Glendale Community College » Economics » Econ 101 - Microeconomics » Fall 2022

Econ 101 - Microeconomics » Fall 2022 » Quiz 3

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Question #1

Which of the following is not a condition of perfect competition?

A. Firms in the market all sell an identical product. Consumers are indifferent as to which seller they buy from as all products are the same.

B. Individual firms do not exert control over price.

C. Firms can easily enter and exit the market.

D. Firms can affect the selling price adjusting production levels.

E. There exists a large number of sellers

Question #2

Assume a firm operating in a perfectly competitive market has fixed costs of $100 and variable costs as shown in the table below. Output Total Variable Cost 0 $0 1 $100 2 $190 3 $270 4 $340 5 $420 6 $510 7 $610 8 $720 9 $850 10 $990 If the market price is $105 how many units will this firm produce?

A. 7

B. 6

C. 5

D. 8

E. 9

Question #3

Assume a firm operating in a perfectly competitive market has fixed costs of $100 and variable costs as shown in the table below. Output Total Variable Cost 0 $0 1 $100 2 $190 3 $270 4 $340 5 $420 6 $510 7 $610 8 $720 9 $850 10 $990 At which price would this firm be indifferent between operating in the short run and shutting down completely?

A. $79

B. $89

C. $94

D. $84

E. $85

Question #4

In the chart below, which is the correct way to identify these cost curves of a firm operating in a perfectly competitive market in the short run?

A. 1 = marginal cost, 2 = average total cost, 3 = average fixed cost

B. 1 = marginal revenue, 2 = average variable cost, 3 = average total cost

C. 1 = marginal revenue, 2 = average total cost, 3 = average variable cost

D. 1 = marginal cost, 2 = average variable cost, 3 = average total cost

E. 1 = marginal cost, 2 = average total cost, 3 = average variable cost

Question #5

In terms of time, what differentiates the long run from the short run?

A. All of these

B. In the long run a firm has no fixed costs. The long run provides enough time for firms to enter and exit a market.

C. In the long run a firm will be more profitable. The long run provides enough time for firms to enter and exit a market.

D. The long run provides enough time for firms to enter and exit a market.

Question #6

Assume firms are making a positive economic profit in the short run. Which of the following will happen in the long run.

A. Firms will enter the market, causing price to rise, increasing profits for existing firms.

B. Firms will enter the market, causing price to fall, reducing profits for existing firms.

C. Firms will leave the market, causing price to rise, reducing profits for existing firms.

D. Firms will enter the market, causing price to rise, reducing profits for existing firms.

E. Firms will leave the market, causing price to fall, reducing profits for existing firms.

Question #7

Which of the following is not a characteristic of a monopoly?

A. There are many firms in the market. Firms are price takers.

B. There exists a significant barrier to entry for firms looking to enter the market.

C. None of these

D. There are no close substitutes to the good being produced by the monopolist.

Question #8

It shows the price a monopolist could receive for various levels of output. Note this is the same total variable cost as the firm in questions 2 and 3. As before, assume the firm has fixed costs of $100. Output Price Total Variable Cost 0 $500 $0 1 $450 $100 2 $400 $190 3 $350 $270 4 $290 $340 5 $240 $420 6 $190 $510 7 $140 $610 8 $90 $720 9 $40 $850 10 -$10 $990 How many units will the monopolist produce?

A. 6

B. 7

C. 5

D. 3

E. 4

Question #9

A. $720

B. $820

C. $920

D. $1,020

E. none of these

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