final_-ans-a - 1 All of the following are examples of...

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1. All of the following are examples of barriers to entry, except one. Which is the exception? a. significant economies of scale b. reputation of established firms c. special deals with distributors d. excessive prices e. patents ANS: D 2. When the oil-producing countries of the Middle East meet to set prices and output levels, this is an example of a. monopoly behavior b. profit sharing c. market distribution d. explicit collusion ANS: D 3. A monopolist that price discriminates a. produces too much output to be efficient b. produces too little output to be efficient c. produces the efficient level of output d. charges a price equal to its marginal cost e. faces an upward sloping demand curve ANS: C 4. If a firm is not forced to take account of a negative externality it creates, it will produce the quantity at which a. the marginal cost of production equals the marginal private benefit b. the marginal cost of production equals the marginal social benefit c. the marginal social cost of production the equals marginal private benefit d. the marginal social cost of production equals the marginal social benefit e. price equals marginal social benefit ANS: A 5. Regardless of whether advertising is effective or not, it results in an increase in both fixed and total costs. a. True b. False ANS: A 6. Because there are positive externalities from higher education, a. the private market would provide too little of it b. the private market would provide too much of it c. the government should impose a tax on college students d. the government should impose a tax on students' families e. higher education should not be produced ANS: A 7. In monopolistic competition, nonprice competition a. allows firms to earn above-normal profit in the long run b. initially causes a leftward shift in the demand curve for each firm's output c. causes each firm to move upward along a given average total cost curve d. might lead to economic profit in the short run e. causes each firm to move toward the right along the given demand curve for its output ANS: D 8. Cecilia's Cafe is a monopolistic competitor. If Cecilia's is currently producing at the output level at which her average total cost is minimized and the cafe is earning an economic profit, then, in the long run, output will a. decline and average total cost will increase b. decline and average total cost will decrease c. remain unchanged as Cecilia's strives to minimize costs d. increase and average total cost will be greater e. increase and average total cost will be smaller ANS: A 9. In the long run, a monopolistic competitor will a. always produce at minimum efficient scale
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b. produce too little output to achieve minimum cost per unit c. use limit pricing to forestall competition d. earn economic profits e. standardize its product ANS: B 10. Given the marginal cost and average total cost curves in Figure 10-6, a monopolistically competitive firm in long- run equilibrium will produce a. 250 units and charge a price of $6
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This note was uploaded on 09/14/2011 for the course ECON 103 taught by Professor Gispy during the Spring '11 term at Prairie State College .

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final_-ans-a - 1 All of the following are examples of...

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