Economics Test Bank Chapter 14

30341 Words Mar 23rd, 2013 122 Pages
Chapter 14 Firms in Competitive Markets

Multiple Choice

1. A FIRM HAS MARKET POWER IF IT CAN
|a. |maximize profits. |
|b. |minimize costs. |
|c. |influence the market price of the good it sells. |
|d. |hire as many workers as it needs at the prevailing wage rate. |

ANS: C PTS: 1 DIF: 1 REF: 14-0
NAT: Analytic LOC: Perfect competition TOP: Market power
MSC: Definitional

2. A book store
…show more content…
|restaurants and MP3 players |
|d. |movie theaters and ballpoint pens |

ANS: B PTS: 1 DIF: 2 REF: 14-0
NAT: Analytic LOC: Perfect competition TOP: Competitive markets
MSC: Applicative

What is a Competitive Market?

1. A KEY CHARACTERISTIC OF A COMPETITIVE MARKET IS THAT
|a. |government antitrust laws regulate competition. |
|b. |producers sell nearly identical products. |
|c. |firms minimize total costs. |
|d. |firms have price setting power. |

ANS: B PTS: 1 DIF: 1 REF: 14-1
NAT: Analytic LOC: Perfect competition TOP: Competitive markets
MSC: Definitional

2. Which of the following is not a characteristic of a competitive market?
|a. |Buyers and sellers are price takers. |
|b. |Each firm sells a virtually identical
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