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41. Refer to Figure 14-1. If the market price is P1, in the short run, the perfectly competitive firm will earn
| a. | positive economic profits. |
| b. | negative economic profits but will try to remain open. |
| c. | negative economic profits and will shut down. |
| d. | zero economic profits. |
42. Refer to Figure 14-1. If the market price is P2, in the short run, the perfectly competitive firm will earn
| a. | positive economic profits. |
| b. | negative economic profits but will try to remain open. |
| c. | negative economic profits and will shut down. |
| d. | zero economic profits. |
43. Refer to Figure 14-1. If the market price is P3, in the short run, the perfectly competitive firm will earn
| a. | positive economic profits. |
| b. | negative economic profits but will try to remain open. |
| c. | negative economic profits and will shut down. |
| d. | zero economic profits. |
44. Refer to Figure 14-1. If the market price is P4, in the short run, the perfectly competitive firm will earn
| a. | positive economic profits. |
| b. | negative economic profits but will try to remain open. |
| c. | negative economic profits and will shut down. |
| d. | zero economic profits. |
45. Refer to Figure 14-1. Which of the four prices corresponds to a perfectly competitive firm earning positive economic profits in the short run?
| a. | P1 |
| b. | P2 |
| c. | P3 |
| d. | P4 |
46. Refer to Figure 14-1. Which of the four prices corresponds to a perfectly competitive firm earning zero economic profits in the short run?
| a. | P1 |
| b. | P2 |
| c. | P3 |
| d. | P4 |
47. Refer to Figure 14-1. Which of the four prices corresponds to a perfectly competitive firm earning negative economic profits in the short run but trying to remain open?
| a. | P1 |
| b. | P2 |
| c. | P3 |
| d. | P4 |
48. Refer to Figure 14-1. Which of the four prices corresponds to a perfectly competitive firm earning negative economic profits in the short run and shutting down?
|
|
|
| a. | P1 |
| b. | P2 |
| c. | P3 |
| d. | P4 |
49. Which of the following industries is most likely to exhibit the characteristic of free entry?
| a. | nuclear power |
| b. | municipal water and sewer |
| c. | dairy farming |
| d. | airport security |
50. When buyers in a competitive market take the selling price as given, they are said to be
| a. | market entrants. |
| b. | monopolists. |
| c. | free riders. |
| d. | price takers. |
51. When firms are said to be price takers, it implies that if a firm raises its price,
| a. | buyers will go elsewhere. |
| b. | buyers will pay the higher price in the short run. |
| c. | competitors will also raise their prices. |
| d. | firms in the industry will exercise market power. |
52. Which of the following is a characteristic of a natural monopoly?
| a. | Marginal cost declines over large regions of output. |
| b. | Average total cost declines over large regions of output. |
| c. | The product sold is a natural resource such as diamonds or water. |
| d. | All of the above are correct. |
53. When a firm's average total cost curve continually declines, the firm is a
| a. | government-created monopoly. |
| b. | natural monopoly. |
| c. | revenue monopoly. |
| d. | All of the above are correct. |
