Under conditions of perfect competition, if a profitable firm pushes its output beyond the point where MR equals MC, a. profits increase b. profits diminish c. AFC increases d. AVC decreases Q31. In the long run, under conditions of perfect competition, market forces come into play to a. enhance profits b. increase demand c. eliminate profits d. separate MR and AR Q32. Under perfect competition, each firm can sell its entire supply at the market price. a. true b. false Q33. The difference between the price firms would be willing to accept for their goods and the price they actually receive is called a. consumer surplus b. consumer efficiency c. allocative efficiency d. producer surplus Q34. Under conditions of perfect competition, if profits are being made, a. new firms are attracted into the industry b. the market supply decreases c. average revenue increases d. new firms are excluded Q35. Which of the following is always true of monopolists? a. they charge the highest possible price b. they always earn high profits c. they do not have to worry about demand d. they charge a price higher than marginal cost Q36. A market structure in which two firms control the market is a a. monopoly b. monopolistic competition c. perfect competition d. duopoly Q37. A monoposony has a. one seller b. a single buyer c. many sellers d. many buyers Q38. A monopoly can sell all that it desires at any given price. a. true b. false Q39. A firm that is a price maker can a. limit output and raise prices b. ignore the law of demand c. ignore the elasticity of the demand for the product d. both limit output and raise prices and ignore the elasticity of the demand for the product Q40. In the long run, economic profits tend to be eliminated under conditions of monopolistic competition. a. true b. false Q41. An effective way in which patents allow manufacturers to prevent the entry of new firms into the industry is through a. creating perfectly inelastic demand b. threats of infringement suits c. creating tying contracts d. threats of triple damages Q42. Forms of imperfect competition include monopoly, oligopoly, and monopolistic competition. a. true b. false Q43. Under oligopoly, collusive practices to fix prices are more likely to take place if a. market demand is highly elastic b. market demand is highly inelastic c. there are a large number of firms in the industry d. both market demand is highly inelastic and there are a large number of firms in the industry
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