#1
Which of the following is a characteristic of a perfectly competitive market?
High barriers to entry
Homogeneous products
Few sellers
Price-setting power for individual firms
#2
In the short run, if a perfectly competitive firm is making a loss, what decision should it make?
Continue production at the same level
Increase production to minimize losses
Shut down in the short run
Exit the industry immediately
#3
What is the main purpose of the production function in microeconomic analysis?
To calculate total revenue
To analyze market demand
To study the relationship between inputs and outputs
To determine the market equilibrium
#4
In the short run, a firm's variable costs typically include:
Rent for the factory
Raw material expenses
Long-term loan payments
Managerial salaries
#5
What is the relationship between average total cost (ATC) and marginal cost (MC) when ATC is at its minimum?
ATC is equal to MC
ATC is greater than MC
ATC is less than MC
ATC and MC are unrelated
#6
What is the main characteristic of a natural monopoly?
Multiple firms competing in the market
High barriers to entry
Homogeneous products
Low production costs
#7
What is the key difference between explicit costs and implicit costs in production?
Explicit costs are incurred in the short run, while implicit costs are incurred in the long run
Explicit costs involve cash payments, while implicit costs represent forgone opportunities
Explicit costs are fixed, while implicit costs are variable
Explicit costs are related to variable inputs, while implicit costs are related to fixed inputs
#8
In a monopolistically competitive market, firms differentiate their products to gain a competitive edge. What does this imply for the demand curve faced by each firm?
Perfectly elastic
Perfectly inelastic
Relatively elastic
Relatively inelastic
#9
What is the law of diminishing marginal returns in production?
As output increases, marginal cost decreases
As input increases, total output increases at a decreasing rate
As input decreases, total output increases at a decreasing rate
As output decreases, marginal cost increases
#10
In the long run, a firm can adjust all of the following except:
Labor
Capital
Output
Fixed costs
#11
In the long run, if a firm experiences economies of scale, it means that:
Average total cost decreases as output increases
Marginal cost decreases as output increases
Average variable cost decreases as output increases
Average fixed cost decreases as output increases
#12
If a firm is operating at the point where marginal cost equals marginal revenue, what can be said about its profit?
It is maximizing profit
It is incurring losses
It is experiencing diminishing returns
It is producing at minimum average variable cost
#13
What is the slope of the total product curve in the short run when diminishing marginal returns set in?
Positive
Zero
Negative
Undefined
#14
How does a technological improvement impact a firm's cost structure in the long run?
It increases fixed costs
It decreases variable costs
It decreases average total cost
It has no effect on costs