1. In a competitive market, strategic interactions among the firms are not important.

TRUE
2. Oligopoly and monopolistic competition are examples of a market structure called imperfect
competition. TRUE
3. The average total cost curve is unaffected by diminishing marginal product. FALSE
4. Marginal costs are costs that do not vary with the quantity of output produced. FALSE
5. A monopolist's supply curve is vertical. FALSE
6. Profit equals marginal revenue minus marginal cost. FALSE
7.
8.
9. Average revenue for a monopoly is the total revenue divided by the quantity produced. TRUE
10. For a monopoly, marginal revenue is often greater than the price they charge for their good.
FALSE
11. A firm in a monopolistically competitive market can earn short-run profits but not long-run
profits. TRUE
12. Brand names are rarely used to convey information about product quality. FALSE
13. In the log run, monopolistically competitive firms produce where demand equals average
total cost. TRUE
14. A monopolistically competitive market is characterized by barriers to entry. FALSE
15. Average variable cost is equal to total variable cost divided by quantity of output. TRUE
16. A monopolist maximizes profit by producing an output level where marginal cost equals
price. FALSE
17.
18.
19.
20.
21. Monopolistic competition is the only market structure that features many sellers. FALSE
22. Variable costs usually change as the firm alters the quantity of output produced. TRUE
23. A monopolist produces where P > MC = MR. TRUE
24. Average total cost and marginal cost express information that is already contained in a firm's
total cost. TRUE
25. Economic profit is greater than or equal to accounting profit. FALSE
26. A competitive market will typically experience entry and exit until accounting profits are
zero. FALSE
27. A firm will shut down in the short run if revenue is not sufficient to cover its variable costs of
production. TRUE
28. The shape of the total cost curve is unrelated to the shape of the production function. FALSE
29. Profit equals total revenue minus total cost. TRUE
30. If a firm produces nothing, it still incurs its fixed costs. TRUE
31. In the short run, if a firm produces nothing, total costs are zero. FALSE
32. Implicit costs are costs that do not require an outlay of money by the firm. TRUE
33. If the marginal cost curve is rising, then so is the average total cost curve. FALSE
34. A monopolist earns higher profits by charging one price than by practicing price
discrimination. FALSE
35. Monopolists can achieve any level of profit they desire because they have unlimited market
power. FALSE
36. Variable costs equal fixed costs when nothing is produced. FALSE
37. In the long run, monopolistically competitive firms produce where demand equals marginal
cost. FALSE
38. The short-run supply curve in a competitive market must be more elastic than the long-run
supply curve. FALSE
39. If long-run average total cost is rising, then the firm is experiencing economies of scale.
FALSE
40. The fundamental cause of monopolies is barriers to entry. TRUE
41. In competitive markets, firms that raise their prices are typically rewarded with larger profits.
FALSE
42. Diminishing marginal product exists when the production function becomes flatter as inputs
increase. TRUE
43. The essence of an oligopolistic market is that there are only a few sellers. TRUE
44.
45.
46.
47.
48.
49.
50.