Chapter 6 – (45 Questions)

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The above diagram shows a perfectly competitive firm in the short-term earning abnormal profit, which point on the above diagram shows how the firm has determined its profit maximising output produced?

In a monopoly industry, which of the following statements are more likely to be correct?

Which one of the following is not a barrier to entry?

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The above diagram shows a perfectly competitive firm in the short-term earning abnormal profit, producing Q. Which point on the above diagram would show in the long-term how the firm would maximise profit?

Which one of the following would normally represent that of a perfectly competitive firm producing in long-term equilibrium?

Which one(s) the following statements comparing monopoly to perfect competition would generally be correct?

i. A monopoly produces at a higher price and lower output than a firm under conditions of perfect competition

ii.  Barriers to entry would allow a monopolist to earn normal profit in the long-term

iii. Many sellers under the assumptions of perfect competition allow only normal profit to be earned in the long-term

Which one of the following assumptions is not an assumption of monopolistic competition?

Which one of the following assumptions is not an assumption of oligopoly?

Which of the following statements would be correct?

i.   A monopoly produces at a higher price and lower output than a firm under conditions of perfect competition

ii.  All firms according to economic theory maximise profit where MC = MR

iii. With oligopoly market structures there is normally a high degree of price competition between rivals

The kinked demand curve is used to explain the theory of?

When a firm decreased its price by £15 from £150, the number of units sold increased from 4,000 to 4,500 units. The marginal revenue would be?

Comparing perfect competition to monopoly, which one of the following would best distinguish one market structure from the other?

Using the diagram below for a perfectly competitive firm in the short-term, which one of the following statements is correct?

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i.  The profit maximising point for the firm is currently at point B

ii.  Subnormal profit is being earned equal to area PABC

iii. Due to no barriers to entry in the long-term, the firm will produce at point B

In the long-term which of the following are true about a perfectly competitive firm?

i.   It produces where P = MC

ii.  It produces where AR = AC

iii. Abnormal profit is earned

Using the above information, which market structure, could not apply to the information given?

      Quantity                Marginal Revenue    Average Revenue

                       Q                                  (MR)                           (AR)

1                                  £1.50                           £1.50

2                                  £0.50                           £1.25

3                                  £0.25                           £1.00

A firm can increase profit or decrease losses by increasing output

A firm has fixed costs of $500 and can sell all its output at a price of $50 per unit.
Its total variable costs at different levels of output are as follows

A business uses four identical components to assemble one unit of its product. Each component costs $60 and the firm also incurs further variable cost of $45 per unit.

Units produced                       8         9       10      11      12     13

Marginal revenue ($)          £300   £295  £290  £285  £280  £275

Which one of the following does not describe the position of profit maximisation?

Which one of the following statements is correct about profit?

A self-employed business person trades within a warehouse that is personally owned by this person.  If the warehouse was alternatively rented it could earn $5,000 a year.  The business person could earn $25,000 doing similar work if employed by another firm in this industry; the business person could be earning also $1,000 in bank interest, if the capital had not been invested in the business.  Business purchases for material during the year were $4,000.

A firm masking zero economic profit is earning

The fundamental objective of a firm according to the theory of economics is

A firm has fixed costs of $2 per unit and can sell all its output at the following prices.  Its total variable costs at different levels of output are also shown below.

According to economic theory of the firm, it states that the equilibrium position for all firms irrespective of their market structure would be

Which one of the following is more likely to increase the level of competition within an industry?

Which one of the following is not a barrier to entry?

Which one of the following is not an economic assumption of monopolistic competition?

A business has fixed cost of $7,000 a week, sells its output at a price of $15 per unit sold and the variable (or marginal cost) of each unit made is $8 per unit.

According to economic theory of the firm, if marginal revenue (MR) is greater than marginal cost (MC) then the firm to increase profits would

Which one of the following is correct, to explain why the UK competition commission would object to a merger between two chocolate makers?

What does the Herfindhl index measure within an industry?

A Herfindhl index measure of zero for an industry would mean?

The following sales revenue has been identified for the leading companies in an industry, total industry sales are $324 million.

Which one of the following would not be a government remedy for high concentration of seller power?

A theme park has no variable cost and all its costs are fixed. Which one of the following would not be correct about profit maximisation for this theme park?

Which one of the following is true about profit?

The market share of a product will be maximised when the firm sets a price where?

Social efficiency in economics is concerned with?

The most allocative efficient output of an economy is where?

The Competition Commission (CC) within the UK would normally investigate a merger or acquisition within an industry because

Which one of the following is not an approach to profit maximisation for a firm?

Which one of the following will reduce the number of firms within an industry?

Which of the following is true about the total revenue (sales) curve of a firm?

Which of the following best describes allocative efficiency?