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    PS5 CH8

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    Cihan Ali Kesen
    The document contains 5 multiple choice questions about microeconomics topics including perfect competition, barriers to entry, assumptions of perfect information, cooperative firms, marginal revenue, profit maximization, marginal profit, demand curves facing perfectly competitive firms, and the effects of technological improvements. The questions cover concepts from chapters 8.1 to 8.4 of a microeconomics textbook.

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    PS5 CH8

    Uploaded by

    Cihan Ali Kesen
    14 views2 pages
    The document contains 5 multiple choice questions about microeconomics topics including perfect competition, barriers to entry, assumptions of perfect information, cooperative firms, marginal revenue, profit maximization, marginal profit, demand curves facing perfectly competitive firms, and the effects of technological improvements. The questions cover concepts from chapters 8.1 to 8.4 of a microeconomics textbook.

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    PS5-CH8

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    The document contains 5 multiple choice questions about microeconomics topics including perfect competition, barriers to entry, assumptions of perfect information, cooperative firms, marginal revenue, profit maximization, marginal profit, demand curves facing perfectly competitive firms, and the effects of technological improvements. The questions cover concepts from chapters 8.1 to 8.4 of a microeconomics textbook.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    14 views2 pages

    PS5 CH8

    Uploaded by

    Cihan Ali Kesen
    The document contains 5 multiple choice questions about microeconomics topics including perfect competition, barriers to entry, assumptions of perfect information, cooperative firms, marginal revenue, profit maximization, marginal profit, demand curves facing perfectly competitive firms, and the effects of technological improvements. The questions cover concepts from chapters 8.1 to 8.4 of a microeconomics textbook.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    of 2

    MICROECONOMICS-II

    PROBLEM SET 5
    CHAPTER 8.1-8.4

    1) Which of following is a key assumption of a perfectly competitive market?


    A) Firms can influence market price.
    B) Commodities have few sellers.
    C) It is difficult for new sellers to enter the market.
    D) Each seller has a very small share of the market.

    2) Firms often use patent rights as a:


    A) barrier to exit.
    B) barrier to entry.
    C) way to achieve perfect competition.
    D) none of the above

    3) The "perfect information" assumption of perfect competition includes all of the following except one.
    Which one?
    A) Consumers know their preferences.
    B) Consumers know their income levels.
    C) Consumers know the prices available.
    D) Consumers can anticipate price changes.

    4) What do cooperative firms do if they make a profit?


    A) Cooperatives never earn profits, so this issue does not occur.
    B) Cooperatives must pay their profits to the federal governments as a windfall profit tax.
    C) Cooperatives must keep half of the profits and return the other half to their members.
    D) Cooperatives generally return the profits to their members as a dividend.

    5) Marginal revenue, graphically, is:


    A) the slope of a line from the origin to a point on the total revenue curve.
    B) the slope of a line from the origin to the end of the total revenue curve.
    C) the slope of the total revenue curve at a given point.
    D) the vertical intercept of a line tangent to the total revenue curve at a given point.

    4) At the profit-maximizing level of output, what is relationship between the total revenue (TR) and total
    cost (TC) curves?
    A) They must intersect, with TC cutting TR from below.
    B) They must intersect, with TC cutting TR from above.
    C) They must be tangent to each other.
    D) They cannot be tangent to each other.
    E) They must have the same slope.

    5) Marginal profit is equal to


    A) marginal revenue minus marginal cost.
    B) marginal revenue plus marginal cost.
    C) marginal cost minus marginal revenue.
    D) marginal revenue times marginal cost.
    6) The demand curve facing a perfectly competitive firm is
    A) the same as the market demand curve.
    B) downward-sloping and less flat than the market demand curve.
    C) downward-sloping and more flat than the market demand curve.
    D) perfectly horizontal.
    E) perfectly vertical.

    7) If a graph of a perfectly competitive firm shows that the point occurs where MR is above AVC but
    below ATC,
    A) the firm is earning negative profit, and will shut down rather than produce that level of output.
    B) the firm is earning negative profit, but will continue to produce where in the short run.
    C) the firm is still earning positive profit, as long as variable costs are covered.
    D) the firm is covering explicit, but not implicit, costs.

    8) An improvement in technology would result in:


    A) upward shifts of MC and reductions in output.
    B) upward shifts of MC and increases in output.
    C) downward shifts of MC and reductions in output.
    D) downward shifts of MC and increases in output.
    E) increased quality of the good, but little change in MC.

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