Question 1

​A sudden fall in the market demand in a competitive industry leads to

Accepted Answer

A) ​A short run market equilibrium price lower than the original equilibrium 
B) A market equilibrium price higher than the short run price 
C) Some firms exiting the market 
D) ​All of the above 
A) ​A short run market equilibrium price lower than the original equilibrium 
B) A market equilibrium price higher than the short run price 
C) Some firms exiting the market 
D) ​All of the above

Question 2

​If a firm in a perfectly competitive industry is experiencing higher than normal returns,in the long-run

Accepted Answer

A) ​Some firms will leave the industry and price will rise 
B) Some firms will enter the industry and price will rise 
C) Some firms will leave the industry and price will fall 
D) ​Some firms will enter the industry and price will fall 
A) ​Some firms will leave the industry and price will rise 
B) Some firms will enter the industry and price will rise 
C) Some firms will leave the industry and price will fall 
D) ​Some firms will enter the industry and price will fall

Question 3

​A sudden decrease in the market demand in a competitive industry leads to

Accepted Answer

A) ​Losses in the short-run and average profits in the long-run 
B) Above average profits in the short-run and average profits in the long-run 
C) New firms being attracted to the industry 
D) ​Demand creating supply 
A) ​Losses in the short-run and average profits in the long-run 
B) Above average profits in the short-run and average profits in the long-run 
C) New firms being attracted to the industry 
D) ​Demand creating supply

Question 4

In a competitive industry,the competitive firm's profits are​

Accepted Answer

A) ​independent of the industry in which they compete 
B) closely linked to the industry in which they compete 
C) determined only by their own differentiated product 
D) ​determined solely by the inelastic demand for their product 
A) ​independent of the industry in which they compete 
B) closely linked to the industry in which they compete 
C) determined only by their own differentiated product 
D) ​determined solely by the inelastic demand for their product

Question 5

The indifference principle states that​

Accepted Answer

A) ​If an asset is mobile,then in the long run,it will be indifferent about where it is used 
B) In the long run,a mobile asset will make the same profit,no matter where it goes 
C) If an asset is mobile,then in the long run,it would stay with the first user 
D) ​Only A&B 
A) ​If an asset is mobile,then in the long run,it will be indifferent about where it is used 
B) In the long run,a mobile asset will make the same profit,no matter where it goes 
C) If an asset is mobile,then in the long run,it would stay with the first user 
D) ​Only A&B

Question 6

​Jim has a choice between two jobs.Job A would pay him $15 an hour with certainty,and the job B is commission based where he could earn $12,with a 50% probability and $18 with a 50% probability.Which job would he choose?

Accepted Answer

A) ​Job A 
B) Job B 
C) Neither of the jobs 
D) ​He would choose to exit the labor market 
A) ​Job A 
B) Job B 
C) Neither of the jobs 
D) ​He would choose to exit the labor market

Question 7

​The main reason(s)monopolies can earn positive profits for a while is(are)

Accepted Answer

A) ​assets cannot quickly move in and out of the industry when demand fluctuates 
B) an increase in demand does not lead to entry of firms to absorb the extra demand 
C) both A&B 
D) ​none of the above 
A) ​assets cannot quickly move in and out of the industry when demand fluctuates 
B) an increase in demand does not lead to entry of firms to absorb the extra demand 
C) both A&B 
D) ​none of the above

Question 8

Critical care surgeons get paid higher salaries than family doctors because​

Accepted Answer

A) ​they usually work under highly stressful conditions 
B) they usually have to get longer training 
C) they usually work uncertain hours 
D) ​all of the above 
A) ​they usually work under highly stressful conditions 
B) they usually have to get longer training 
C) they usually work uncertain hours 
D) ​all of the above

Question 9

In the long run,a monopoly's

Accepted Answer

A) ​economic profits are zero 
B) economic profits are negative 
C) economic profits are positive 
D) ​demand is perfectly inelastic 
A) ​economic profits are zero 
B) economic profits are negative 
C) economic profits are positive 
D) ​demand is perfectly inelastic

Question 10

​Alan is offered a gamble.Heads he wins $100,tails he wins $20.If the game costs $60,would he play?

Accepted Answer

A) ​Yes he would play since the expected value is equal to the price of the play 
B) Yes he would play since the expected value of the play is higher than the price of the play 
C) No he would not play since the price of the play is higher than the expected value 
D) ​No he would not play since this is a fair bet and he is not being offered any risk premium 
A) ​Yes he would play since the expected value is equal to the price of the play 
B) Yes he would play since the expected value of the play is higher than the price of the play 
C) No he would not play since the price of the play is higher than the expected value 
D) ​No he would not play since this is a fair bet and he is not being offered any risk premium

Question 11

​Robert,as a baker has to work long hours and doesn't get much time with his family.Robert's boss,in order to keep Robert working at the bakery would soon have to offer him a

Accepted Answer

A) ​positive compensating differential 
B) negative compensating differential 
C) nothing can make Robert stay 
D) ​none of the above 
A) ​positive compensating differential 
B) negative compensating differential 
C) nothing can make Robert stay 
D) ​none of the above

