Microeconomics Quiz
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Microeconomics Quiz

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@CompatibleDravite

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Questions and Answers

In the long run, a firm experiences constant returns to scale when:

  • the firm's output decreases despite an increase in all inputs
  • the firm's output increases proportionally more than the increase in all inputs
  • the firm's output increases proportionally less than the increase in all inputs
  • the firm's output increases at the same rate as the increase in all inputs (correct)
  • In perfect competition, a firm is a price taker, meaning that:

  • the firm can collaborate with other firms to set a higher market price
  • the firm has no control over the market price and must accept the prevailing market price (correct)
  • the firm can set its own price based on its production costs
  • the firm can influence the market price through its output level
  • Which of the following is a characteristic of monopolistic competition?

  • Firms producing homogeneous products
  • A single firm dominating the market
  • Numerous firms selling identical products
  • Product differentiation among firms (correct)
  • The kinked demand curve model is often used to explain the behavior of firms in which market structure?

    <p>Oligopoly</p> Signup and view all the answers

    What is the primary purpose of a patent in the context of intellectual property?

    <p>To protect the exclusive right to a new invention or process for a specific period</p> Signup and view all the answers

    In the context of production technologies, what does the Law of Diminishing Returns state?

    <p>As more units of a variable input are added to fixed inputs, the additional output will eventually decrease.</p> Signup and view all the answers

    What is the primary difference between short-run and long-run average cost curves?

    <p>The short-run average cost curve reflects the costs of production when some factors of production are fixed, while the long-run average cost curve reflects the costs when all factors are variable.</p> Signup and view all the answers

    What is the main characteristic of a firm in a perfectly competitive market?

    <p>It is a price taker and can sell any quantity of output at the market price.</p> Signup and view all the answers

    What factor payment is associated with the supply of labor in the production process?

    <p>Wages</p> Signup and view all the answers

    What is the key characteristic of a natural monopoly?

    <p>It arises when a single firm can supply the entire market at a lower cost than two or more firms.</p> Signup and view all the answers

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