preview

Eco/561 Week 1

Better Essays
Open Document

ECO/561 1) If a firm in a purely competitive industry is confronted with an equilibrium price of $5, its marginal revenue: A. will be greater than $5 B. will also be $5 C. will be less than $5 D. may be either greater or less than $5 2) A firm that is motivated by self interest should: A. always use large amounts of cheap inputs and small amounts of expensive inputs in producing its output B. hire each input so the productivity of each is equal at the margin C. always use large amounts of the most productive inputs and small amounts of the least productive inputs in producing its output D. employ the combination of resources that will produce the profit-maximizing output at the minimum cost 3) If …show more content…

price exceeds average total cost by the largest amount D. total revenue exceeds total cost by the greatest amount 18) Nonprice competition refers to: A. reductions in production costs that are not reflected in price reductions B. price increases by a firm that are ignored by its rivals C. advertising, product promotion, and changes in the real or perceived characteristics of a product D. competition between products of different industries, for example, competition between aluminum and steel in the manufacture of automobile parts 19) Advertising can impede economic efficiency when it: A. increases consumer awareness of substitute products B. enables firms to achieve substantial economies of scale C. reduces brand loyalty D. increases entry barriers 20) Which of the following is not a possible source of natural monopoly? A. rent-seeking behavior B. greater use of specialized inputs C. simultaneous consumption D. large-scale network effects 21) Suppose that an industry is characterized by a few firms and price leadership. We would expect that: A. marginal revenue would exceed marginal cost B. price would exceed both marginal cost and average total cost C. price would equal average total cost D. price would equal marginal cost 22) When economists view technological change as internal to the economy, they mean that it: A. arises mainly from government

Get Access
Related
Get Access