Market Structure Economics Questions! Trivia Quiz

100 Questions | Total Attempts: 271

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Economics Quizzes & Trivia

Economics is a tough topic to learn about when you’re starting off, but when you begin to appreciate how we analyze the production, distribution, and consumption of goods and services, whether it’s on a wide or narrow scale, you’ll be able to get a much better sense of the market structure and how a country’s wealth and economy are measures. Think you know your stuff? Take the quiz!


Questions and Answers
  • 1. 
    Perfect competition is defined as market structure in which:
    • A. 

      A: there are many small sellers.

    • B. 

      B: the product is homogenous.

    • C. 

      C: it is very easy for firms to enter or exit the market.

    • D. 

      D: all of these.

  • 2. 
    Perfect competition is a market structure in which there is:
    • A. 

      A: a contest among firms to provide good service after the sale.

    • B. 

      B: competition in product quality.

    • C. 

      C: rivalry in product design.

    • D. 

      D: none of these.

  • 3. 
    Which of the following is true of a perfectly competitive firm?
    • A. 

      A: The firm is a price maker.

    • B. 

      B: If the firm wishes to maximize profits it will produce an output level in which total revenue equals total cost.

    • C. 

      C: The firm will not earn an economics profit in the long run.

    • D. 

      D: The firm's short-run supply curve is its MC curve below its AVE curve.

  • 4. 
    A firm in a price-taker market:
    • A. 

      A: must take the price that is determined in the market.

    • B. 

      B: must reduce its price if it wants to sell larger quantity.

    • C. 

      C: must be large relative to the total market.

    • D. 

      D: can exert a major influence on the market price.

  • 5. 
    A firm that is a price taker can:
    • A. 

      A: substantially change the market price of its product by changing its level of production.

    • B. 

      B: sell all of its output at the market price.

    • C. 

      C: sell some of its output at a price higher than the market price.

    • D. 

      D: decide what price to charge for its product.

  • 6. 
    Which of the following best explains why a firm in a perfectly competitive market must take the price determined in the market?
    • A. 

      A: The short-run average total costs of firms that are price takers will be constant.

    • B. 

      B: If a price taker increased its price, consumers would buy from other suppliers.

    • C. 

      C: Firms in a price-taker market will have to advertise in order to increase sales.

    • D. 

      D: There are no good substitutes for the product supplied by a firm that is a price taker.

  • 7. 
    Because a competitive firm is a price taker, it faces a demand curve that is:
    • A. 

      A: perfectly inelastic.

    • B. 

      B: relatively inelastic.

    • C. 

      C: relatively elastic.

    • D. 

      D: perfectly elastic.

  • 8. 
    Under perfect competition, a firm is a price taker because:
    • A. 

      A: setting a price higher than the going price results in profits.

    • B. 

      B: each firm's product is perceived as different.

    • C. 

      C: each firm has a significant market share.

    • D. 

      D: setting a price higher than the going price results in zero sales.

  • 9. 
    A perfectly competitive firm in the short-run can earn:
    • A. 

      A: positive economic profits.

    • B. 

      B: negative economic profits.

    • C. 

      C: zero economic profits.

    • D. 

      D: all of these are possible.

  • 10. 
    A perfectly competitive firm maximizes profits or minimizes losses in the short-run by producing at the output level at which:
    • A. 

      A: marginal revenue equals marginal cost.

    • B. 

      B: total revenue equals total cost.

    • C. 

      C: total revenue is at a maximum.

    • D. 

      D: none of these.

  • 11. 
    In the short run, if a perfectly competitive firm is producing at a price below average total cost, its economic profit is:
    • A. 

      A: positive.

    • B. 

      B: zero.

    • C. 

      C: negative.

    • D. 

      D: normal.

  • 12. 
    In the short run, if a perfectly competitive firm is producing at a price above average total cost, its exonomic profit must be:
    • A. 

      A: positive.

    • B. 

      B: zero.

    • C. 

      C: negative.

