A) are independently capable of setting price. B) have outputs that are too small to inuence market price and thus take it as given. C) take pricing behavior in their own hands. D) wait for other rms to set price, take it as given, and charge a higher price. 1) 2) If a prot- maximizing rm nds that, at its current level of production, MR < MC, it will A) operate at a loss. B) decrease output. C) increase output. D) shut down. 2) 3) The above gure shows the cost curves for a competitive rm. The rm will incur economic losses if the price is less than A) $5. B) $10. C) $0. D) $11. 3) 1 4) The above fgure shows the cost curves For a typical frm in a market and three possible market supply curves. IF there are 100 identical frms, the market supply curve is best represented by A) curve A....
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This note was uploaded on 04/10/2012 for the course ECN 100B taught by Professor Jamesbushnell during the Fall '11 term at UC Davis.
- Fall '11