Question 1

An "experience good" is one that:

Accepted Answer

A)  Only an expert can use 
B)  Has undetectable quality when purchased 
C)  Can be readily experienced simply by touching or tasting 
D)  Improves with age,like a fine wine 
E)  All of the above 
A)  Only an expert can use 
B)  Has undetectable quality when purchased 
C)  Can be readily experienced simply by touching or tasting 
D)  Improves with age,like a fine wine 
E)  All of the above B

Question 2

The market for "lemons" is one in which

Accepted Answer

A)  the rational buyer discounts 
B)  the seller's product claims are unverifiable at the point of purchase 
C)  "the bad apples drive out the good" 
D)  the problem of adverse selection is rampant 
E)  all of the above 
A)  the rational buyer discounts 
B)  the seller's product claims are unverifiable at the point of purchase 
C)  "the bad apples drive out the good" 
D)  the problem of adverse selection is rampant 
E)  all of the above E

Question 3

In the long-run,firms in a monopolistically competitive industry will

Accepted Answer

A)  earn substantial economic profits 
B)  tend to just cover costs,including normal profits 
C)  seek to increase the scale of operations 
D)  seek to reduce the scale of operations 
A)  earn substantial economic profits 
B)  tend to just cover costs,including normal profits 
C)  seek to increase the scale of operations 
D)  seek to reduce the scale of operations B

Question 4

What is the profit maximization point for a firm in a purely competitive environment?

Accepted Answer

A)  The output where P = MC 
B)  The output where P  MC 
D)  The output where MR = MC 
E)  The output where AVC < P 
A)  The output where P = MC 
B)  The output where P  MC 
D)  The output where MR = MC 
E)  The output where AVC < P

Question 5

The price for used cars is well below the price of new cars of the same general quality.This is an example of:

Accepted Answer

A)  The Degree of Operating Leverage 
B)  A Lemon's Market 
C)  Redeployment Assets 
D)  Cyclical Competition 
E)  The Unemployment Rate 
A)  The Degree of Operating Leverage 
B)  A Lemon's Market 
C)  Redeployment Assets 
D)  Cyclical Competition 
E)  The Unemployment Rate

Question 6

In pure competition:

Accepted Answer

A)  the optimal price-output solution occurs at the point where marginal revenue is equal to price 
B)  a firm's demand curve is represented by a horizontal line 
C)  a firm is a price-taker since the products of every producer are perfect substitutes for the products of every other producer 
D)  a and b only 
E)  a,b,and c 
A)  the optimal price-output solution occurs at the point where marginal revenue is equal to price 
B)  a firm's demand curve is represented by a horizontal line 
C)  a firm is a price-taker since the products of every producer are perfect substitutes for the products of every other producer 
D)  a and b only 
E)  a,b,and c

Question 7

Uncertainty includes all of the following except ____.

Accepted Answer

A)  unknown effects of deliberate actions 
B)  incomplete information as to the type of competitor 
C)  random disturbances 
D)  unverifiable claims 
E)  accidents due to weather hazards 
A)  unknown effects of deliberate actions 
B)  incomplete information as to the type of competitor 
C)  random disturbances 
D)  unverifiable claims 
E)  accidents due to weather hazards

Question 8

Long distance telephone service has become a competitive market.The average cost per call is $0.05 a minute,and it's declining.The likely reason for the declining price for long distance service is:

Accepted Answer

A)  Governmental pressure to lower the price 
B)  Reduced demand for long distance service 
C)  Entry into this industry pushes prices down 
D)  Lower price for a barrel of crude oil 
E)  Increased cost of providing long distance service 
A)  Governmental pressure to lower the price 
B)  Reduced demand for long distance service 
C)  Entry into this industry pushes prices down 
D)  Lower price for a barrel of crude oil 
E)  Increased cost of providing long distance service

Question 9

In the purely competitive case,marginal revenue (MR)is equal to:

Accepted Answer

A)  cost 
B)  profit 
C)  price 
D)  total revenue 
E)  none of the above 
A)  cost 
B)  profit 
C)  price 
D)  total revenue 
E)  none of the above

