Expert Answers

1- Under perfect competition, at the profit maximizing level of output:
a.price is greater than marginal revenue.
b.price is equal to marginal revenue.
c.marginal revenue is equal to zero.
d.the marginal revenue curve is downward sloping.
e.the average revenue curve is upward sloping.

2- The ordering of market structures from most market power to least market power (where market power is the ability to set its own price) is:
a.monopoly, monopolistic competition, oligopoly, perfect competition.
b.perfect competition, monopolistic competition, oligopoly, monopoly.
c.eligopoly, monopoly, monopolistic competition, perfect competition.
d.monopoly, oligopoly, monopolistic competition, perfect competition.
e.monopoly, perfect competition, monopolistic competition, oligopoly.

3- In a perfectly competitive industry, the price of good A is $2. If a firm in this inudustry decides to increase its price to $2.50, it will:
a.realize an increase in profits of $.50 per unit.
b.be able to increase the quantity sold.
c.be unable to sell any quantity of good A that is produced.
d.lose some of its customers in the market.
e.experience a decrease in profits of $.50 per unit.

4- Monopoly is a market structure in which:

5- Steve is about to start up a business in a monopolistically competitive market. Which of the following can he expect?

6- Which of the following characteristics distinguishes oligopoly from other market structures?

8- The demand curve faced by a perfectly competitive firm is:
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