WorksheetsPerfect competition and Monopoly
Total questions: 33
Worksheet time: 40mins
Which of the following is NOT a characteristic of Perfect Competition?
Barriers to entry
Homogeneous product
Firms are price takers
Do not involve non-price competition
In a Perfect Competition market, if firms are making supernormal profits in the short run, what must the Average Cost (AC) be?
equal to the price
equal to the Marginal Cost (MC)
below the Average Revenue (AR)
above the Average Revenue (AR)
What type of outcome will the firms experience in the short run with Price=MR=AR= RM10, Quantity= 5 units, AC= RM12, and MC= RM10?
Profit
Loss
Breakeven
Can you identify the different types of profit illustrated in the following image?
Super-duper profit
Regular profit
Below-average profit
What is the key to profit maximization using the marginal approach?
Setting P equal to MC
Setting AC equal to AR
Setting MR equal to MC
Setting TR equal to TC
What is the secret formula to unlock the treasure chest of marginal revenue (MR)?
Whispering 'TR divide quantity' to the wind
Chanting 'TC divide quantity' under a full moon
Solving the riddle of 'change in TC divide change in quantity'
Unveiling the mystery of 'change in TR divide change in quantity'
Which of the following is an example of firms in Perfect Competition?
TNB
Fish
Shoes
Shampoo
Which time frame allows you to mix and match ALL your production tools?
Short run
Long run
Sunk Cost
Medium Run
What is the ultimate goal of total product?
Only the minimum quantity of labour
The past expenditure on something that has no resale value
The maximum output that a given quantity of labour can produce
What is the magical term that describes the increase in total product when you add just one more unit of the variable input, while keeping all other inputs constant?
Sunk Cost
Marginal Product
Average Product
What is the secret sauce that makes a firm's costs stay the same no matter what?
The cost of all the productive resources that a firm uses
The cost of a firm's fixed inputs
The average product of a factor of production
What is the term for the total cost of all the firm's variable inputs?
Total cost
Very expensive
Minimum cost
Total variable cost
What magical phenomenon occurs when a firm's technology allows average total cost to decrease as production increases, creating a downward-sloping LRAC curve?
Economies of scale
Economies of a city
Long-run average cost curve
Is it true or false that when a firm's technology features cause average total cost to increase as output rises and the LRAC curve slopes upward, it's called 'diseconomies of scale'?
True
False
Which of the following best describes a perfect competition market?
A market with only a few firms producing identical goods
A market with many firms producing goods that differ somewhat
A market with many firms producing identical goods
What happens in a world of perfect competition?
There are strict rules for entry
Every company can control the price of the product
All companies sell their products at the same price
What are the two key features that define a monopoly?
Barriers to entry and no close substitutes.
Franchises and barriers to entry.
Barriers to entry and close substitutes.
Close substitutes and no barriers to entry.
Which of the following scenarios best represents a monopoly?
A bustling city restaurant.
The fast-paced stock market.
The sole veterinarian in a remote farm community.
PPUM
Imagine you're in a game show! In the monopoly, the firm's marginal revenue curve is ________, while in a perfectly competitive market, each firm's marginal revenue curve is ________.
downward sloping; horizontal
horizontal; downward sloping
upward sloping; horizontal
downward sloping; upward sloping
What type of market structure is characterized by a single firm dominating the market?
Oligopoly
Purely Competitive
Monopoly
Monopolistic competition
What is one disadvantage of having a monopoly?
achieving economies of scale
high level of research and development
Producing a greater quantity at profit-maximizing level of output
limited choices for consumers
What is one of the key requirements for a monopoly to exist?
Products are high priced
There are several close substitutes for the product
There is a unique product with no close substitutes
The product cannot be produced by small firms
What is a barrier to entry?
Something that new firms love to jump over
A secret code to enter the market
Any obstacle that stops new players from joining the game
A magical force that keeps competition at bay
Which of the following could entice new firms to join an industry?
Normal profits
Economic losses
Economic profits
Accounting profits
How can this monopoly firm reach its peak profit level?
How can this monopoly firm hit the jackpot by finding the perfect price to maximize profits?
Using the graph provided, determine the total profit generated by this company.
What could entice a new player to join an industry?
Normal profits
Economic losses
Economic profits
Accounting profits
Imagine a firm in a perfectly competitive market throwing a party! When the price drops below the minimum of a(n) ____________, the party stops!
marginal cost curve
average total cost curve
average fixed cost curve
average variable cost curve
What kind of price does a perfect competitive firm charge?
different to other firms
higher than other firms
lower than other firms
similar to other firms
What makes a monopoly stand out from the crowd?
Low barriers to entry
Many close substitutes
Unique product with no close substitutes
Franchises and barriers to entry
Which market structure is like a boss in the market?
Oligopoly
Perfectly Competitive
Monopoly
Monopolistic Competition
What is the secret formula to unlock the treasure chest of marginal revenue (MR)?
Whispering 'TR divide quantity' to the wind
Chanting 'TC divide quantity' under a full moon
Reciting 'Change in TC divide change in quantity' backwards three times
Singing 'Change in TR divide change in quantity' to the tune of your favorite song
