Question : 9.1   Perfectly Competitive Markets 1) Assume the market for organic produce : 1245257

9.1   Perfectly Competitive Markets

1) Assume the market for organic produce sold at farmers’ markets is perfectly competitive. All else equal, as more farmers choose to produce and sell organic produce at farmers’ markets, what is likely to happen to the equilibrium price of the produce and profits of the organic farmers in the long run?

A) The equilibrium price is likely to increase and profits are likely to remain unchanged.

B) The equilibrium price is likely to remain unchanged and profits are likely to increase.

C) The equilibrium price is likely to decrease and profits are likely to decrease.

D) The equilibrium price is likely to increase and profits are likely to increase.

2) Assume the market for organically-grown produce is perfectly competitive. All else equal, as farmers find it less profitable to produce and sell organic produce in this market

A) the demand curve will shift to the left and the equilibrium price will decrease.

B) the supply curve will shift to the left and the equilibrium price will increase.

C) the supply curve will shift to the right, the demand curve will shift to the left, and the equilibrium price will decrease.

D) the supply curve will shift to the left, the demand curve will shift to the left, and the equilibrium price will increase.

3) Which of the following is not a characteristic of a perfectly competitive market structure?

A) There are a very large number of firms that are small compared to the market.

B) All firms sell identical products.

C) There are no restrictions to entry by new firms.

D) There are restrictions on exit of firms.

4) Which of the following is not a characteristic of a monopolistically competitive market structure?

A) There is a large number of independently acting small sellers.

B) All sellers sell products that are differentiated.

C) There are low barriers to entry of new firms.

D) Each firm must react to actions of other firms.

5) Which of the following is a characteristic of an oligopolistic market structure?

A) There are few dominant sellers.

B) Each firm sells a unique product.

C) It is easy for new firms to enter the industry.

D) Each firm need not react to the actions of rivals.

6) Which of the following is a characteristic of a monopoly?

A) It is easy for new firms to enter the market.

B) There is only one seller in the market.

C) The product is not unique.

D) The firm has no control over price.

7) Perfect competition is characterized by all of the following except

A) heavy advertising by individual sellers.

B) homogeneous products.

C) sellers are price takers.

D) a horizontal demand curve for individual sellers.

8) A very large number of small sellers who sell identical products imply

A) a multitude of vastly different selling prices.

B) a downward sloping demand for each seller’s product.

C) the inability of one seller to influence price.

D) chaos in the market.

9) Which of the following is the best example of a perfectly competitive industry?

A) wheat production

B) steel production

C) electricity production

D) airplane production

10) The price of a seller’s product in perfect competition is determined by

A) the individual seller.

B) a few of the sellers.

C) market demand and market supply.

D) the individual demander.