Chapter 6 Perfect Competition

| February 14, 2018

1)
A constant cost industry is one in which
A)
input prices do not change as output changes in the long-run.
B)
supply is highly inelastic.
C)
short-run supply is horizontal.
D)
all of the above

2)
A constant cost industry is more likely to arise in a market where
A)
the industry takes only a small portion of the resources available.
B)
the industry takes only a large portion of the resources available.
C)
inputs have very different levels of quality.
D)
firms have large fixed costs and small marginal costs.

3)
A constant cost industry is one in which
A)
demand is horizontal.
B)
long-run supply is horizontal.
C)
short-run supply is horizontal.
D)
all of the above

4)
In a constant cost industry, an increase in price causes
A)
some firms to exit the industry.
B)
quantity supplied to remain constant.
C)
some firms to enter the industry.
D)
price controls.

5)
In a constant cost industry, a decrease in price causes
A)
some firms to exit the industry.
B)
quantity supplied to remain constant.
C)
some firms to enter the industry.
D)
price controls.

6)
Which of the following products is the most likely to have constant costs in
the long run?
A)
ice
B)
wine grapes
C)
housing
D)
copper

Recall
the Application about the demand and price for margarine to answer the
following question(s).

7)
Recall the Application. Between 2000 and 2009, total U.S. consumption of
margarine ________ and the price, in real terms, ________.
A)
doubled; doubled
B)
decreased by roughly half; decreased by roughly half
C)
decreased by roughly half; stayed roughly the same
D)
doubled; stayed roughly the same

8)
Recall the Application. The reason that the change in demand for margarine did
not change the equilibrium price in the long run is because the margarine
industry is an example of ________ industry.
A)
a decreasing-cost
B)
an increasing-cost
C)
a constant-cost
D)
a negative-cost

9)
The long-run supply curve is upward sloping in a constant cost industry.

10)
In a constant cost industry, inputs prices do not change with changes in
output.

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