ECON 101 Final Exam A+ Part 1 of 1 – 99.99999 Points Question 1 of 20 4.45 Points The representative firm in a purely competitive industry: A.Will always earn a profit in the short run B.May earn either an economic profit or a loss in the long run C.Will always earn an economic profit in the long run D.Will earn an economic profit of zero in the long run Question 2 of 20 4.45 Points An example of a monopolistically competitive industry would be: A.Steel B.Soybeans C.Electricity D.Retail clothing Feedback: See page 275 – 276. Question 3 of 20 4.45 Points Firms in an industry will not earn long-run economic profits if: A.Fixed costs are zero B.The number of firms in the industry is fixed C.There is free entry and exit of firms in the industry D.Production costs for a given level of output are minimized Feedback: See page 240. Question 4 of 20 4.45 Points Marginal product is: A.the increase in total output attributable to the employment of one more worker. B.the increase in total revenue attributable to the employment of one more worker. C.the increase in total cost attributable to the employment of one more worker. D.total product divided by the number of workers employed. Feedback: See page 201. Question 5 of 20 4.45 Points The law of diminishing returns indicates that: A.as extra units of a variable resource are added to a fixed resource, marginal product will decline beyond some point. B.because of economies and diseconomies of scale a competitive firm’s long-run average total cost curve will be U-shaped. C.the demand for goods produced by purely competitive industries is downsloping. D.beyond some point the extra utility derived from additional units of a product will yield the consumer smaller and smaller extra amounts of satisfaction. Feedback: See page 204. Question 6 of 20 4.45 Points If average total cost is declining, then: A.marginal cost must be greater than average total cost. B.the average fixed cost curve must lie above the average variable cost curve. C.marginal cost must be less than average total cost. D.total cost must also be declining. Feedback: See page 208. Question 7 of 20 4.45 Points Average fixed costs diminish continuously as output increases. True False Feedback: See page 208. Question 8 of 20 4.45 Points Patents and copyrights were established by the government to reduce oligopoly and monopoly power. True False Feedback: See page 246 – 247. Question 9 of 20 4.45 Points A purely competitive firm is a price maker, but a monopolist is a price taker. True False Feedback: See page 226. Question 10 of 20 4.45 Points The profit-maximizing rule MC = MR is followed by firms under: A.monopolistic competition, but not perfect competition. B.perfect competition, but not monopolistic competition. C.either monopolistic competition or perfect competition, depending on the costs of production. D.both monopolistic competition and perfect competition. Feedback: Great job. See page 277. Question 11 of 20 4.35 Points A perfectly competitive firm will continue producing in the short run as long as it can cover its: A.total cost. B.average total cost. C.average variable cost. D.average fixed cost. Feedback: Great work! See bottom of page 235. Question 12 of 20 4.45 Points A perfectly competitive firm will earn a profit and will continue producing the profit-maximizing quantity of output in the short run if price is: A.greater than marginal cost. B.less than marginal cost. C.less than average variable cost. D.greater than average total cost. Feedback: Great work! See page 233. Question 13 of 20 4.45 Points Monopolistic competition is an industry characterized by: A.a product with many close substitutes. B.a horizontal demand curve. C.a small number of firms. D.barriers to entry and exit. Feedback: Great work. See page 276. Question 14 of 20 4.45 Points If a perfectly competitive firm increases production from 10 units to 11 units, and the market price is $20 per unit, total revenue for 10 units is: A.$10. B.$2…
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