Quiz 6

If firms in an industry are experiencing economic losses, firms will the industry and the price of the good will .

• leave; increase

• enter; increase

• enter; decrease

• leave; decrease

If perfectly competitive firms earn economic profit in the short run, then we would expect that in the long run:

• new firms will enter the market

• supply will decrease

• existing firms will leave the market

• demand will decrease

Which of the following is an example of perfect competition?

• One large firm supplies the entire product to the market.

• Many firms supply similar products, but each has significant brand loyalty.

• Many small firms all produce the same good.

• Two firms supply the entire market and compete with each other for customers.

Which of the following is true concerning a monopoly?

• A) A single consumer can impact the market price.

• B) The largest firm is a price taker.

• C) Many small firms sell the same good.

• D) The largest firm has significant market power.

An individual competitive firm can raise its price to increase profit. (Incorrect) has a large advertising budget. (Incorrect) produces a small proportion of output relative to the market. (Correct) can alter the market price of the good(s) it produces. (Incorrect)

• An individual competitive firm can raise its price to increase profit.

• has a large advertising budget.

• produces a small proportion of output relative to the market.

• can alter the market price of the good(s) it produces.

If one perfectly competitive firm is the only one to raise its price above the market price, it will sell some output, but less than previously.

• sell more output than previously.

• sell the same amount of output as previously.

• not sell any output.

The number and relative size of firms in an industry define the type of

• firm ownership.

• market structure.

• perfectly competitive market.

• monopoly market

An industry in which only two firms compete to supply a particular product is best characterized by which of the following market structures?

• monopoly

• duopoly

• oligopoly

• monopolistic competition

A perfectly competitive firm is a price taker because

• it has market power.

• it has no control over the market price of its product.

• its products are differentiated.

• market demand is downward-sloping.

Obstacles that make it difficult or impossible for additional producers to begin producing or selling in a new market are referred to as

• barriers to entry.

• barriers to exit.

• barriers to competition.

• blockades to exit.