1. In a competitive price searcher market, the firms will
 a. be able to choose their price and the entry barriers into the market will be
    low.
 b. be able to choose their price and the entry barriers into the market will be
    high.
 c. have to accept the market price for their product and the entry barriers into
    the market will be low.
 d. have to accept the market price for their product and the entry barriers into
    the market will be high.
 
2. A profit-maximizing price searcher will expand output to the point where
 a. total revenue equals total cost.
 b. marginal revenue equals marginal cost.
 c. price equals average total cost.
 d. price equals marginal cost.
 
3. In the long run, neither competitive price takers nor competitive price searchers
    will earn economic profits because
 a. entry barriers into these markets are high.
 b. the government will dictate moderate prices for these firms.
 c. with low barriers to entry, competition among suppliers will force prices down
    to the level of production costs.
 d. marginal revenue is always less than marginal cost when barriers to entry are
    low.
 
4. If firms in a competitive price searcher market are currently experiencing
    positive economic profits, in the long run
 a. new firms will enter the market, and the current firms will experience a
    decrease in demand for their products until zero economic profit is again
    restored.
 b. new firms will enter the market, and the current firms will experience an
    increase in demand for their products until zero economic profit is again
    restored.
 c. some existing firms will exit the market, and the remaining firms will
    experience an increase in demand for their products until zero economic profit
    is again restored.
 d. some existing firms will exit the market, and the remaining firms will
    experience a decrease in demand for their products until zero economic profit
    is again restored.
  
5. As long as a market is contestable, even if it has only a few sellers
 a. the threat of new entrants will prevent the current producers from producing
    inefficiently and charging prices above the competitive level.
 b. the producers will be able to charge prices that are high enough to produce
    long-run economic profits.
 c. the producers will not face new competition because the barriers to entry are
    high.
 d. the market will never be expected to come close to the competitive result.
 
6. Entrepreneurial judgment
 a. is necessary to make business decisions when no fixed decision rule can be
    used.
 b. is fully incorporated into modern economic models of business behavior.
 c. requires complex decisions involving uncertainty, discovery, and business
    judgment.
 d. Both a and c are correct.
 
7. Compared to the outcome when the firms are price takers, competitive price
    searcher markets will result in
 a. a wider variety of products and higher prices.
 b. less product variety and higher prices.
 c. a wider variety of products and lower prices.
 d. less product variety and lower prices.
 
8. If a market is in long run equilibrium, which of the following conditions will be
    present in a competitive price taker market but absent from a competitive price
    searcher market?
 a. P = ATC
 b. MR = MC
 c. P = MC
 d. All of the above are true.
 
9. The strategy underlying price discrimination is
 a. to charge higher prices to customers who have good substitutes available to
    them.
 b. to charge everyone the same price, but limit the quantity they are allowed to
    buy.
 c. to increase total revenue by charging higher prices to those with the most
    inelastic demand for the product and lower prices to those with the most
    elastic demand.
 d. to reduce per unit cost by charging higher prices to those with the most
    inelastic demand and lower prices to those with the most elastic demand.

  10. If a government wanted to increase the prosperity of a nation, it could best serve
    this goal by
 a. protecting domestic industries from international trade.
 b. regulating the way in which firms can operate.
 c. reducing barriers that restrict the ability of potential competitors to enter
    markets.
 d. subsidizing firms in danger of going out of business.