Quiz
Exam 4
Create a free account to finish this quiz
Save your progress and see your final score.
Already have an account? Sign in
Questions in this quiz (50)
1In monopolistic competition, each firm:
- Ais a price-taker
- Bhas some ability to set the price of its differentiated good
- Cwill set price equal to marginal cost
- Dhas marginal revenue that is greater than price
2If the toothpaste market is monopolistically competitive, product differentiation will take place in which of the following forms?
- Adifferent varieties of toothpaste--including whitening agents
- Bdifferentiation in the locations where certain toothpastes are available
- Cquality differences among the various brands
- Dall these forms
3For the monopolistically competitive seafood market, the demand curve for any individual firm is__________, and there are____________producers of seafood.
- Adownward-sloping; a few
- Bupward-sloping; many
- Cvertical; a few
- Ddownward-sloping; many
4Monopolistic competition is an industry characterized by a :
- Asmall number of firms producing identical products, with barriers to entry for firms
- Bsmall number of firms producing similar products, with relatively easy entry for firms
- Clarge number of firms producing similar products, with relatively easy entry for firms
- Dlarge number of firms producing identical products, with relatively easy entry for firms
5Due to the existence of a large number of similar, but not identical, substitutes in most communities, the market for financial planners is best considered:
- Aa monopoly
- Ban oligopoly
- Cperfect competition
- Dmonopolistic competition
6Monopolistic competition is an industry characterized by a__________number of firms producing_________products with_________for firms.
- Asmall; identical; barriers to entry
- Bsmall; similar; relatively easy entry
- Clarge; similar; relatively easy entry
- Dlarge; identical; relatively easy entry
7Due to the existence of a large number of similar, but not identical, substitutes in most communities, the market for florists is best considered:
- Aa monopoly
- Ban oligopoly
- Cmonopolistic competition
- Dperfect competition
8Many customers will walk right past a diner that serves coffee and go to Starbucks and pay more for a cup of coffee. For these customers, cups of coffee are differentiated by:
- Astyle
- Blocation
- Cquality
- Dtype
9Since a monopolistically competitive firm faces a downward-sloping demand curve for its product, its price will be:
- Aequal to marginal revenue
- Bless than marginal revenue
- Cgreater than marginal revenue
- Dequal to total revenue
10Suppose a monopolistically competitive firm can increase its profits by decreasing its output. Then it must be the case that at the current output:
- Amarginal revenue is less than zero
- Bprice is less than marginal revenue
- Cmarginal revenue is less than marginal cost
- Dprice is less than average total cost
11Market structures are categorized by the following two criteria:
- Athe number of firms and the size of the firms
- Bwhether or not products are differentiated and the extent of advertising
- Cthe number of firms and whether or not products are differentiated
- Dthe size of the firms and the extent of advertising
12The market structure called_______is described as having a single producer selling a single, undifferentiated product.
- Aperfect competition
- Bmonopoly
- Coligopoly
- Dmonopolistic competition
13A monopoly is a market characterized by:
- Aa single seller
- Ba product with many close substitues
- Ca large number of small firms
- Da small number of large firms
14If your local government gives you the exclusive right to sell breakfast bagels in your community, your monopoly would result from:
- Acontrol of a scarce resource or input
- Btechnological superiority
- Cincreasing returns to scale
- Dgovernment-created barriers
15Natural monopolies include all of the following except:
- Aa diamond mining company
- Ba gas company
- Can electricity company
- Drailways
16If the state government gives you the exclusive right to sell cement to municipalities, your monopoly would result from:
- Asunk costs
- Bgovernment restrictions
- Ceconomies of scale
- Dlocation
17A firm that faces a downward-sloping demand curve is a:
- Aprice-setter
- Bquantity-minimizer
- Cquantity-taker
- Dprice-taker
18Lenoia runs a natural monopoly producing electricity for a small mountain village. The barrier preventing other firms from competing with her is:
- Aher control of scarce natural resources
- Beconomies of scale
- Cher technological superiority
- Da government-created barrier
19De Beers became a monopoly by:
- Aestablishing control over diamond mines
- Beconomies of scale
- Ctechnological superiority
- Downership of a patent
20One of the major differences between a monopolist and a purely competitive firm is that the monopolist has a ________ demand curve, while the purely competitive firm has a _____ demand curve.
- Adownward-sloping; perfectly elastic
- Bperfectly inelastic; perfectly elastic
- Cdownward-sloping; perfectly inelastic
- Dperfectly elastic; downward-sloping
21A monopolist's marginal cost curve shifts up, but he firm's demand curve remains the same and the firm does not shut down. Compared to before the increase in marginal costs, the monopolist will _______ its price and ______ its level of production.
