10–81
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written consent of McGraw-Hill Education.
AACSB: Knowledge Application
A c c e s s i b i l i t y :
Keyboard Navigation
Blooms: Understand
D i f f i c u lt y :
02 Medium
Learning Objective: 10–05 Explain how purely competitive firms can use the marginal-revenue–
marginal-cost approach to maximize profits or minimize losses in the short run.
Test Bank: I
T o p i c :
Profit Maximization in the Short Run: Marginal–Revenue–Marginal-Cost Approach
133.
(Last Word) Fixed costs for a firm are analogous to
134.
(Last Word) Oil wells and seasonal resorts will often shut down temporarily because
135.
(Last Word) Temporary shutdowns of firms are most widespread when
10–82
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written consent of McGraw-Hill Education.
B. the economy experiences recession.
C.
firms have the ability to set prices for their output.
D.
wage levels are falling.
AACSB: Knowledge Application
A c c e s s i b i l i t y :
Keyboard Navigation
Blooms: Understand
D i f f i c u lt y :
02 Medium
Learning Objective: 10–05 Explain how purely competitive firms can use the marginal-revenue–
marginal-cost approach to maximize profits or minimize losses in the short run.
Test Bank: I
T o p i c :
Profit Maximization in the Short Run: Marginal–Revenue–Marginal-Cost Approach
True / False Questions
136.
Oligopoly firms may produce either standardized or differentiated products.
137.
The term imperfect competition refers to every market structure besides pure competition.
138.
Firms in a monopolistically competitive industry have no reason to engage in nonprice
competition because their products are uniquely different from
other sellers in the market.
10–83
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written consent of McGraw-Hill Education.
FALSE
139.
Although individual purely competitive firms can influence the price of their product,
these firms as a group cannot influence market price.
140.
In a purely competitive industry, competition centers more on advertising and sales
promotion than on price.
141.
Price and marginal revenue are identical for an individual purely competitive seller.
10–84
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written consent of McGraw-Hill Education.
D i f f i c u lt y :
02 Medium
Learning Objective: 10–03 Explain how demand is seen by a purely competitive seller.
Test Bank: I
T o p i c :
Demand as Seen by a Purely Competitive Seller
142.
The demand curve for a purely competitive industry is perfectly elastic, but the demand
curves faced by individual firms in such an industry are
downsloping.
143.
Marginal revenue is the addition to total revenue resulting from the sale of one more unit
of output.
144.
In maximizing profit, a firm will always produce that output where total revenues are at a
maximum.
145.
In the short run, a competitive firm will always choose to shut down if product price is
less than the lowest attainable average total cost.
146.
A competitive firm will produce in the short run so long as its price exceeds its average
fixed cost.
147.
The firm described in the accompanying graph will maximize profits by producing output D.
148.
In the accompanying diagram, at the profit-maximizing output, total revenue will be 0GLD.
149.
In the accompanying diagram, at output C, production will result in an economic profit.
150.
In the accompanying diagram, at any price below R, the firm will shut down in the short run.
151.
In the accompanying graph, if demand fell to the level of FNJ, there would be no output at
which the firm could realize an economic profit.
152.
In the accompanying diagram, if the firm produced D units of output at price G, it would earn a
normal profit.
153.
The short-run supply curve slopes upward because producers must be compensated for
rising marginal costs.
10–92
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written consent of McGraw-Hill Education.
Learning Objective: 10–06 Explain why a competitive firms marginal cost curve is the same as
its supply curve.
Test Bank: I
T o p i c :
Marginal Cost and Short-Run Supply
Multiple Choice Questions
154.
Which market model assumes the least number of firms in an industry?
155.
In which market model would there be a unique product for which there are no close
substitutes?
156.
There would be some control over price within rather narrow limits in which market
model?
10–93
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written consent of McGraw-Hill Education.
B.
pure competition
C.
pure monopoly
D.
oligopoly
157.
Mutual interdependence would tend to limit control over price in which market model?
158.
In which two market models would advertising be used most often?
159.
In which market model are the conditions of entry into the market easiest?
160.
In which market model are the conditions of entry the most difficult?
161.
Local electric or gas utility companies mostly operate in which market structure?
10–95
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written consent of McGraw-Hill Education.
Learning Objective: 10–01 Give the names and summarize the main characteristics of the four
basic market models.
Test Bank: II
Topic:
Four Market Models
162.
The fast-food restaurant industry in a large city would be an example of which market
model?
163.
The market for agricultural products such as wheat or corn would best be described by
which market model?
164.
The soft drink and automobile industries would be examples of which market model?
10–96
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written consent of McGraw-Hill Education.
D. oligopoly
165.
Which of the following is not a basic market model?
166.
Which idea is inconsistent with pure competition?
167.
Which characteristic would best be associated with pure competition?
10–97
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written consent of McGraw-Hill Education.
A. few sellers
B. price takers
C.
nonprice competition
D.
product differentiation
168.
If a firm has at least some control over the price of its product, then the firm cannot be in
which market model?
169.
In a purely competitive industry, each firm
170.
Which of the following is a feature of a purely competitive market?
172.
Which of the following is a reason why individual firms under pure competition would
not find it gainful to advertise their product?
10–99
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written consent of McGraw-Hill Education.
Topic:
Pure Competition: Characteristics and Occurrence
173.
Price is taken to be a “given” by an individual firm selling in a purely competitive market
because
174.
Which of the following is not a necessary characteristic of a purely competitive industry?
175.
A purely competitive firm does not try to sell more of its product by lowering its price
below the market price because
10-100
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written consent of McGraw-Hill Education.
D i f f i c u lt y :
02 Medium
Learning Objective: 10–03 Explain how demand is seen by a purely competitive seller.
Test Bank: II
Topic:
Demand as Seen by a Purely Competitive Seller
176.
A purely competitive firm can be identified by the fact that
177.
The demand curve faced by a purely competitive firm
178.
If the demand curve faced by an individual firm is downward-sloping, the firm cannot be