AnswersHSA 26-27 EconomicsMarket Structures and Competition

Market Structures and Competition — Unit test Answers

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1
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Why are utilities, such as electricity and water, examples of natural monopolies?

A
The cost of production restricts competition in the market.
B
There are limited natural resources to meet demand.
C
Consumers only trust known companies to provide these essentials.
D
There is no need for alternative options.
2
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Look at the chart comparing the price of graphic T-shirts to the quantity supplied.

Question illustration
A
demand curve.
B
demand schedule.
C
supply curve.
D
supply schedule.
3

This table shows the number of employees needed to fill lunch orders at several food trucks.Food Truck Number of Lunch Orders Number of Employees Frank’s Falafels 20 per hour 2 Kimchi Kim’s 25 per hour 3 Deli Delight 30 per hour 3 Lunch on the Go 25 per hour 2 Which food truck has the absolute advantage?

A
Frank’s Falafels
B
Kimchi Kim’s
C
Deli Delight
D
Lunch on the Go
4

Equilibrium occurs when supply and demand coordinate to

A
set excess demand.
B
set prices and production.
C
maintain excess supply.
D
raise prices and production.
5

In which way do producers try to differentiate themselves in monopolistic competition?

A
price
B
advertising
C
product features
D
image
6

The chart shows the marginal cost and marginal revenue of producing apple pies.What most likely will happen if the pie maker bakes a seventh pie?

Question illustration
A
The marginal cost will most likely decrease to $1.00
B
The marginal cost will most likely increase to $2.00
C
The marginal revenue will most likely decrease to $8.00.
D
The marginal revenue will most likely increase to $12.00.
7

When supply is higher than demand, prices will

A
rise until the demand falls.
B
rise until the supply falls.
C
fall until the demand rises.
D
fall until the supply rises.
8

Which best describes how specialized producers decrease their opportunity costs?

A
by reducing production costs
B
by focusing on target markets
C
by increasing production of certain items
D
by limiting the types of goods produced
9

The graph is a marginal cost curve that compares expenses for producing apple pies.According to the graph, the marginal cost begins to increase when the producer makes

Question illustration
A
two pies.
B
three pies.
C
four pies.
D
five pies.
10

A possible result of disequilibrium is

A
excess demand.
B
lower demand.
C
fixed prices.
D
stable availability.
11

[BLANK]

A
elasticity
B
quality
C
time
D
quantity
12

Motherboards, Inc., manufactures computer parts. The company’s total revenue is

A
the money the company earns after paying all of its production costs.
B
the total wages the company pays workers in its factories and stores.
C
the amount of money the company earns from selling an individual part.
D
the amount the company receives from the sale of all of its computer parts.
13

The highest amount a landlord can charge for rent is an example of

A
an incentive.
B
a price floor.
C
a price ceiling.
D
an elastic service.
14

The chart shows the marginal cost and marginal revenue of producing apple pies. What most likely will happen if the pie maker continues to make additional pies?

Question illustration
A
The marginal costs will continue to rise, increasing the total cost, while the marginal revenue remains the same, decreasing the profit earned for each pie.
B
The marginal costs will continue to fall, decreasing the total cost, while the marginal revenue remains the same, increasing the profit earned for each pie.
C
The marginal costs will continue to rise, increasing the total cost, while the marginal revenue remains the same, increasing the profit earned for each pie.
D
The marginal costs will continue to fall, decreasing the total cost, while the marginal revenue remains the same, decreasing the profit earned for each pie.
15

Which statements correctly explain price floors and price ceilings? Choose four answers.

A
Ineffective price floors tend to be too high.
B
Ineffective price ceilings tend to be too low.
C
Price floors help producers by raising prices.
D
Price ceilings help consumers by lowering prices.
E
Effective price floors are set above equilibrium.
F
Effective price ceilings are set below equilibrium.

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