DEVRY ECO312 WEEK 3 WEEKLY ASSIGNMENT

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.