Download Question 1 Economists tend to focus on one structural aspect of

Question 1
Economists tend to focus on one structural aspect of market organization that is more important than the
others, which is:
Answer
the number of buyers and sellers.
product homogeneity or differentiation.
the quality of market information.
entry and exit conditions.
4 points
Question 2
Using cost plus pricing, what is the price if ATC = $14.50 and the target rate of return is 4 percent?
Answer
$15.10
$49.34
$14.5
$22.10
4 points
Question 3
If Tiger Toys faces a demand curve of P = 85 - .25Q and a MC = ATC = 20, then the markup would be:
Answer
$52.50.
$20.00.
$32.50.
$65.00.
4 points
Question 4
In a purely competitive market, a company selling in the market views its demand curve as:
Answer
completely price insensitive.
horizontal (flat).
vertical.
convex.
4 points
Question 5
The key to the importance of the marginal cost curve of a company is that it is a company's:
Answer
supply curve of product to the marketplace.
demand curve for its product to the marketplace.
average cost of product in both the short and long run.
fixed cost.
4 points
Question 6
The shut down condition - the point at which the company finds it is no longer viable to produce and sell a
product - for a competitive firm is where price is:
Answer
less than marginal revenue.
less than short run average total cost.
greater than marginal revenue.
less than average variable cost.
4 points
Question 7
The market for micro-computers (PCs) is fairly competitive, the products are somewhat homogeneous, and over
time firms have entered looking to make profits on new configurations of the micro-computer. Over time,
profits:
Answer
have risen dramatically.
have stayed about the same for most firms.
have become razor thin for many producers.
are not important since this industry is in the nonprofit sector.
4 points
Question 8
Using the linear approximation system to estimate the profit maximizing price requires that the managers know
the costs of production and:
Answer
the production function.
one price and quantity of demand.
two prices and quantities of demand.
decision-making process of the marketplace.
4 points
Question 9
In a perfectly competitive market, the price that the firm faces from supply and demand is also equal to:
Answer
average variable cost.
marginal revenue and average revenue.
average revenue but never marginal revenue.
long run average cost in the short run.
4 points
Question 10
While very few markets are 'purely competitive' according to the strict economics definition, market analysts
often use competition as the:
Answer
benchmark from which to judge other market settings.
standard of an inefficient market structure.
market with poor entry and exit conditions.
one market with typical asymmetry in information.
4 points
Question 11
The market environment heavily influences corporate decision-making ability. Discuss the differences in
executive decisions concerning pricing, product design, and advertising between a company that exists in a
perfectly competitive market and a company that lives a monopolistically competitive market.
Question 12
The simple case of pricing with market power assumes (a) all consumers are charged the same price, (b) the firm
sells one product, (c) demand exists in one time period, and (d) competitors do not pursue pricing games.
Economists insist on reviewing what happens as each assumption is relaxed one at a time. However, it is clear
that in real world all four are relaxed simultaneously. Why does economic analysis insist on such an unrealistic
analysis?