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.
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