WorksheetsDr week 4 Market strucutre
Total questions: 15
Worksheet time: 8mins
A firm’s total cost is $100 when it produces 10 units of output. When it produces 11 units, total cost rises to $115. What is the marginal cost of the 11th unit?
$5
$15
$100
$115
Which of the following is true in an industry where economies of scale exist?
Larger firms can produce at lower average costs than smaller firms.
Long-run average total costs increase as firms get larger.
Large and small firms can compete effectively with each other.
Firms have incentives to decrease their size to maximize profits.
A monopolist maximizes profit by producing the quantity where
price equals marginal cost.
marginal revenue equals marginal cost.
price equals average total cost.
marginal revenue equals average total cost.
Which market structure is characterized by many sellers, differentiated products, and low barriers to entry?
Perfect competition.
Monopoly.
Monopolistic competition.
Oligopoly.
In perfect competition, the demand curve for an individual firm is
downward-sloping.
upward-sloping.
horizontal.
vertical.
A firm in monopolistic competition will earn zero economic profit in the long run because
there are no barriers to entry.
products are homogeneous.
firms have market power.
demand is perfectly elastic.
Which of the following is an example of third-degree price discrimination?
Charging different prices for next-day delivery and 3-day delivery.
Charging a lower price per unit for buying in bulk.
Different prices for movie tickets for children and adults.
Higher prices for premium gasoline compared to regular.
Oligopoly is characterized by
many small firms.
interdependent decision-making.
homogeneous products only.
no barriers to entry.
The law of diminishing marginal returns states that as more units of a variable input are added to a fixed input, the marginal product of the variable input will eventually
increase.
decrease.
remain constant.
become zero.
A firm’s average total cost (ATC) is calculated as
total cost divided by quantity of output.
total variable cost divided by quantity of output.
total fixed cost divided by quantity of output.
marginal cost divided by quantity of output.
A natural monopoly arises because of
legal barriers to entry.
economies of scale over the entire range of output.
control of a key resource.
product differentiation.
In the short run, a perfectly competitive firm will shut down if price is less than
average total cost.
average variable cost.
marginal cost.
average fixed cost.
Monopolists can engage in price discrimination because they
face a perfectly elastic demand curve.
have no market power.
can separate consumers into groups with different elasticities.
produce homogeneous products.
Which of the following is a barrier to entry?
Low start-up costs.
Access to raw materials.
Patents.
Perfect information.
A firm in perfect competition produces where price equals marginal cost because
it is a price maker.
this maximizes profit.
it faces a downward-sloping demand curve.
it has no fixed costs.
