1. At the long-run quantity of output, where the LRATC curve is at its lowest po
ID: 1242421 • Letter: 1
Question
1. At the long-run quantity of output, where the LRATC curve is at its lowest point, it is tangent to the ________ of the corresponding short-run average total cost curve. A. minimum B. maximum C. right of the minimum D. left of the minimum 2. At quantities greater than the long-run least per-unit cost quantity of output, the long-run average total cost curve is tangent to the ________ of the corresponding short-run average total cost curve. A. minimum B. maximum C. right of the minimum D. left of the minimum 3. The slope of a long-run average total cost curve exhibiting diseconomies of scale is: A. zero. B. infinite. C. positive. D. negative. 6. A firm that is able to more efficiently utilize by-products as it increases production in the long run is an example of: A. economies of scale. B. diseconomies of scale. C. labor-intensive production. D. capital-intensive production. 7. For large beer breweries, it is common for long-run average total cost to decline as output increases. This indicates that many breweries achieve: A. diseconomies of scale. B. diminishing marginal returns. C. economies of scale. D. constant returns to scale. 10. When an increase in the firm's output reduces its long-run average total cost, it experiences: A. increasing returns to scale. B. decreasing returns to scale. C. constant returns to scale. D. variable returns to scale. 11. Market structures are categorized by the following two criteria: A. the number of firms and the size of the firms B. whether or not products are differentiated and the extent of advertising C. the number of firms and whether or not products are differentiated D. the size of the firms and the extent of advertising 12. The following are four differences between monopoly and perfect competition. Which of these is incorrect? A. A monopolist has a large market share while a perfect competitor does not. B. Unlike a perfectly competitive firm, a monopoly can make positive economic profits in the long run. C. A monopoly will charge a higher price and produce a smaller quantity than a competitive market with the same demand and cost structure. D. Monopoly profits can continue to exist in the long run, because the monopoly produces more and charges a higher price than a comparable perfectly competitive industry. 13. Which of the following is(are) true concerning monopoly? A. Monopoly is at the opposite end of the spectrum from a perfectly competitive firm. B. A monopoly has no rivals. C. Barriers to entry prevent other firms from entering the industry. D. All of the statements are true. 14. The two theoretical extremes of the market structure spectrum are occupied on one end by perfect competition and on the other end by: A. monopoly. B. duopoly. C. oligopoly. D. monopolistic competition. 15. If a local California avocado stand operates in a perfectly competitive market, that stand owner will be a: A. price-maker. B. price-taker. C. price-discriminator. D. price-maximizer. 16. Which of the following is not a characteristic of a perfectly competitive industry? A. Firms seek to maximize profits. B. Profits may be positive in the short run. C. There are many firms. D. There are differentiated products. 17. In a perfectly competitive industry, the market demand curve is usually: A. perfectly inelastic. B. perfectly elastic. C. downward-sloping. D. relatively elastic. 18. An industry that contains a firm that is the only producer of a good or service for which there are no close substitutes and for which entry by potential rivals is prohibitively difficult is: A. a duopoly. B. a monopoly. C. an oligopoly. D. perfect competition. 19. A monopoly is a market characterized by: A. a single seller. B. a product with many close substitutes. C. a large number of small firms. D. a small number of large firms. 20. A monopoly is best characterized by which of the following? A. a product with no close substitutes B. a single buyer and several sellers C. a large number of small firms D. a small number of large firms.Explanation / Answer
1. A. minimum<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
2. C. right of the minimum
3. C. positive.
6. A. economies of scale.
7. C. economies of scale
10. A. increasing returns to scale.
11. C. the number of firms and whether or not products are differentiated.
12. D. Monopoly profits can continue to exist in the long run, because the monopoly produces more and charges a higher price than a comparable perfectly competitive industry.
13. D. All of the statements are true.
14. A. monopoly.
15. B. price-taker.
16. D. There are differentiated products.
17. B. perfectly elastic.
18. B. a monopoly.
19. A. a single seller.
20 A. a product with no close substitutes.
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