Whizkid Flashnotes Honor Society Pre and Post questions simulation for Exam 3 Answer key Pre Chap 9 Quiz Question 6 Question 7 Question 8 Which of the following is the best example of a business firm operating in a competitive price taker market Answers a a pizza parlor located in a major metropolitan area b a Midwest farmer producing beef cattle c Wal Mart a large retailer that competes in many markets d a small brewery supplying a local brand of beer e a Laundromat located a few blocks from a major university Several states require cosmetologists to undertake 1 500 hours or more of training in order to obtain a license to provide hair styling or braiding services This is an example of Answers a a barrier to entry b antitrust legislation c government action that promotes competition d the legal structure that is required for the operation of price taker markets Competitive price taker markets are characterized by which of the following Answers a b A small number of firms in the market 2 out of 2 points 2 out of 2 points 2 out of 2 points Firms that all produce the same product c Widespread use of advertising as a competitive weapon d Firms that are large relative to the size of the market When a law is passed that requires businesses to obtain permission from government officials in order to enter a market this is an example of Question 9 Question 10 Answers a a barrier to entry b the invisible hand principle c price control legislation d antitrust legislation Which of the following is the best example of a business firm operating in a competitive price taker market Answers a a bookstore located a few blocks from a major university b TGIFriday s a restaurant chain that operates in numerous locations c an Indiana hog farmer that raises pigs d Ford Motor company a major manufacturer of automobiles that operates in numerous markets throughout the world Question 11 Answers a Competitive price taker markets and purely competitive markets are similar but competition is stronger in the latter b similar but products are differentiated in the former 2 out of 2 points 2 out of 2 points 2 out of 2 points c terms used to designate markets in which the firms confront a downward sloping demand curve d merely alternative names for the same concept Question 12 2 out of 2 points Which of the following results from competition as a dynamic process for the individual firms in an industry Answers a Each firm will produce a homogeneous product b Each firm will utilize a variety of techniques such as product style and price to win the dollar votes of consumers c Each firm faces a perfectly elastic demand curve d Each firm will cooperate attempting to establish a price and output structure so each firm can survive and continue to serve the consumer Question 13 Answers a Which of the following is a reason to study the decisions of price takers 2 out of 2 points The decision making of both price searchers and price takers is identical b While there are not many price taker markets these few markets dominate the economy c The price taker model enhances our knowledge of competition as a dynamic process d Price takers are the most common type of business in the real world Firms that can choose what price they will charge for their product and can increase the number of units sold by reducing price are called 2 out of 2 points Question 14 Answers a price leaders b purely competitive c price takers d price searchers Question 15 Which of the following is true about firms that are price takers Answers a The have downward sloping demand curves b They can sell only a portion of their output at the market price c They produce products that are different than their competitors d They are small relative to the total market Post Chap 9 Quiz Question 6 Answers a Question 7 Answers a b When profits occur in a competitive market this indicates that producers value the goods more than consumers value the goods b producers value the goods more than the resources used to produce them c consumers value the goods more than the resources used to produce them d consumers value the goods less than the resources used to produce them Competition as a dynamic process implies that individual firms in a market use price competition as well as other forms of competition to gain the dollar votes of consumers 2 out of 2 points 5 out of 5 points 5 out of 5 points seek to utilize a variety of techniques such as product style and convenience of location to win the dollar vote of consumers but they never use price to compete c produce a homogeneous product d cooperate attempting to establish a price and output structure so each firm can survive and continue to serve the consumer Question 8 5 out of 5 points If an amusement park that is highly profitable during the summer months is unable to cover its variable costs during the winter months what would be the profit maximizing strategy to implement Answers a Operate during the summer but shut down during the winter months b Raise its prices during the winter months c Lower its prices during the summer months d Operate during all months of the year as long as its profits during the summer exceed its losses during the winter Question 9 Answers a Which of the following is true when the conditions in a competitive price taker market are such that the firms are consistently unable to cover their production costs 5 out of 5 points Some firms will exit from the industry and market price will rise until the remaining firms can earn the normal rate of return b All firms will go out of business since consumers will not pay prices that enable firms to cover their production costs c Resource prices will increase competition will decline and eventually the firms in the industry will earn monopoly profit d The firms will suffer short run economic losses that will be exactly offset by long run economic profits Question 10 5 out of 5 points What is implied if a firm is losing money Answers a The firm must go out of business immediately b The product cannot be produced profitably in the long run c Consumers do not understand the value of the product d The value of the resources used to make the product is being reduced Question 11 What will happen to a firm earning zero economic profit Answers a It is doing as well as typical firms in other markets b It will also generally be making zero accounting profit c It will be forced to shutdown and leave the market d It will not survive in the long run Question
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