CH-9B Perfect Competition – Microeconomics: Principles and Applications : Exam Guide

CHAPTER 9B—PERFECT COMPETITION
MULTIPLE CHOICE
1) Diminishing marginal returns are the reason why some industries have positively-sloped
long-run average cost curves.
a. True.
b. False
Answer: B
2) In perfect competition, technological advances will allow economic profits for
a. all firms.
b. only the firm developing the new technology.
c. early adopters.
d. none of the firms, as the advance will be immediately adopted by all of them.
Answer: C
3) In a perfectly competitive market, a technological advance allows all firms to earn higher
economic profits in the long run.
a. True.
b. False
Answer: B
4) One of the defining characteristics of a perfectly competitive market is
a. both buyers and sellers are well informed about the market
b. a small number of buyers
c. high barriers to entry
d. a small number of buyers but a large number of sellers
e. buyers are better informed about the market than sellers
Answer: A
5) Which of the following is not a characteristic of a perfectly competitive market
a. buyers and sellers are well informed about the market
b. standardized product
c. many buyers and few sellers
d. easy exit out of the industry
e. easy entry into the industry
Answer: C

Test Bank for Microeconomics: Principles and Applications
Robert E. Hall, Marc Lieberman
9781111822569, 9781478405238, 9781478498056