ArCh23_10e.doc - Chapter 23—Perfect Competition MULTIPLE...

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Chapter 23—Perfect CompetitionMULTIPLE CHOICE1.Which of the following isnotan assumption of the theory of perfect competition?a.There are many sellers and many buyers, none of which is large in relation to total sales orpurchases.b.Each firm produces and sells a differentiated product.c.Buyers and sellers have all relevant information with respect to prices, product quality, andsources of supply.d.There is easy entry and exit.ANS: BPTS:1DIF:ModerateNAT:Analytic
LOC:Perfect competition2.Real-world markets that approximate the four assumptions of the theory of perfectcompetition includePTS:1DIF:EasyNAT:Analytic
LOC:Perfect competition3.The theory of perfect competition generally assumes thatPTS:1DIF:ModerateNAT:Analytic
LOC:Perfect competition4.In the theory of perfect competition,PTS:1DIF:ModerateNAT:Analytic
LOC:Perfect competition5.Does a real-world market have to meet all the assumptions of the theory of perfect competition beforeit is considered a perfectly competitive market?a.No, probably no real-world market meets all the assumptions of the theory of perfect
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competition. All that is necessary is that a real-world market behave as if it satisfies all theassumptions.b.Yes, if a real-world market does not meet the assumptions, then it cannot be considered aperfectly competitive market.c.Yes, unless it is a new market such as the computer market. New markets are not held tothe same assumptions as old, more established markets.d.No, but it does have to meet the assumption of producing and selling a homogeneousproduct. It does not have to fully meet the other assumptions.ANS: APTS:1DIF:ModerateNAT:AnalyticLOC:Perfect competition

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Term
Spring
Professor
CaraTucker

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