Question

1. Firms can be price searchers in each of the following markets, except for ______________.

A. perfect competition

B. monopoly

C. oligopoly

D. monopolistic competition

2.Which of the following statements is false?

A. Sunk costs are an important factor in determining entry into a market because these costs may be quite high.

B. Sunk costs are an important factor in determining entry into a market because sunk costs cannot be recouped.

C. Sunk costs are not relevant to the firm’s decisions after it has entered the market.

D. Sunk costs, although likely to be important in guiding the decisions of firms, are unlikely to be influential on market structure

3. Contestable markets have ______ barriers to entry and ______ sunk costs

Group of answer choices

A. high; high

B. high; low

C. low; high

D. low; low

4. The causes of high concentration in an industry are many, but one is _______________.

Group of answer choices

A. economies of scale

B. diseconomies of scale

C. less than minimum efficient scale

D. large firms cannot coexist

5. Which of the following statements is true?

A. Every effort or expense that a firm must undertake to enter an industry is a barrier to entry.

B. The need for hard work is a barrier to entry in and of itself.

C. Patents and copyrights are important barriers to entry in both oligopoly and perfect competition.

D. Any circumstance that prevents a firm from competing on an equal footing with existing firms is a barrier to entry.

Answer 1

Answer
1.perfect competition
Firms are price takers in perfect competition

2B. Sunk costs are an important factor in determining entry into a market because sunk costs cannot be recouped.
Sunk costs are those cost which cannot be revcovered by the firm.

3 D. low; low
They have low barriers to entry, implying that the sunk costs are low and firms can exit without incurring high losses

4 D. large firms cannot coexist
Often large firms find it difficult to coexist as smller firms tend to come up often which give competition to these large firms. Large firms often collude against each other.

5 A. Every effort or expense that a firm must undertake to enter an industry is a barrier to entry.
This statement is true. Option C is not as in perfect comepetition there is free entry and exit.

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