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Microeconomics Test

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5 Written Questions

5 Matching Questions

  1. In a perfectly competitive mkt. if TR>TC what is happening?
  2. Why are pure monoplies a rarity?
  3. compa red to a fir m und er PC, a m onopo list produces
  4. WHY do costs differ between perfect competion industry and monpoly industry?
  5. A firm sells grapefuit at $1.50 a pound what is the firms marginal revenue?
  1. a economies of scale, x-inefficiency, the need for monopoly preserving expenditures, and the VERY long-run prespective
  2. b a smaller quantity,charges a higher price, and earns a positive economic profit
  3. c equals $1.50 because in a perfectly comp. industry P=AR=MR=D
  4. d Company is generating economic profits
  5. e Few goods and services rarely have only one producer

5 Multiple Choice Questions

  1. shut down now
  2. TR - TC or (P- ATC) xQ
  3. False
  4. AR/Average Revenue
  5. The price will fall.

5 True/False Questions

  1. In a Monoply short run supply curve is equivalent to what?By subtracting total cost from total revenue or (PxQ) - (ATCxQ)


  2. what are the characteristics of pure competition (perfect competition)?large number of buyers and sellers, homogenous (standardized) product, no barriers to new firms entering mkt., firms are price takers and have a perfectly elastic demand.


  3. A perfectly competitive firm should always...Company is generating economic profits


  4. What is another name for economies of scale?Normal rate of return


  5. Why is allocative efficiency not achieved in a monopoly?P(what product is worth to consumers) > MC (what the resources used to make the product are worth)


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