Pre-Test Chap 11 e18 - Pre-Test Chap 11 e18 Student: _ 1....

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Pre-Test Chap 11 e18 Student: ___________________________________________________________________________ 1. In the long run an oligopoly: A. Will produce less than a monopoly B. May be able to earn positive economic profits C. Will always produce in the range of decreasing returns to scale D. Will produce on the portion of the demand curve where demand is price-inelastic 2. Assume that an industry is significantly affected by import competition from foreign suppliers. Taking this factor into account, it would mean that: A. The Herfindahl index would be significantly higher in that industry because there are more firms in the industry B. The industry is less concentrated than suggested by domestic concentration ratios C. There is a high degree of interindustry competition D. There is a low degree of interindustry competition 3. The Herfindahl index for an industry is 2550. Which of the following sets of market shares and industry with four firms would produce such an index? A. 20, 20, 30, and 30 B. 25, 25, 25, and 25 C. 20, 25, 25, and 30 D. 10, 20, 30, and 40 4. The economic inefficiency of monopolistic competition means that: A. Industries tend to evolve into oligopolies rather than become more competitive B. Industries spend money on advertising and sales promotion C. Producers produce at an output short of, and charge a price greater than, minimum average total cost D. Firms do not maximize profits at the MC equals MR output 5. A feature of monopolistic competition is: A. Many (thousands) of buyers and sellers B. Homogeneous or standardized products C. Considerable control over price D. Nonprice competition 6. The strategy of establishing a price that prevents the entry of new firms is called: A. A price war B. Limit pricing C. Price leadership D. Setting a profit maximizing price
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7. Which statement concerning monopolistic competition is false ? A. Long-run equilibrium under monopolistic competition is achieved where economic profits are zero B. Monopolistic competition is likely to result in a greater variety of product brands than pure competition C. The monopolistic competitive demand curve is more elastic than the demand curve facing a monopolistic firm D. Monopolistic competition does not lead to any economic inefficiency, since firms in this industry cannot sustain economic profits 8. At a given output, a firm's marginal cost is $4, marginal revenue is $4, average revenue is $6, and average cost is $5. The firm could be
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Pre-Test Chap 11 e18 - Pre-Test Chap 11 e18 Student: _ 1....

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