Question 10

Experience goods are products or services

Accepted Answer

A)  that the customer already knows 
B)  whose performance is highly unusual 
C)  whose quality is undetectable when purchased 
D)  not likely to cause repeat purchases 
E)  all of the above 
A)  that the customer already knows 
B)  whose performance is highly unusual 
C)  whose quality is undetectable when purchased 
D)  not likely to cause repeat purchases 
E)  all of the above

Question 11

To remain competitive today,many companies commit themselves to:

Accepted Answer

A)  ​continuous improvement processes 
B)  ​competitive strategic analysis by outside experts 
C)  ​episodes of strategic planning 
D)  ​a and c 
E)  ​b and c 
A)  ​continuous improvement processes 
B)  ​competitive strategic analysis by outside experts 
C)  ​episodes of strategic planning 
D)  ​a and c 
E)  ​b and c

Question 12

Asset specificity is largest when

Accepted Answer

A)  value in first best use is large 
B)  value in second best use is large 
C)  customers choose their supplier at random 
D)  very valuable assets are non-redeployable 
E)  customers are loyal to a particular seller 
A)  value in first best use is large 
B)  value in second best use is large 
C)  customers choose their supplier at random 
D)  very valuable assets are non-redeployable 
E)  customers are loyal to a particular seller

Question 13

To escape adverse selection and elicit high quality experience goods buyers can

Accepted Answer

A)  offer price premiums to new firms in the market 
B)  seek out unbranded goods 
C)  buy from generic storefronts that have leased temporary space 
D)  secure warranties from warehouse retailers 
E)  none of the above 
A)  offer price premiums to new firms in the market 
B)  seek out unbranded goods 
C)  buy from generic storefronts that have leased temporary space 
D)  secure warranties from warehouse retailers 
E)  none of the above

Question 14

Under asymmetric information,

Accepted Answer

A)  you never get what you pay for 
B)  you sometimes get cheated 
C)  you always get cheated 
D)  at best you get what you pay for 
E)  sellers make profits in excess of competitive returns 
A)  you never get what you pay for 
B)  you sometimes get cheated 
C)  you always get cheated 
D)  at best you get what you pay for 
E)  sellers make profits in excess of competitive returns

Question 15

All of the following are mechanisms which reduce the adverse selection problem except ____.

Accepted Answer

A)  warranties from established enterprises with non-redeployable assets 
B)  high interest rates 
C)  large collateral requirements 
D)  brand names and product-specific promotions and retail displays 
E)  higher prices in repeat customer transactions 
A)  warranties from established enterprises with non-redeployable assets 
B)  high interest rates 
C)  large collateral requirements 
D)  brand names and product-specific promotions and retail displays 
E)  higher prices in repeat customer transactions

Question 16

If price exceeds average costs under pure competition,____ firms will enter the industry,supply will ____,and price will be driven ____.

Accepted Answer

A)  more; decrease; down 
B)  more; decrease; up 
C)  more; increase; down 
D)  more; increase; up 
E)  none of the above 
A)  more; decrease; down 
B)  more; decrease; up 
C)  more; increase; down 
D)  more; increase; up 
E)  none of the above

Question 17

Sunrise Juice Company sells its output in a perfectly competitive market.The firm's total cost function is given in the following schedule: $$\begin{array} { c c } 
\text { Output } & \text { Total Cost } \
\text { (Units) } & ( \$ ) \
\hline 0 & 50 \
10 & 120 \
20 & 170 \
30 & 210 \
40 & 260 \
50 & 330 \
60 & 430
\end{array}$$ Total costs include a "normal" return on the time (labor services)and capital that the owner has invested in the firm.The prevailing market price is $7 per unit. (a) Prepare (i) marginal cost and (ii) average total cost schedules for the firm.
(b) What is the firm's profit maximizing output level?
(c) Is the industry in long-tun equilibrium? Justify your answer.

Accepted Answer

(a)
  (i.e., above "

Question 18

In long-run equilibrium,all firms in a pure competition market situation operating under a condition of certainty will have identical costs even though they may use different production and operation techniques.

Accepted Answer

A) True 
 B)False

Question 19

All of the following are true for both competition and monopolistic competition in the long run,except one of them.Which is it?

