Competitive firms cannot individually affect market price because:
1. There is an infinite demand for their goods.
2. The market demand curve is flat or horizontal.
3. Their individual production is insignificant relative to the production of the industry.
4. The government exercises control over the market power of competitive firms.
2. The market demand curve is flat or horizontal.
3. Their individual production is insignificant relative to the production of the industry.
4. The government exercises control over the market power of competitive firms.
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1.Individual farmers cannot individually affect market price because
a)There is an infinite demand for their goods.
b) Demand is perfectly inelastic for the farmer's produce.
c)Their individual production is insignificant relative to the production of the market.
d)The government exercises control over the market power of competitive firms.
2.Compared to the early 1950s, today farm output per labor-hour is
a)10 times greater than it was then. |
b) | The same as it was then. |
c) | 20 times greater than it was then. |
d) | 20 percent less than it was then. |
3.Because farm products have a low price elasticity of demand, a small change in farm output will have
a) | An indeterminate effect on price. |
b) | No effect on price. |
c) | A smaller effect on price. |
d) | A larger effect on price. |
4.The price elasticity of demand for food is
a) | Perfectly inelastic. |
b) | Relatively inelastic. |
c) | Relatively elastic. |
d) | Perfectly elastic. |
5.In order to continue earning an economic profit, individual farmers must
a) | Expand their rate of output until marginal cost equals zero. |
b) | Charge higher prices than their competitors. |
c) | Continue to improve their productivity. |
d) | Charge lower prices than their competitors. |
6.If a price support is maintained above the equilibrium price, the result will be a
a) | Market price that is too low. |
b) | Market price equal to the equilibrium price. |
c) | Surplus of the product. |
d) | Shortage of the product. |
7.The primary focus of U.S. farm policy has been
a) | Subsidies. |
b) | Price supports. |
c) | Low-interest loans. |
d) | Tax credits for mechanical equipment. |
1) When positive economic profits exist in an industry:
the market price of the good produced by the industry is less than the marginal cost faced by the industry. |
the market price of the good produced by the industry is less than the average total cost of the industry. |
there is an exit of firms from the industry. |
resources flow from less productive uses to that particular industry. |
2) When price is less than the firms' minimum average total cost, ________.
firms' profits are likely to be maximum |
prices are likely to fall further |
new firms will enter the market |
existing firms will leave the market |
3) The entry of new firms into a perfectly competitive market will cause:
an increase in the profitability of existing firms. |
a decrease in the profitability of existing firms. |
a right shift of the demand curve of the good being produced by the firms. |
a left shift of the demand curve of the good being produced by the firms. |
4) Entry of new firms into an existing market causes:
a downward movement along the market supply curve. |
a leftward shift of the market supply curve. |
an upward movement along the market supply curve. |
a rightward shift of the market supply curve. |
5) The incentive for new firms to enter into a perfectly competitive market is primarily the:
high level of government intervention in the market. |
large number of buyers in the market. |
large number of existing firms in the market. |
positive profits observed for the existing firms in the market. |