Questions:
1) Price is constant or given to the individual firm selling in a purely competitive market because
A. the firm's demand curve is downward sloping
B. of product differentiation reinforced by extensive advertising
C. each seller supplies a negligible fraction of total supply
D. there are no good substitutes for its product
2) The most important pricing strategy for a perfectly competitive firm is
A. minimizing cost
B. maximizing sales
C. product differentiation
D. advertising
3) Which of the following is a nonprice barrier of entry?
A. Huge sunk cost
B. Discounts
C. Product differentiation
D. Advertising
4) A third-degree price discrimination can be applied to which of the following market structures?
A. A monopoly
B. An oligopoly
C. A monopolistic competition
D. A perfect competition
5) Investing in R&D is more likely to occur in markets where
A. firms have monopoly power protected by regulatory barriers
B. markets are closely competitive markets with close to zero economic profits
C. markets are oligopoly markets with strong collusion agreements
D. markets are monopolistic competitive markets
6) All economies of scale are achieved at the minimum of
A. average total cost
B. total cost
C. average variable cost
D. average fixed cost
7) Inflation is undesirable because it
A. arbitrarily redistributes real income and wealth
B. invariably leads to hyperinflation
C. usually is accompanied by declining real GDP
D. reduces everyone's standard of living in the same proportion
8) An economy's aggregate demand curve shifts leftward or rightward by more than changes in initial spending because of the
A. net export effect
B. wealth effect
C. real-balances effect
D. multiplier effect
9) Suppose productivity rises in a particular economy, but wages stay the same. Other things equal,
A. the demand curve will shift leftward
B. the supply curve will shift rightward
C. the supply curve will shift leftward
D. expenditures curve will shift rightward
10) If personal taxes were decreased and resource productivity increased simultaneously, the equilibrium
A. output would rise
B. output would fall
C. price level would necessarily fall
D. price level would necessarily rise