Managerial Economics Questions

Which of the following is true?a. The long-run industry supply curve relates the price of a good or service to the quantity produced after all adjustments to a price change have been madeb. In perfectly competitive industries, the long-run supply curve is always horizontal. c. In establishing the long-run industry supply curve, factor costs and the number of firms are held constant.d. Every point on along-run industry suppl curve shows a price and quantity supplied at which firms in the industry are earning positive economic profit.

Market structures are categorized by the following two criteria:a. the number of firms and whether or not products are differentiatedb. the size of the firms and the extent of advertisingc. whether or not products are differentiated and the extent of advertisingd. the number of firms and size of the firms

The pricing in monopoly prevents some mutually beneficial trades. The value of these unrealized mutually beneficial trades is calleda. inequitiesb. sunk costsc. a deadweight lossd. opportunity costs

If all firms in an industry are price-takers, then: a. each firm can sell at the price it wants to charge, provided it is not too different from the prices other firms are changing.b. each firm takes the market price as given for its current output level, recognizing that the price will change if it alters its output significantly. c. the market sets the price, and each firm can take it or leave it (by setting a different price)d. An individual firm cannot alter the market price even if it doubles in output.

A monopolist with a linear demand curve will:a. produce regardless of elasticity, since it is a monopolist.b. produce only at the unit price-elastic portion of its demand curvec. not produce in the inelastic portion of its demand curved. not produce in the elastic portion of its demand curve.

When perfect competition prevails, which of the following characteristic of firms are we likely to observe? a. They all try to highlight the substantial product differentiation between producers.b. They are all price-takersc. There are not many of themd. They spend time erecting and maintaining barriers to new firms.

Which of the following is not an assumption that economists make when using the model of perfect competition? a. The products of each firm in a particular market are identicalb. There is easy entry and exit.c. Each firm sets its price equal to its average total costd. Firms seek to maximize profits

Consider a perfectly competitive firm in the short run. Assume it is sustaining economic losses but continues to produce. At the profit-maximizing (loss-minimizing) output, all of the following statements are correct expect:a. Marginal cost is less than average variable costb. Price is equal to marginal costc. Marginal cost is equal to marginal revenued. Marginal cost is less than average total cost

When economic profits in an industry are zero:a. firms are really doing badlyb. firms are doing as well as they could do in other marketsc. the industry is not in long-run equilibriumd. firms should exit so they can make an economic profit in some other market

The market for breakfast cereal contains hundreds of similar products, such as Fruit loops, corn flakes, and Rice Krispies, that are considered to be different products by different buyers. This situation violates the perfect competition assumption of:a. ease of entry and exitb. a standardized productc. many buyers and sellersd. complete informaton

In the short run, a perfectly competitive firm produces output and incurs economic loss if: a. P<AVCb. AVC>P>ATCc. P>ATCd. AVC<P<ATC

When perfect competition prevails, which of the following characteristics of firms are we likely to observe? a. They all try to operate where price equals average variable cost.b. They are all price-takersc. They all try to operate where price equals total cost, d. None of them ever experiences diminishing marginal returns.

During the summer, Alex runs a lawn-mowing service, and lawn-mowing is a perfectly competitive industry. In the sort run, Alex will shut down his lawn-mowing service rather than continue mowing grass if:a. total revenues can't cover total costb. total revenues can't cover total variable costsc. price exceeds average total costd. total revenues can't cover total fixed costs

If the price is consistently below average cost, then in the short run a perfectly competitive firm shoulda. There is not enough information given to answer this question b. raise pricec. shut downd. continue to produce to minimize losses

Perfectly competitive industries are characterized bya. consumers who can differentiate between the products of different producersb. a few producers who make up most of the market share of the industryc. few sellers and many buyersd. goods that are standardized

Zoe's bakery operates in a perfectly competitive industry. The variable costs at Zoe's Bakery increase, so all of the cost curves (with the exception of fix cost) shift leftward. The demand for Zoe's pastries does not change, nor does the firm shut down. To maximize profits after the variable cost increase, Zoe's Bakery will ___ its price and ___ its level of production. a. decrease; increaseb. raise; increasec. do nothing to; decreased. raise; decrease

An assumption of the model of perfect competition isa. few buyers and sellersb. difficult entry and exitc. Cooperation and Interdependence between sellersd. Identical goods

For a perfectly competitive firm, the short-run supply curve is the:a. greater than the minimum AVC; shut downb. Greater than the minimum AVC but less than the ATC; make an economic profit.c. Greater than ATC; make an economic profitd.Less than ATC; make an economic profit

A perfectly competitive firm will continue producing in the short run as long as it can cover itsa. fixed costb. average fixed costc. variable costd. total cost

Many furniture stores run "going out of business" sales but never go out of business. In order for the shut-down decision not be the appropriate one, the price of furniture must be __ than the ___ average variable cost. a. higher; minimumb. lower; minimumc. higher; maximumd. lower; maximum