Chapter 15 Part 2

A market with a large number of sellers

• might be an oligopoly or a perfectly competitive market.

• can only be a perfectly competitive market.

• might be a monopolistically competitive or a perfectly competitive market.

• can only be a monopolistically competitive market.

• might be a perfectly competitive, monopolistically competitive, oligopoly, or monopoly market.

A perfectly competitive firm

• has a perfectly elastic supply.

• sells a product that has perfect substitutes.

• has a perfectly inelastic demand.

One requirement for an industry to be perfectly competitive is that

• many firms produce slightly different products.

• different firms produce widely different products.

• established firms have a significant advantage over new firms.

• sellers and buyers have imperfect information about prices.

• established firms have no advantage over new firms.

________ a large number of firms competing by making similar but slightly different products.

• Both perfect competition and monopolistic competition require

• Monopolistic competition requires

• Oligopoly requires

• Monopoly requires

• Perfect competition requires

A market is classified as an oligopoly when

• a few firms compete.

• only one firm sells a product with no close substitutes.

• no matter how many firms are in the market, a barrier blocks entry by other new firms.

• many firms produce the same product.

• many firms produce a slightly differentiated product.

A large number of sellers all selling an identical product implies which of the following?

• vertical market supply curves

• large losses incurred by all sellers

• the inability of any seller to change the price of the product

• horizontal market supply curves

• market chaos

For a syrup producer in central Vermont, profit is maximized at the level of output for which total

• cost is minimized.

• revenue exceeds total cost by the largest amount.

• revenue exceeds total cost by the smallest amount.

• revenue equals total cost.

• revenue is maximized.

If a perfectly competitive wheat farmer is maximizing its profit and then increases its output, the farmer's

• total revenue does not change but total cost increases, thereby decreasing the farmer's total profit.

• marginal revenue increases, but so does marginal cost, so that the farmer's total profit is uncertain.

• total revenue and total cost both rise, but the effect on the farmer's total profit is uncertain.

• total revenue increases, but total cost rises by more so that the farmer's total profit decreases.

• total revenue decreases and total cost increases, both thereby decreasing the farmer's total profit.

During the winter, theme parks in Orlando close earlier than in the summer. The reason the theme parks close early during the winter is because during that season the marginal revenue from staying open later is

• equal to

• less than

• zero compared to

• greater than

• not comparable to

Which of the following is true if a firm shuts down?

• The price is less than minimum average variable cost.

• The firm is able to avoid an economic loss

• The firm incurs a loss equal to its total variable cost