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TEST BANK 4 EC 2100 FALL 2010 Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. The typical firm in the U. S. economy a. has some degree of market power. b. sells its product for a price that is equal to the marginal cost of producing the last unit. c. is perfectly competitive. d. is a monopoly. ____ 2. The two types of imperfectly competitive markets are a. markets with differentiated products and monopoly. b. markets with differentiated products and oligopoly. c. oligopoly and monopoly. d. monopolistic competition and oligopoly. ____ 3. Firms in industries that have competitors but do not face so much competition that they are price takers are oper- ating in either a(n) a. oligopoly or perfectly competitive market. b. oligopoly or monopoly market. c. oligopoly or monopolistically competitive market. d. monopoly or monopolistically competitive market. ____ 4. Imperfectly competitive firms are characterized by a. horizontal demand curves. b. standardized products. c. a large number of small firms. d. price making ability. ____ 5. Crude oil is primarily supplied to the world market by a few Middle Eastern countries. Such a market is an ex- ample of a(n) (i) imperfectly competitive market. (ii) monopoly market. (iii) oligopoly market. a. (i) and (ii) only b. (ii) and (iii) only c. (i) and (iii) only d. (iii) only ____ 6. A concentration ratio a. measures the percentage of total sales of the top firm in the industry. b. reflects the level of competition in an industry. c. is inversely related to the price charged by the top firm in the industry. d. All of the above are correct. ____ 7. The higher the concentration ratio, the a. more control an individual firm has to set prices. b. more competitive the industry. c. less competitive the industry. d. Both a and c are correct. Table 16-1 The following table shows the percentage of output supplied by the top eight firms in four different industries. Firm Industry A Industry B Industry C Industry D 1 0.24 0.46 0.10 0.32 2 0.13 0.24 0.08 0.16 3 0.10 0.10 0.06 0.08 4 0.08 0.05 0.05 0.04 5 0.05 0.04 0.04 0.02 6 0.03 0.03 0.03 0.01 7 0.02 0.02 0.02 0.01 8 0.01 0.01 0.01 0.01 ____ 8. Refer to Table 16-1. Which industry has the highest concentration ratio? a. Industry A b. Industry B c. Industry C d. Industry D ____ 9. Each firm in a monopolistically competitive firm faces a downward-sloping demand curve because a. there are many other sellers in the market. b. there are very few other sellers in the market. c. the firm's product is different from those offered by other firms in the market. d. that firm faces the threat of entry into the market by new firms. ____ 10. Each firm in a monopolistically competitive market a. earns both short-run and long-run profits.... View Full Document

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