Question Question 1. Question : (TCO 3) Which of the following constitutes an implicit cost t

03 Jun Question Question 1. Question : (TCO 3) Which of the following constitutes an implicit cost t

Question
Question 1. Question :

(TCO 3) Which of the following constitutes an implicit cost to the Johnston Manufacturing Company?

Payments of wages to its office workers

Rent paid for the use of equipment owned by the Schultz Machinery Company

Use of savings to pay operating expenses instead of generating interest income

Economic profits resulting from current production

Question 2. Question :

(TCO 3) The long run is characterized by

the relevance of the law of diminishing returns.

at least one fixed input.

insufficient time for firms to enter or leave the industry.

the ability of the firm to change its plant size.

Question 3. Question :

(TCO 3) Economists would describe the U.S. automobile industry as

purely competitive.

an oligopoly.

monopolistically competitive.

a pure monopoly.

Question 4. Question :

(TCO 3) If a firm in a purely competitive industry is confronted with an equilibrium price of $5, its marginal revenue

may be either greater or less than $5.

will also be $5.

will be less than $5.

will be greater than $5.

Question 5. Question :

(TCO 3) Which of the following is a characteristic of pure monopoly?

Close substitute products

Barriers to entry

The absence of market power

“Price taking”

Question 6. Question :

(TCO 3) A natural monopoly occurs when

long-run average costs decline continuously through the range of demand.

a firm owns or controls some resource essential to production.

long-run average costs rise continuously as output is increased.

economies of scale are obtained at relatively low levels of output.

Question 7. Question :

(TCO 3) Monopolistic competition means

IN a market situation where competition is based entirely on product differentiation and advertising.

a large number of firms producing a standardized or homogeneous product.

many firms producing differentiated products.

a few firms producing a standardized or homogeneous product.

Question 8. Question :

(TCO 3) Use your basic knowledge and your understanding of market structures to answer this question. Which of the following companies most closely approximates a monopolistic competitor?

Subway Sandwiches

Pittsburgh Plate Glass

Ford Motor Company

Microsoft

Question 9. Question :

(TCO 3) Which of the following is a unique feature of oligopoly?

Mutual interdependence

Advertising expenditures

Product differentiation

Nonprice competition

Question 10. Question :

(TCO 3) If the four-firm concentration ratio for industry X is 80

the four largest firms account for 80% of total sales.

each of the four largest firms accounts for 20% of total sales.

the four largest firms account for 20% of total sales.

the industry is monopolistically competitive.

Question 11. Question :

(TCO 3) What is the difference between ACCOUNTING PROFIT, ECONOMIC PROFIT, and NORMAL PROFIT?

Question 12. Question :

(TCO 3) Identify the primary characteristics of perfect competition and monopolistic competition. Give examples of each.