Question 12

​In equilibrium the typical investor __________

Accepted Answer

A) ​prefers high risk assets to low risk assets 
B) prefers low risk assets to high risk assets 
C) is indifferent between buying low and high risk assets 
D) ​does not stay in the market 
A) ​prefers high risk assets to low risk assets 
B) prefers low risk assets to high risk assets 
C) is indifferent between buying low and high risk assets 
D) ​does not stay in the market

Question 13

In a competitive industry buffeted by demand and supply shocks,prices increase and decrease,but economic profits tend to revert to zero.Hence,profits are exhibiting

Accepted Answer

A) ​Above-average return 
B) Positive earnings 
C) Mean reversion 
D) ​None of the above 
A) ​Above-average return 
B) Positive earnings 
C) Mean reversion 
D) ​None of the above

A sudden fall in the market demand in a competitive industry leads to

If a firm in a perfectly competitive industry is experiencing higher than normal returns,in the long-run

A sudden decrease in the market demand in a competitive industry leads to

In a competitive industry,the competitive firm's profits are

The indifference principle states that

Jim has a choice between two jobs.Job A would pay him $15 an hour with certainty,and the job B is commission based where he could earn $12,with a 50% probability and $18 with a 50% probability.Which job would he choose?

The main reason(s)monopolies can earn positive profits for a while is(are)

Critical care surgeons get paid higher salaries than family doctors because

In the long run,a monopoly's

Alan is offered a gamble.Heads he wins $100,tails he wins $20.If the game costs $60,would he play?

Robert,as a baker has to work long hours and doesn't get much time with his family.Robert's boss,in order to keep Robert working at the bakery would soon have to offer him a

In equilibrium the typical investor __________

In a competitive industry buffeted by demand and supply shocks,prices increase and decrease,but economic profits tend to revert to zero.Hence,profits are exhibiting

The One Lessor of Business

Benefits, Costs, and Decisions

Extent How Much Decisions

Investment Decisions: Look Ahead and Reason Back

Simple Pricing

Economies of Scale and Scope

Understanding Markets and Industry Changes

Strategy: the Quest to Keep Profit From Eroding

Foreign Exchange, Trade, and Bubbles

More Realistic and Complex Pricing

Direct Price Discrimination

Strategic Games

Bargaining

Making Decisions With Uncertainty

Auctions

The Problem of Adverse Selection

The Problem of Moral Hazard

Getting Employees to Work in the Firms Best Interest

Getting Divisions to Work in the Firms Best Interest

Managing Vertical Relationships

Filters

Exam 8: Market Structure and Long Run Equilibrium

​A sudden fall in the market demand in a competitive industry leads to

​If a firm in a perfectly competitive industry is experiencing higher than normal returns,in the long-run

​A sudden decrease in the market demand in a competitive industry leads to

In a competitive industry,the competitive firm's profits are​

The indifference principle states that​

​Jim has a choice between two jobs.Job A would pay him $15 an hour with certainty,and the job B is commission based where he could earn $12,with a 50% probability and $18 with a 50% probability.Which job would he choose?

​The main reason(s)monopolies can earn positive profits for a while is(are)

Critical care surgeons get paid higher salaries than family doctors because​

In the long run,a monopoly's

​Alan is offered a gamble.Heads he wins $100,tails he wins $20.If the game costs $60,would he play?

​Robert,as a baker has to work long hours and doesn't get much time with his family.Robert's boss,in order to keep Robert working at the bakery would soon have to offer him a

​In equilibrium the typical investor __________

In a competitive industry buffeted by demand and supply shocks,prices increase and decrease,but economic profits tend to revert to zero.Hence,profits are exhibiting

The One Lessor of Business

Benefits, Costs, and Decisions

Extent How Much Decisions

Investment Decisions: Look Ahead and Reason Back

Simple Pricing

Economies of Scale and Scope

Understanding Markets and Industry Changes

Strategy: the Quest to Keep Profit From Eroding

Foreign Exchange, Trade, and Bubbles

More Realistic and Complex Pricing

Direct Price Discrimination

Strategic Games

Bargaining

Making Decisions With Uncertainty

Auctions

The Problem of Adverse Selection

The Problem of Moral Hazard

Getting Employees to Work in the Firms Best Interest

Getting Divisions to Work in the Firms Best Interest

Managing Vertical Relationships

Filters

A sudden fall in the market demand in a competitive industry leads to

If a firm in a perfectly competitive industry is experiencing higher than normal returns,in the long-run

A sudden decrease in the market demand in a competitive industry leads to

In a competitive industry,the competitive firm's profits are

The indifference principle states that

Jim has a choice between two jobs.Job A would pay him $15 an hour with certainty,and the job B is commission based where he could earn $12,with a 50% probability and $18 with a 50% probability.Which job would he choose?

The main reason(s)monopolies can earn positive profits for a while is(are)

Critical care surgeons get paid higher salaries than family doctors because

Alan is offered a gamble.Heads he wins $100,tails he wins $20.If the game costs $60,would he play?

Robert,as a baker has to work long hours and doesn't get much time with his family.Robert's boss,in order to keep Robert working at the bakery would soon have to offer him a

In equilibrium the typical investor __________