A. is determined by the actions of other firms in the industry

B. no longer influences the amount demand of the firms product

D. is guaranteed to be above a firms average cost.

A. because of barriers to entry into the industry

C. because of barriers to exit from the industry

D. by virtue of size alone

A. the AC and MC curves

B. the MR and AR curves

D. the MR and MC curves

A. the same as the slope of the demand curve

C. always equal to one.

D. half as steep as the demand curve

A. increase; decrease

B. increase; increase

D. decrease; decrease

A. total costs exceed normal profit

C. normal profit is zero

D. total costs exceed total revenue

A. is perfectly elastic if price increases and perfectly inelastic if price decreases

B. is constant regardless of whether price increase of decrease.

D. in response to a price increase is less elastic than the elasticity of demand in response to a price decrease

A. Dq/DTVC

C. q/TVC

D. DTVC/Dq

A. participants in a contestable market are continuously faced with competition or the threat of competition because entry is cheap

B. In a contestable market forces will guarantee that the firms produce efficiently or be driven out of business

C. In a contestable market, economic profits cannot persist in the long run.

A. none of these

C. how much to spend on advertising?

D. What price to charge

A. in monopolistic competition entry into the industry is blocked

C. in perfect competition firms can differentiate their products

D. in monopolistic competition there are relatively few barriers to entry.

B. it is suffering a loss.

C. fixed costs exceed revenues.

D. total costs exceed revenues

A. always greater than price

B. always equal to price

C. less than price at low levels of output and greater than price at high levels of output

B. It is not efficient because too little output is produced but is efficient in that the output produced is produced at minimum average total cost.

C. It is efficient because entry is free and economic profits are eliminated in the long run.

D. It is efficient because the right amount of output is produced, but not efficient in that the output produced is produced at a cost above minimum average total cost

A. decreasing average fixed costs.

B. decreasing average variable costs.

C. decreasing marginal costs.

A. a natural monopoly

B. a merged industry

D. a colluding industry

A. price leadership

B. a concentrated industry.

D. an oligopoly.

B. entry to it and exit from it are both costly

C. entry to it costless, but exit from it is costless

D. entry to it is costly, but exit from it is costless

A. The model cannot be tested empirically.

C. Real-world pricing strategies are more simple than those assumed in this model

D. it assumes that firms believe that their rivals will not respond to any price change they initiate

B. Is the rate of return on investments over the interest rate on risk-free government bonds.

C. is zero in a perfectly competitive industry.

D. is the difference between total revenue and total costs

B. slope up to the right

C. are U-shaped

D. slope down to the right

A. If TP is declining, then AP is negative

B. If AP is at a maximum, then MP is also,

D. If AP = MP, then total product is at a maximum.

A. 15

C. 30

D. 60

A. sells a fixed amount of output regardless of price.

C. can sell an infinite amount of output at the market-determined price

D. must raise price to sell more output

A. a cartel

B. a monopoly

C. perfectly competitive firms

A. all firms must make economic profits.

C. a firm can vary all inputs, but it cannot change the mix of inputs it uses.

D. a firm can shut down, but it cannot exit the industry

A. There are no fixed costs in the long run

C. Fixed costs are the difference between total costs and total variable costs

D. Fixed costs do not depend on the firms level of output

A. monopolistically competitive

B. indeterminate from this information

D. perfectly competitive

A. Produces less output, charges lower prices and earns only a normal profit

C. produces less output, charges lower prices and earns economic profits

D. produces more output, charges higher prices and earns economics profits

A. approximately one-half

B. smaller than

D. larger than

A. In monopolistic competition, there are too many firms and each firm produce a slightly different product at a scale that is less than optimal

C. in monopolistic competition there is the correct number of firm and each firm produces a slightly different product at an optimal scale.

D. In monopolistic competition there are too many firms and each firm produce a slightly different product at the optimal scale

A. immediate run

C. intermediate run

D. long run

A. advertising costs

B. fixed costs

C. marginal costs

B. expenditure set

C. isoquant

D. budget constraint

A. marginal rate of production

B. law of diminishing marginal returns.

D. marginal rate of substitution

B. perfectly competitive firms

C. a cartel

D. a monopoly.

A. total fixed cost only.

B. total variable costs only.

D. total costs only

A. 160; 270

B. 10; 30

C. 10; 3.33

B. no; infinite

C. more; more

D. fewer; less

A. monopolistic competition

B. perfect competition

D. monopoly

B. a government franchise monopoly

C. a fixed cost monopoly

D. a economies of scale monopoly

A. a production functions

B. an isocost line

C. an indifference curves.

A. The fast-food market where there are a large number of producers but the demand for fast food is inelastic

C. The automobile industry, where there are few producers but there is great product differentiation.

D. The coffee market where the product is standardized and there are a large number of coffee growers.

A. downward sloping to the right

C. upward sloping to the right

D. Horizontal

A. there are many EU and government health controls on cosmetic products

B. there are a very large number of firms in the industry

D. profit margins are very high for both producers and retailers

A. marginal costs to increase

C. average costs to increase

D. average costs to decrease

A. produced less and charged a higher price

C. produced more and charged a higher price

D. produced less and charged a lower price.

A. a period where the law of diminishing returns does not hold.

C. all inputs being variable

D. no variable inputs that is all of the factors of production are fixed

A. game theory,

C. price leadership

D. price concentration

A. the efficient output level will be produced in the long run

B. firms realize all economies of scale

C. firms will be producing at minimum average cost