ECN 104 Lecture 4: McConnellBrueFlynnBarbiero-12e_Ch7 - Copy
6 Jun 2018
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Chapter7PerfectCompetition
Copyright (c) 2010 McGraw-Hill Ryerson Limited. Page 1
CHAPTER 7
Perfect Competition
Topic Question numbers
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7.1 Four market structures 1-9
7.2 Characteristics of perfect competition and the firm's demand curve 10-52
Characteristics of perfect competition 10-23
Demand for a firm in perfect competition 24-31
Average, total, and marginal revenue 32-52
7.3 Profit maximization in the short run 53-154
Total-revenue–Total-cost approach 53-77
Marginal-revenue–marginal-cost approach 78-154
7.4 Marginal cost and short-run supply 155-214
Generalized depiction 155-199
Diminishing returns, production costs, and product supply 200-203
Supply curve shifts 204-208
Firm and industry: Equilibrium price 209-214
7.5 Profit maximization in the long run 215-273
Assumptions 215-216
The goal of our analysis 217-220
Long-run equilibrium 221-244
Long-run supply for a constant-cost industry 245-250
Long-run supply for an increasing-cost industry 251-265
Long-run supply for a decreasing-cost industry 266-273
7.6 Perfect competition and efficiency 274-311
Productive efficiency: P= Minimum ATC 274-279
Allocative efficiency: P=MC 280-303
Maximum consumer and producer surplus 304-307
Dynamic adjustments 308-310
“Invisible hand” revisited 311
The last word 312-313
True-False Questions 314-348
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Chapter7PerfectCompetition
Copyright (c) 2007 McGraw-Hill Ryerson Limited. Page 2
1. In which of the following industry structures is the entry of new firms the most difficult?
A) monopoly
B) oligopoly
C) monopolistic competition
D) perfect competition
Ans: A Level: Easy Main Topic: 7.1 Four market structures Page: 163
Subtopic: Four market structures Type: Application
2. A one-firm industry is known as:
A) monopolistic competition
B) oligopoly
C) monopoly
D) perfect competition
Ans: C Level: Easy Main Topic: 7.1 Four market structures Page: 163
Subtopic: Four market structures Type: Definition
3. Local telephone, electric, or gas utilities would best be described by which market
model?
A) monopolistic competition
B) perfect competition
C) monopoly
D) oligopoly
Ans: C Level: Moderate Main Topic: 7.1 Four market structures Page: 163
Subtopic: Four market structures Type: Application
4. An industry comprised of a small number of firms, each of which considers the potential
reactions of its rivals in making price-output decisions is called:
A) monopolistic competition
B) oligopoly
C) monopoly
D) perfect competition
Ans: B Level: Easy Main Topic: 7.1 Four market structures Page: 164
Subtopic: Four market structures Type: Application
hzzled
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Chapter7PerfectCompetition
Copyright (c) 2007 McGraw-Hill Ryerson Limited. Page 3
5. Mutual interdependence would tend to limit control over price in which market model?
A) monopolistic competition
B) perfect competition
C) monopoly
D) oligopoly
Ans: D Level: Easy Main Topic: 7.1 Four market structures Page:164
Subtopic: Four market structures Type: Application
6. Economists use the term "imperfect competition" to describe:
A) all industries which produce standardized products.
B) any industry in which there is no nonprice competition.
C) a monopoly only.
D) those markets which are not perfectly competitive.
Ans: D Level: Easy Main Topic: 7.1 Four market structures Page: 164
Subtopic: Four market structures Type: Definition
7. In which two market models would advertising be used most often?
A) perfect competition and monopolistic competition
B) perfect competition and monopoly
C) monopolistic competition and oligopoly
D) monopoly and oligopoly
Ans: C Level: Moderate Main Topic: 7.1 Four marketstructures Page: 164
Subtopic: Four market structures Type: Application
8. The North American automobile industry would be described by the economist as:
A) perfectly competitive.
B) an oligopoly.
C) monopolistically competitive.
D) a monopoly.
Ans: B Level: Easy Main Topic: 7.1 Four market structures Page: 164
Subtopic: Four market structures Type: Application
9. In which of the following market structures is there clear-cut mutual interdependence
with respect to price-output policies?
A) monopoly
B) oligopoly
C) monopolistic competition
D) perfect competition
Ans: B Level: Easy Main Topic: 7.1 Four market structures Page: 164
Subtopic: Four market structures Type: Application
hzzled
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