Chapter 15 Part 1

In which market structure do firms exist in very large numbers, each firm produces an identical product, and there is freedom of entry and exit?

• only monopolistic competition

• only perfect competition

• monopoly

• oligopoly

• both perfect competition and monopolistic competition

One requirement for an industry to be perfectly competitive is that:

• there are many firms selling different products.

• there are multiple restrictions on entry into or exit from the market.

• the many firms sell slightly different products.

• there are no restrictions on entry into or exit from the market.

Which of the following market types has the fewest number of firms?

• oligopoly

• monopolistic competition

• perfect competition

• monopoly

• perfect competition and monopolistic competition

When one firm sells a good or service that has no close substitutes and a barrier blocks the entry of new firms, what type of market is this?

• either monopoly or monopolistic competition

• perfect competition

• only monopoly

• oligopoly

• only monopolistic competition

A market is classified as monopolistically competitive when:

• many firms produce a slightly differentiated product

• there is one firm that sells a good or service with no close substitutes.

• there is a barrier that blocks entry by other firms.

• many firms produce the same product.

• a small number of firms compete.

In which market structure are there a small number of firms competing?

• monopolistic competition

• only oligopoly

• perfect competition

• only monopoly

• either monopoly or oligopoly

To maximize its profit, in the short run a perfectly competitive firm decides

• how much advertising it should undertake

• what price to charge for its product

• what quantity of output to produce

• whether to increase the size of its plant

• whether to exit the market

The price charged by a perfectly competitive firm is

• lower the more the firm produces

• the same as the market price

• higher the more the firm produces

• different than the price charged by competing firms

• indeterminate

For a perfectly competitive firm, the price of its good is equal to the firm's marginal revenue because

• information about price changes is hard to come by for small sellers

• price and marginal revenue are the same economic concepts

• the firm's total revenue cannot be changed by anything the firms can do

• there are only a small number of firms in the market

• individual perfectly competitive firms cannot influence the market price by changing their output

Suppose Pat's Paints is a perfectly competitive firm. If Pat's Paints’ marginal revenue equals $5 per can, and Pat decides to sell 100 cans of paint, Pat's total revenue equals

• $5

• $100

• $20

• $500

• Information on the price of a can of paint is needed to answer the question