Accepted Answer

A)  P = MC 
B)  P = AC 
C)  Economic profits become zero in the long-run 
D)  The barriers to entry and exit are relatively easy 
E)  None of the above is an exception 
A)  P = MC 
B)  P = AC 
C)  Economic profits become zero in the long-run 
D)  The barriers to entry and exit are relatively easy 
E)  None of the above is an exception

Question 20

A "search good" is:

Accepted Answer

A)  One that depends on how the product behaves over time 
B)  A product whose quality is only found out over time by finding how durable it is 
C)  Like a peach that can be examined for flaws 
D)  Like a used car,since it is easy to determine its inherent quality 
E)  None of the above 
A)  One that depends on how the product behaves over time 
B)  A product whose quality is only found out over time by finding how durable it is 
C)  Like a peach that can be examined for flaws 
D)  Like a used car,since it is easy to determine its inherent quality 
E)  None of the above

An "experience good" is one that:

The market for "lemons" is one in which

In the long-run,firms in a monopolistically competitive industry will

What is the profit maximization point for a firm in a purely competitive environment?

The price for used cars is well below the price of new cars of the same general quality.This is an example of:

In pure competition:

Uncertainty includes all of the following except ____.

Long distance telephone service has become a competitive market.The average cost per call is $0.05 a minute,and it's declining.The likely reason for the declining price for long distance service is:

In the purely competitive case,marginal revenue (MR)is equal to:

Experience goods are products or services

To remain competitive today,many companies commit themselves to:

Asset specificity is largest when

To escape adverse selection and elicit high quality experience goods buyers can

Under asymmetric information,

All of the following are mechanisms which reduce the adverse selection problem except ____.

If price exceeds average costs under pure competition, firms will enter the industry,supply will ,and price will be driven .

In long-run equilibrium,all firms in a pure competition market situation operating under a condition of certainty will have identical costs even though they may use different production and operation techniques.

All of the following are true for both competition and monopolistic competition in the long run,except one of them.Which is it?

A "search good" is:

Introduction and Goals of the Firm

Fundamental Economic Concepts

Demand Analysis

Estimating Demand

Business and Economic Forecasting

Managing in the Global Economy

Production Economics

Cost Analysis

Applications of Cost Theory

Price and Output Determination: Monopoly and Dominant Firms

Price and Output Determination: Oligopoly

Best-Practice Tactics: Game Theory

Pricing Techniques and Analysis

Contracting,governance,and Organizational Form

Government Regulation

Long-Term Investment Analysis

Filters

Exam 10: Prices,output,and Strategy: Pure and Monopolistic Competition

An "experience good" is one that:

The market for "lemons" is one in which

In the long-run,firms in a monopolistically competitive industry will

What is the profit maximization point for a firm in a purely competitive environment?

The price for used cars is well below the price of new cars of the same general quality.This is an example of:

In pure competition:

Uncertainty includes all of the following except ____.

Long distance telephone service has become a competitive market.The average cost per call is $0.05 a minute,and it's declining.The likely reason for the declining price for long distance service is:

In the purely competitive case,marginal revenue (MR)is equal to:

Experience goods are products or services

To remain competitive today,many companies commit themselves to:

Asset specificity is largest when

To escape adverse selection and elicit high quality experience goods buyers can

Under asymmetric information,

All of the following are mechanisms which reduce the adverse selection problem except ____.

If price exceeds average costs under pure competition,____ firms will enter the industry,supply will ____,and price will be driven ____.

In long-run equilibrium,all firms in a pure competition market situation operating under a condition of certainty will have identical costs even though they may use different production and operation techniques.

All of the following are true for both competition and monopolistic competition in the long run,except one of them.Which is it?

A "search good" is:

Introduction and Goals of the Firm

Fundamental Economic Concepts

Demand Analysis

Estimating Demand

Business and Economic Forecasting

Managing in the Global Economy

Production Economics

Cost Analysis

Applications of Cost Theory

Price and Output Determination: Monopoly and Dominant Firms

Price and Output Determination: Oligopoly

Best-Practice Tactics: Game Theory

Pricing Techniques and Analysis

Contracting,governance,and Organizational Form

Government Regulation

Long-Term Investment Analysis

Filters

If price exceeds average costs under pure competition, firms will enter the industry,supply will ,and price will be driven .