Reference no: EM133313926

Questions

1. Which one of the following is true for a firm operating in perfectly competitive market?

a. The firm can control neither its price nor its output

b. The firm can control its price but not its output

c. The firm can control its output but not its price

d. The firm can control both its price and its output

2. A competitive firm is said to maximize its profits when

a. The price is equal to average cost

b. The price is equal to average revenue

c. The price is equal to marginal cost

d. The price is equal to marginal revenue

3. Which one of the following situations should cause a firm to shut down in the short run?

a. It is not covering its variable costs

b. It is not covering its fixed costs

c. It is not covering its total costs

d. It is not covering its money outlays or explicit costs

4. Which one of the following shows where a monopolist produces?

a. MC=MR

b. MC=P

c. P=ATC

d. P>ATC

5. Which one of the following indicates where a monopolist sets price?

a. Where MC=MR

b. From the demand curve at the quantity for which MC=MR

c. Where supply = demand

d. Where marginal revenue = demand

6. Which one of the following explains why monopoly occurs?

a. Barriers to entry into the industry

b. Greed by the seller

c. Lack of interest by potential competitors

d. Inadequate regulation by government

7. Which one of the following would likely lead to cooperation and the optimal joint outcome?

a. if both players behaved rationally

b. if the games were played only once

c. if the game were played repeatedly, with retaliation against noncooperative behavior

d. if the players split the proceeds evenly

8. Which one of the following can the prisoner's dilemma help to explain?

a. Self-interest leads the players to a collectively inferior outcome.

b. The good of many outweighs the desires of the few.

c. It can help to explain the well-being of the players but not that of the society.

d. It can help to explain the well-being of the society but not that of the players

9. In a prisoner's dilemma game, which one of the following makes the attainment of a cooperative outcome more likely?

a. If the players realize that their mutual interest is served best by cooperation

b. If the game is played repeatedly and with the threat of retaliation against those who refuse to cooperate

c. If the game is played only once and players know that there will be devastating retaliation if they fail to cooperate

d. If players realize that, if they fail to cooperate, so will others.