Question : 21) Firms in perfectly competitive industries unable to control the : 1245284

21) Firms in perfectly competitive industries are unable to control the prices of the products they sell and earn a profit in the long run. Which of the following is one reason for this?

A) Owners of perfectly competitive firms realize that their short-run profits are temporary. Therefore, they either sell their businesses or develop other products that will earn short-run profits.

B) Firms in perfectly competitive industries can use advertising in the short run to persuade consumers that their products are better than those of other firms. But eventually consumers realize that all of the firms sell virtually identical products.

C) Firms from other countries are able to produce similar products at lower costs.

D) Firms in these industries sell identical products.

22) The delivery of first-class mail by the U.S. Postal Service is an example of

A) a monopoly.

B) perfect competition because consumers have access to other methods of written communication; for example, email and text messaging.

C) monopolistic competition, because mail delivery is a differentiated product provided by many firms.

D) an oligopoly because a few other firms provide delivery of letters and packages.

23) A perfectly competitive firm faces a demand curve that is

A) horizontal.

B) vertical.

C) perpendicular to the quantity axis.

D) perfectly inelastic.

24) Some markets have many buyers and sellers but fall into the category of monopolistic competition rather than perfect competition. The most common reason for this is

A) there are high barriers to entering these markets.

B) firms in these markets sell identical products.

C) firms in these markets make high profits.

D) firms in these markets do not sell identical products.

25) Which of the following is a characteristic of a firm in a perfectly competitive market?

A) The firm cannot make a profit in the short run because it is too small a part of the total market.

B) The firm can make a profit in the long run but not in the short run.

C) The firm can sell as much as it wants without having to lower its price.

D) The firm must lower its price in order to increase quantity demanded.

26) If a perfectly competitive firm raises the price it charges to consumers, which of the following is the most likely outcome?

A) The firm’s revenue will not change because some consumers will refuse to pay the higher price.

B) The firm will not sell any output.

C) The firm’s total revenue will increase only if the demand for its product is inelastic.

D) The firm’s total revenue will increase only if the demand for its product is elastic.

27) A perfectly competitive firm has to charge the same price as every other firm in the market. Therefore, the firm

A) faces a perfectly inelastic demand curve.

B) is not able to make a profit in the short run.

C) is a price taker.

D) faces a perfectly elastic supply curve.

28) Which of the following is not an assumption of perfectly competitive markets?

A) There are many sellers and many buyers, all of which are small relative to the market.

B) Each firm produces a similar but not identical product.

C) There are no barriers to new firms entering the market.

D) The products sold by all firms in the market are identical.

29) In a perfectly competitive market the term “price taker” applies to

A) sellers and buyers.

B) firms but not buyers.

C) buyers but not sellers.

D) only the smallest sellers and buyers.

30) Which of the following describes the difference between the market demand curve for a perfectly competitive industry and the demand curve for a firm in this industry?

A) The market demand curve is a horizontal line; the firm’s demand curve is downward-sloping.

B) The market demand curve is downward-sloping; the firm’s demand curve is a vertical line.

C) The market demand curve can not have a constant slope; the firm’s demand curve has a slope equal to zero.

D) The market demand curve is downward-sloping; the firm’s demand curve is a horizontal line.