    • D. 

      D: normal.

  • 13. 
    A competivie firm maximizes its profits (or minimizes is losses) by producing the quantity where the market price equals the firm's:
    • A. 

      A: marginal cost.

    • B. 

      B: average cost.

    • C. 

      C: average variable cost.

    • D. 

      D: average fixed cost.

  • 14. 
    The point of maximum profit for a business firm is where:
    • A. 

      A: P = AC.

    • B. 

      B: TR = TC.

    • C. 

      C: MR = AR.

    • D. 

      D: MR = MC.

    • E. 

      E: TR = MR.

  • 15. 
    Marginal revenue is the change in:
    • A. 

      A: total profit brought about by selling one more unit of output.

    • B. 

      B: Price brought about by selling one more unit of output.

    • C. 

      C: Total revenue brought about by selling one more unit of output.

    • D. 

      D: output brought about by a $1 change in product price.

    • E. 

      E: Average revenue brought about by selling one more unit of output.

  • 16. 
    In Exibit 8-11, the profit-maximizing output level at the price of $8 is:
    • A. 

      0

    • B. 

      4

    • C. 

      7

    • D. 

      8

    • E. 

      10

  • 17. 
    As shown in Exhibit 8-12, suppose the firm's price is OB. The firm's total economic profit at this price is equal to the area of:
    • A. 

      CJID

    • B. 

      BFHD

    • C. 

      AEXD

    • D. 

      CGHD

    • E. 

      Zero

  • 18. 
    Which of the following statements is true?
    • A. 

      To maximize profits, a firm must maximize total revenue.

    • B. 

      In long-run equilibrium, a competitive firm produces at the point of minimum average total cost.

    • C. 

      In the short-run, a perfectly competitie firm produces where total cost is minimum.

    • D. 

      In the short-run, a perfectly competitive firm will close down whenever price is less than average total cost.

  • 19. 
    In long-run equilibrium, the typical perfectly competitive firm will:
    • A. 

      Earn zero economic profit

    • B. 

      Change plant size in the long run

    • C. 

      Change output in the short run

    • D. 

      Do any of these.

  • 20. 
    In long-run equilibrium for a perfectly competitive firm, price equals which of the following?
    • A. 

      Economics of real cost

    • B. 

      Maximum total revenue

    • C. 

      Diseconomies of scale cost.

    • D. 

      Minimum point on the long-run average cost curve.

  • 21. 
    A monolpy is:
    • A. 

      A seller of a highly advertised and differentiated product in a market with lower barriers to entry in the long run.

    • B. 

      The only seller of a good for which there are no good substitutes in a market with high barriers to entry.

    • C. 

      The only buyer of a unique raw material.

    • D. 

      The producer of a product subsidized by the government.

  • 22. 
    A monopolist faces a downward-sloping demand curve because:
    • A. 

      The demand for its product is inelastic.

    • B. 

      The industry demand curve is horizontal.

    • C. 

      Resource prices increase as the monopolist expands output.

    • D. 

      The entire market demand curve is the monopolist's demand curve.

  • 23. 
    Which of the following firms best fits the definition of a monopoly?
    • A. 

      General Motors

    • B. 

      Exxon Mobile

    • C. 

      Local electic utility

    • D. 

      AT&T

  • 24. 
    A natural monolpy is a market where:
    • A. 

      A single firm has control over a vital natural resource.

    • B. 

      Many smaller firms can produce the entire market output at the same per-unit cost as could one large firm.

    • C. 

      A single large firm can produce the entire market output at a lower per-unit cost than a group of smaller firms.

    • D. 

      Many smaller firms can produce the entire market output at a lower per-unit cost than could one large firm.

  • 25. 
    Which of the following is true under natural monopoly?
    • A. 

      The marginal cost curve will be above the average cost curve

    • B. 

      The monopolist will set price equal to marginal cost and will earn economic profits.

    • C. 

      Economies of scale exist.

    • D. 

      Output is produced under conditions of constant cost.