1- All of the following statements apply to a purely competitive market in the long run, except:
A- In the long run, all inputs are variable in quantity.
B- Firms can expand their plant capacities in the long run.
C- Total fixed costs remain constant even when output expands in the long run.
D- Firms may enter or leave the industry in the long run.
2- Which of the following is true of normal profits?
A- They are necessary to keep a firm in the industry in the long run
B- They are zero under pure competition in the long run
C- They are excluded from a firm's costs of production
D- They are what attract other firms to enter an industry
3- -The long-run supply curve would be perfectly elastic when:
A- An increase in demand does not cause a change in product price
B- An increase in demand causes an increase in product price
C- A decrease in demand causes an increase in short-run supply
D- A decrease in demand causes an increase in product price
4- What happens in a decreasing-cost industry when some firms leave and the industry's output contracts?
A- The average cost will increase
B- The average cost will decrease
D- The total cost will decrease
C- The product price will decrease
5- Which of the following statements about a competitive firm is correct?
A-To maximize profits a competitive firm should produce at that output at which total revenue is greatest
B- In long-run equilibrium a competitive firm will produce at the point of minimum average costs
C- A competitive firm will produce in the short run so long as total receipts are sufficient to cover total fixed costs
D-A competitive firm will close down in the short run whenever price is less than the minimum attainable average total cost
6- When there is allocative efficiency in a purely competitive market for a product, the minimum price producers are willing to accept is:
A- Less than marginal benefit
B- Greater than marginal cost
C- Equal to the amount of efficiency or deadweight losses
D- Equal to the maximum price consumers are willing to pay
7- A patent is the legal right granted to a firm that allows it to:
A- Make copies of other firm's products
B- Be the sole buyer of a particular product or resource
C- Sell its new product exclusively for a set number of years
D- Be the exclusive distributor of a particular imported product
1- All of the following statements apply to a purely competitive market in the long run, except:
A- In the long run, all inputs are variable in quantity.
B- Firms can expand their plant capacities in the long run.
C- Total fixed costs remain constant even when output expands in the long run.
D- Firms may enter or leave the industry in the long run.
2- Which of the following is true of normal profits?
A- They are necessary to keep a firm in the industry in the long run
B- They are zero under pure competition in the long run
C- They are excluded from a firm's costs of production
D- They are what attract other firms to enter an industry
3- -The long-run supply curve would be perfectly elastic when:
A- An increase in demand does not cause a change in product price
B- An increase in demand causes an increase in product price
C- A decrease in demand causes an increase in short-run supply
D- A decrease in demand causes an increase in product price
4- What happens in a decreasing-cost industry when some firms leave and the industry's output contracts?
A- The average cost will increase
B- The average cost will decrease
D- The total cost will decrease
C- The product price will decrease
5- Which of the following statements about a competitive firm is correct?
A-To maximize profits a competitive firm should produce at that output at which total revenue is greatest
B- In long-run equilibrium a competitive firm will produce at the point of minimum average costs
C- A competitive firm will produce in the short run so long as total receipts are sufficient to cover total fixed costs
D-A competitive firm will close down in the short run whenever price is less than the minimum attainable average total cost
6- When there is allocative efficiency in a purely competitive market for a product, the minimum price producers are willing to accept is:
A- Less than marginal benefit
B- Greater than marginal cost
C- Equal to the amount of efficiency or deadweight losses
D- Equal to the maximum price consumers are willing to pay
7- A patent is the legal right granted to a firm that allows it to:
A- Make copies of other firm's products
B- Be the sole buyer of a particular product or resource
C- Sell its new product exclusively for a set number of years
D- Be the exclusive distributor of a particular imported product
