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Micro Exercise

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Exercise 9 Solution Chapter 11 Firms in Perfectly Competitive Markets 11.1 Perfectly Competitive Markets 1) Which of the following is not a characteristic of a perfectly competitive market structure? A) There are a very large number of firms that are small compared to the market. B) All firms sell identical products. C) There are no restrictions to entry by new firms. D) There are restrictions on exit of firms. Answer: D Comment: Recurring Diff: 1 Page Ref: 368/368 Topic: Market Structures Objective: LO1: Explain what a perfectly competitive market is and why a perfect competitor faces a horizontal demand curve. AACSB: Reflective Thinking Special Feature: None 2) Which of the following is a characteristic of an oligopolistic market structure? A) There are few dominant sellers. B) Each firm sells a unique product. C) It is easy for new firms to enter the industry. D) Each firm need not react to the actions of rivals. Answer: A Comment: Recurring Diff: 1 Page Ref: 368/368 Topic: Market Structures Objective: LO1: Explain what a perfectly competitive market is and why a perfect competitor faces a horizontal demand curve. AACSB: Reflective Thinking Special Feature: None 3) Perfect competition is characterized by all of the following except A) heavy advertising by individual sellers. B) homogeneous products. C) sellers are price takers. D) a horizontal demand curve for individual sellers. Answer: A Comment: Recurring Diff: 1 Page Ref: 369/369 Topic: Characteristics of Perfectly Competitive Firms Objective: LO1: Explain what a perfectly competitive market is and why a perfect competitor faces a horizontal demand curve. AACSB: Reflective Thinking Special Feature: None 4) Which of the following is the best example of a

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