Pierce College » Economics » Economics 1 - Principles of Economics » Summer 2021

Economics 1 - Principles of Economics » Summer 2021 » End of Week Quiz Chapter 8 to 10

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Question #1

If marginal cost is rising in a competitive firm's short-run production process and its average variable cost is falling as output is increased, then

A. marginal cost is below average variable cost.

B. marginal cost is below average fixed cost.

C. marginal cost is above average variable cost.

D. average fixed cost is constant.

Question #2

In Sam's greenhouse operation, labor is the only short term variable input. After completing a cost analysis, if the marginal product of labor is the same for each unit of labor, this will imply that

A. the average product of labor is always greater that the marginal product of labor.

B. the average product of labor is always equal to the marginal product of labor.

C. the average product of labor is always less than the marginal product of labor.

D. as more labor inputs are used, the average product of labor inputs will fall.

Question #3

If the price that a firm charges is higher than its ___________ cost of production for that quantity produced, then the firm will earn profits.

A. variable

B. average

C. fixed

D. marginal

Question #4

The term _______ refers to a firm operating in a perfectly competitive market that must take the prevailing market price for its product.

A. price setter

B. business entity

C. price taker

D. trend setter

Question #5

Why would a profit-seeking firm need to tailor its decisions about the quantity of labor inputs that it purchases?

A. deciding what quantity to produce is one of the major choices a profit-seeking firm makes

B. to produce the profit-maximizing quantity of output at the lowest possible average cost

C. to produce the highest profitable quantity of output at the lowest possible marginal cost

D. the quantity of labor is the only variable cost choice a profit-seeking firm can make

Question #6

When a business adopts a strategy of reducing and/or discontinuing production in response to a sustained pattern of losses, it is

A. preparing to reach its shutdown point.

B. considering capital investments.

C. preparing to exit operations.

D. considering opportunity costs.

Question #7

In the _______ , the perfectly competitive firm will react to profits by _____________________ .

A. long run; increasing its production

B. short run; reducing its labor inputs

C. long run; tailoring their quality controls

D. short run; increasing quality of products

Question #8

If a competitive firm experiences a shift in costs of production that decreases marginal costs at all levels of output,

A. the firm's demand curve will also shift to the left.

B. the firm's marginal cost curve will shift to the left.

C. expanding output levels at any given price will be profitable.

D. producing less at any market price will off-set marginal cost .

Question #9

Under perfect competition, any profit-maximizing producer faces a market price equal to its

A. total costs

B. average costs

C. variable costs

D. marginal costs

Question #10

A natural monopoly occurs when the quantity demanded is _________ the minimum quantity it takes to be at the bottom of the long-run average cost curve.

A. a or c above

B. less than

C. equal to

D. greater than

Question #11

The US government has registered _________ on behalf of business firms to protect a particularly distinct element each has selected for its ability to aid consumers to easily _________.

A. 1 million copyright licenses; identify the authors of creative works

B. 200,000 trade secrets; create a natural monopoly

C. 200,00 patents; license for use

D. 800,000 trademarks; identify the source of goods

Question #12

Occasionally, _________ may lead to pure monopoly; in other market conditions, they may limit competition _________.

A. barriers to entry; to a few oligopoly firms

B. deregulation; requiring new copyright law

C. deregulation; requiring new patent law

D. barriers to entry; to a natural monopoly

Question #13

The marginal revenue curve for a monopolist _________ the market demand curve.

A. always is the same

B. always rises above

C. always lies beneath

D. always runs parallel

Question #14

If a firm holds a pure monopoly in the market and is able to sell 5 units of output at $4.00 per unit and 6 units of output at $3,90 per unit, it will produce and sell the sixth unit if its marginal cost is

A. $3.90 or less

B. $3.40 or less

C. $4.00 or less

D. $3.50 or less

Question #15

For a pure monopoly to exist,

A. there are limited sellers in a particular industry

B. there is a single seller in a particular industry

C. there are a few sellers in a given industry

D. there is only one seller, therefore no industry

Question #16

Deregulation occurs when a government eliminates or scales back rules relating to all but one of the following. Which one is it?

A. prices that can be charged

B. quantities that can be produced

C. conditions of entry in a certain industry

D. natural monopoly

Question #17

Which of the following denotes the typical shape of the monopolist's total cost curve?

A. total costs rise and grow steeper as output rises

B. higher output levels create the typical downward sloping cost curve

C. total costs are typically constant and are shown by a straight horizontal line

D. total costs decrease and become flatter as output rises

Question #18

_______________ law implies ownership over an idea or concept or image

A. Trademark

B. Intellectual property

C. Copyright

D. Patent

Question #19

If monopolistic competitors must expect a process of entry and exit like perfectly competitive firms,

A. they will be unable to earn higher-than-normal profits in the short run.

B. they will wish to cooperate to make decisions about what price to charge.

C. they will be unable to earn higher-than-normal profits in the long run.

D. they will wish to cooperate to make decisions about what quantity to produce.

Question #20

The shape of the perceived demand curve for a perfectly competitive firm reflects that firm's ability to

A. lose fewer customers than a monopoly that raised its prices.

B. choose any combination of price and quantity.

C. sell any quantity it wishes at the prevailing market price.

D. raise its price without losing all of its customers.

Question #21

In a monopolistic competitive industry, firms can try to differentiate their products by

A. enhancing the intangible aspects of the product.

B. choosing optimal locations from which the product is sold.

C. creating optimal perceptions of the product.

D. enhancing productâ€™s physical aspects and all of the above.

Question #22

If a monopoly or a monopolistic competitor raises their prices, the quantity demanded ____________.

A. will decline

B. will decline in the short run

C. will expand

D. stays the same

Question #23

A monopolistically competitive industry does not display ____________ in either the short-run, when firms are making ____________, nor in the long-run, when firms are earning ____________.

A. productive efficiency; profits and losses; zero profits

B. allocative efficiency; profits and losses; negative profits

C. productive and allocative efficiency; profits and losses; negative profits

D. productive and allocative efficiency; profits and losses; zero profits

Question #24

The single most common form of competition in the U.S. is

A. oligopolistic competition in a certain market with similar products.

B. monopolistic competition among firms with differentiated products.

C. perfect competition among firms with differentiated products.

D. perfect competition because it displays product and allocative efficiencies.

Question #25

____________ occurs when circumstances have allowed several large firms to have all or most of the sales in an industry.

A. An oligopoly

B. Collusion

C. A monopoly

D. A cartel

Question #26

A successful advertising campaign may allow competing monopolists to

A. increase its profits.

B. charge a higher price.

C. sell a greater quantity.

D. do all of the above.

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