1. A perfectly competitive seller is: a. Both a “price maker” and a “price taker” b. Neither a “price maker” nor a “price taker” c. A “price taker” d. A “price maker”
2. The demand curve for a perfectly competitive industry is ______________, while the demand curve for a single firm in that industry is ________________.
Perfectly inelastic b. Perfectly elastic c. Relatively inelastic d. Relatively elastic e. Downward sloping f. Upward sloping
3. Assume the Jeter Corp. is producing 20 units of output in a perfectly competitive market selling at $10 per unit. Its total fixed costs are $100 and its AVC is $3 at 20 units of output. This corporation:
a. Should close down in the short run b. is maximizing its profits
c. Is realizing a loss of $60 d. Is realizing an economic profit of $40
4. What do economies of scale, the ownership of essential raw materials, and patents have in common?
a. They must all be present before price discrimination can be practiced
b. They are all barriers to entry
c. They all help explain why a monopolist’s demand and marginal revenue curves coincide
d. They all help explain why the long run average cost curve is U-shaped
5. Generally the demand curve facing a cartel is what shape? ____________________________
6. Give an example of how a monopolistically competitive firm can engage in non-price competition. __________________
7. If an industry evolves from being monopolistically competitive to oligopolistic in nature, we would expect:
a. The concentration ratio to decrease
b. The concentration ratio to increase
c. The concentration ration might either increase or decrease
d. The barriers to entry have weakened
8. Why are imports considered a “safety valve” for the economy?
9. What do labor unions, state occupational licensing agencies, the NCAA, the AMA, and college accreditation agencies have in common?
10. What counter veiling market structure would negate the anti-competitive nature of OPEC?
11. What do the transport and agricultural industries, labor unions, and major league baseball all have in common?