28. Fixed costs are those costs which are:
a. Zero if the firm produces no output in the short run
b. Unchanging through time
c. Independent of the rate of output
d. Implicit to a competitive firm
29. Refer to the above graph of cost curves. Total fixed cost at output level Q2 is measured
by:
a. 0B
b. AC
c. CD
d. DE
30. At any level of output:
a. Average variable cost will exceed average total cost in the short run
b. Marginal cost will exceed average variable cost by the level of average fixed cost
c. Average variable cost will exceed average fixed cost by the level of average total cost
d. Average total cost will exceed average variable cost by the level of average fixed cost
31. Marginal cost can be defined as the:
a. Change in total fixed cost resulting from one more unit of production
b. Change in total cost resulting from one more unit of production
c. Change in average total cost resulting from one more unit of production
d. Change in average variable cost resulting from one more unit of production
32. Which market model assumes the least number of firms in an industry?
a. Monopolistic competition
b. Pure competition
c. Pure monopoly
d. Oligopoly
33. Mutual interdependence would tend to limit control over price in which market model?
a. Monopolistic competition
b. Pure competition
c. Pure monopoly
d. Oligopoly
34. In which two market models would advertising be used most often?
a. Pure competition and monopolistic competition
b. Pure competition and pure monopoly
c. Monopolistic competition and oligopoly
d. Pure monopoly and oligopoly
35. The fast-food restaurant industry would be an example of which market model?
a. Monopolistic competition
b. Pure competition
c. Pure monopoly
d. Oligopoly
36. Which of the following is true under conditions of pure competition?
a. There are differentiated products
b. The market demand curve is perfectly elastic
c. No single firm can influence the market price by changing its output
d. Each individual firm has the ability to set its own price
37. A purely competitive firm does not try to sell more of its product by lowering its price
below the market price because:
a. Its competitors would not permit it
b. It can sell all it wants to at the market price
c. This would be considered unethical price chiseling
d. Its demand curve is inelastic, so total revenue will decline
38. Average revenue and marginal revenue are equal at each output level in:
a. Pure competition
b. Monopolistic competition
c. Monopoly
d. Oligopoly
39. In pure competition, each extra unit of output that a firm sells will yield a marginal
revenue that is:
a. Equal to the price
b. Less than the price
