#1
What is a common characteristic of a perfectly competitive market?
Price-taking behavior
ExplanationFirms accept market price as given.
#2
Which of the following is an example of a fixed cost for a firm?
Property rent
ExplanationCosts that don't vary with production.
#3
What is the main goal of profit maximization for a firm?
To maximize the difference between total revenue and total cost
ExplanationMaximizing earnings.
#4
Which of the following is NOT a characteristic of a monopoly?
Product differentiation
ExplanationHomogeneous product.
#5
Which of the following is a characteristic of a natural monopoly?
High barriers to entry
ExplanationSignificant obstacles for new entrants.
#6
What does the term 'marginal revenue' represent for a firm?
The additional revenue from selling one more unit of output
ExplanationIncremental earnings from additional sales.
#7
In economics, what is the term used to describe the total revenue minus explicit costs?
Economic profit
ExplanationNet earnings after accounting for costs.
#8
What does the term 'economies of scale' refer to?
Decrease in average total cost as production quantity increases
ExplanationCost advantages with increased production.
#9
Which market structure is characterized by a small number of large firms dominating the market?
Oligopoly
ExplanationFew firms with significant market share.
#10
What is the formula for calculating marginal cost?
Change in total cost divided by change in quantity
ExplanationIncremental cost of producing one more unit.
#11
Which of the following is NOT a characteristic of monopolistic competition?
Price-taking behavior
ExplanationFirms have some control over prices.
#12
What is the relationship between marginal cost and average total cost when marginal cost is below average total cost?
Marginal cost is decreasing and less than average total cost
ExplanationCost per unit decreases as production increases.
#13
Which of the following is a characteristic of a firm operating in a perfectly competitive market in the long run?
Zero economic profit
ExplanationCompetitive equilibrium.
#14
What is the main characteristic of a monopolistically competitive market?
Product differentiation
ExplanationDiverse product offerings.
#15
In the long run, a perfectly competitive firm will produce at which point?
Where average total cost is minimized
ExplanationEfficiency in production.
#16
What is the main reason for a firm to engage in price discrimination?
To capture consumer surplus
ExplanationExtracting maximum value from consumers.
#17
What is the term used to describe the situation where a firm produces at the lowest possible cost per unit of output?
Economies of scale
ExplanationEfficient production.
#18
Which of the following is a characteristic of oligopoly?
High barriers to entry
ExplanationDifficulty for new competitors to enter.
#19
What is a characteristic of a firm operating in a monopolistically competitive market in the long run?
Economic profit equal to zero
ExplanationCompetitive equilibrium.