A concentration ratio measures: a) the number of firms in a perfectly competitive industry b) the number of products sold in a monopolistically...
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Q.1. A concentration ratio measures:b) the number of products sold in a monopolistically competitive market

a) the number of firms in a perfectly competitive industry

c) the ratio of the total number of firms in the market to the dollar value of the industry revenues

d) the percent of total industry output that is accounted for by the largest firms.



 

Q.2. Collusive oligopoly produces prices and quantities very similar to those produced by:


           a)  monopoly                                               b) monopolistic competition

           c)  perfect competition                                  d) none of the above


Q.3.In the input, or factor markets, which side of the market do firms and households occupy?

 

           

a)        Firms are on the supply side and households on the demand side.

b)        Neither firms nor households are part of the demand side or the supply side.

c)        Both firms and households are on the demand side.

d)        Both firms and households are on the supply side.

e)        Firms are on the demand side and households on the supply side.

Q.4. How does product differentiation lead to a imperfect competition?

 

           a) Each producer colludes with each other

           b) Each producer faces a downward sloping curve

           c) Each producer is guaranteed positive profits

           d) All the above

 

Q.5. Which of the following is not true about a collusive oligopoly?


           a) It is illegal                                      b) It tends to be unstable

           c)  It is economically efficient           d) None of the above


Q.6. The problem of allocation of resources is concerned with:

 

a)        What to produce                   b)        How to produce

c)        For whom to produce                       d)        All of the above

 

 

Q.7 At the short-run break-even point, the competitive firm is

 

a) making positive economic profits.                         b)  making zero economic profits.

c) making negative economic profits.            d)  just covering its total variable costs.

 

Q.8. Which one of the following is true with a pure monopoly?

 

a)     The monopoly's demand curve and the market demand curve are one and the same

b)     The monopolist will always charge the highest possible price

c)     The monopolist will always charge a high price because it wants to maximize profits

d)    The market is dominated by just two firms

 

 

 

 

Q.9. Which of the following is supplied by households in factor markets?

 

           

a)        Labor.                         b)        Land.

c)        Savings.                      d)        All of the above.

e)        None of the above

Q.10.Economic problem arises in

a)        Planned economies                b)        Free market economies

c)        Mixed economies                   d)        All of the above

 

Q.11. Which of the following concepts apply to oligopoly more than to any other market structure?

a)     Easy entry and more than one firm in the market.

b)     Homogeneous product and perfect information

c)     Economies of scale and significant barriers to entry.

d)    Concentration and interdependence.

e)     Advertising and product differentiation.

 

                       

Q.12. Monopolistically competitive firms constantly develop new products to

 

a)     make the demand for their product more elastic.

b)     increase the demand for their product.

c)     increase the marginal cost of their product.

d)    None of the above answers is correct.

 

 

Q.13. The fact that we are operating at a point inside a production possibilities frontier curve,indicates there is

 

a)        Scarcity                                  b)        Constant opportunity cost

c)        Unemployment                      d)        Increasing opportunity cost

Q. 14. Which of the following concepts apply to oligopoly more than to any other market structure?

a)     Easy entry and more than one firm in the market.

b)     Homogeneous product and perfect information

c)     Economies of scale and significant barriers to entry.

d)    Concentration and interdependence.

e)     Advertising and product differentiation.

 

 

Q. 15. Monopolistically competitive firms have some control over price because:

a)     There are barriers to entry.                             d) There are no barriers to entry.

b)     There are few firms in the market.                 e) Products are not identical.

c)      Profits are greater than zero.

 

Q. 16. A perfectly elastic demand function

 

a)     shows that a consumer is willing to pay any amount for the product.

b)     is characteristic of an individual firm operating in a perfectly competitive market.

c)     shows that the individual firm can increase sales by lowering the price of output.

d)    has a marginal revenue that is always decreasing.

 

Q.17. A minimum wage in the market for fast-food workers is likely to produce 

a)     an increase in the demand of for fast-food workers

b)     a decrease in the supply of fast-food workers

c)     a lower price of fast-food products

d)    a surplus of fast-food workers

 

 


 

18. The figure above shows the situation facing Smart Digit, Inc., a firm in monopoly that sells calculators. The firm's profit is ________ per calculator.

 

A) zero           B) $2              C) $4              D) $6

 

19. A firm's profit is the amount by which ________ exceeds ________.

A) price; average total cost

B) price; marginal cost

C) average total cost; marginal cost

D) price; average variable cost


 

20. In the figure above, Gap maximizes its profit if it charges ________ per jacket.

 

A) $130                      B) $80                        C) $115                      D) $100

 

21. In the figure above, what is Gap's economic profit?

 

A) Zero          B) $5,000                   C) -$5,000                  D) -$1,160

 

22. Which of the following is most characteristic of a monopolistically competitive market?

 

A) Firms engage in strategic behaviour.

B) There are many small firms in the industry.

C) Economic profits are often positive in the long run.

D) Each firm faces a horizontal demand curve.

E) All firms are price takers.

 

23. Patents create monopolies by restricting

 

A) prices.        B) profit.        C) entry.         D) demand.

 

24. Monopolistic competition is like perfect competition in that

 

A) firms in both types of market structures produce a standardized product.

B) strategic behavior is common to both market structures.

C) neither has significant barriers to entry.

D) each firm faces a horizontal demand curve.

E) firms in both types of market structure engage in non-price competition.

revenue.

 

25. One reason movie theatre charge a lower admission price to senior citizens is that

 

A) movie-theatre owners are able to practice perfect price discrimination.

B) government sets the price policies.

C) senior citizens have a more elastic demand than other movie-goers.

D) senior citizens have a less elastic demand than other movie-goers.

E) senior citizens have a higher willingness-to-pay than other people

 

26. Compared with perfect competition, monopolistic competition results in

 

A) a wider variety of the good produced, but at higher unit costs.

B)the same degree of variety of the good, but higher unit costs.

C) fewer varieties of the good produced at lower unit costs.

D) fewer varieties of the good produced at higher unit costs.

E) a clearly more efficient social outcome.

 

27. The main difference between perfect competition and monopolistic competition is

 

A) there are more firms in perfect competition.

B) perfect competition has freedom of entry and exit.

C) monopolistic competition has product differentiation.

D) firms earn profits in the long run in monopolistic competition.

E) monopolistic competition has lower costs

 

28. A monopoly firm expands its output and lowers its price. The firm finds that its total revenue falls. Hence, the firm is producing in the

 

A) inelastic range of its supply curve.            B) elastic range of its supply curve.

C) elastic range of its demand curve.                        D) inelastic range of its demand curve.

 

29. A monopoly will

A) produce in the elastic range of its demand curve.

B) flood the market with goods to deter entry.

C) produce only where marginal revenue is zero.

D) produce in the inelastic range of its demand curve

 

30. Monopolies can often earn an economic profit in the long run because

 

A) they have high costs.

B) barriers to entry prevent competing firms from entering the market.

C) they receive government subsidies.

D) the risks of running a monopoly are high.

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