- Araise; decrease
- Bnot change; decrease
- Craise; increase
- Dlower; increase
22Suppose a monopoly is producing at the profit-maximizing level of output. At that level of output:
- Amarginal revenue equals marginal cost
- Bmarginal revenue is greater than marginal cost
- Cmarginal revenue is less than marginal cost
- Dprice is less than marginal cost
23In 1999, a judge declared the tMicrosoft was a monopolist. Assuming that is is maximizing its profits at its current level of output, we may conclude that is Microsoft were to increase its price, its total revenue would:
- Arise
- Bfall
- Cremain unchanged
- Dthere is insufficient information to make a determination
24A monopoly responds to an increase in demand by _____ price and ____________ output.
- Aincreasing; decreasing
- Bincreasing; increasing
- Cdecreasing; increasing
- Ddecreasing; decreasing
25A monopoly responds to a decrease in marginal cost by ____ price ________ and output.
- Aincreasing; decreasing
- Bincreasing; increasing
- Cdecreasing; increasing
- Ddecreasing; decreasing
26Oligopoly is a market structure that is characterized by a:
- Asmall number of interdependent firms producing identical or differentiated products
- Bsmall number of independent firms producing identical or differentiated products
- Clarge number of relatively small independent firms producing differentiated products
- Dlarge number of relatively small independent firms producing identical products
27The market structure that is characterized by only a small number of producers is referred to as:
- Aoligopoly
- Bperfect competition
- Cmonopoly
- Dmonopolistic competition
28The industry characterized by a few interdependent firms where there are barriers to entry is called:
- Aperfect competition
- Bmonopolistic competition
- Cmonopoly
- Doligopoly
29A duopoly is an industry that consists of:
- Aa single firm
- Btwo firms
- Cthree or more firms
- Da large number of small firms
30An extreme case of oligopoly in which firms collude to raise joint profits is known as a:
- Aduopoly
- Bcartel
- Cdominant producer
- Dprice war
31Overt collusion if:
- Afirms agree openly on price, output, and other decisions aimed at achieving ,monopoly profits
- Bsmaller firms in an industry tacitly agree to charge the same price as the largest firm
- Ccompetition among a large number of small firms generates a stable market price
- Dcompetition among a large number of small firms generated similar, but slightly different, prices
32A cartel is an example of:
- Aprice extortion
- Bpirce leadership
- Covert collusion
- Dtacit collusion
33In the classic prisoners' dilemma with tow accomplices in crime, the dominant strategy for each individual is to:
- Anot confess
- Bconfess
- Cconfess only if the other confesses
- Dthis game does not have a dominant strategy
34In the classic prisoners' dilemma with two accomplices in crime, the Nash equilibrium is for:
- Aboth individuals to not confess
- Bboth individuals to confess
- Cone to confess and the other not confess
- Dthis game does not have a Nash equilibrium
35If a Florida strawberry wholesaler is in a perfectly competitive market, that wholesaler will have a ______ share of the market, and consumers will consider her strawberries to be _________. Therefore, _________advertising will take place in this market.
- Alarge; standardized; no
- Bsmal; standardized; little, if any
- Csmall; differentiated; no
- Dlarge; differentiated; extensive
36If a local California avocado stand operates in a perfectly competitive market, that and owner will be a:
- Aprice-maker
- Bprice-taker
- Cprice-discriminator
- Dprice-maximizer
37If all firms in an industry are price-takers, then:
- Aeach firm can take the price that it wants to charge and sell at this price, provided it is not oo different from the prices other firms are charging.
- Beach firm take the market price as given for its current output level, recognizing that the price ill change if it alters its output significantly
- Can individual firm cannot alter the market price even if it doubles its output
- Dthe market sets the price, and each firm can take it or leave it
38The demand sucre for a perfectly competitive firm is:
- Aperfectly inelastic
- Bperfectly elastic
- Cdownward-sloping
- Drelatively, but not perfectly elastic
39Price-takers are individuals in a market who:
- Aselect a price from a wide range of alternatives
- Bselect the lower price available in a competitive market
- Cselective average of prices available in a competitive market
- Dhave no ability to affect the price of a good in a market
40The market fir breakfast cereal contains hundreds of similar producers, such as Fruit Loops, Corn Flakes, and Rice Krispies, that are considered to be different products by different buyers. This situation violates the perfect competition assumption of:
- Amany buyers and sellers
- Ba standardized product
- Ccomplete information
- Dease of entry and exit
41___________ almost always take the market price as given, or are considered _______, but this is often not true of ____________.
- Aconsumers; quantity-minimizers; producers
- Bproducers; quantity-takers; consumers
- Cconsumers and producers; price-takers; firms the produce a different product
- Dproducers; price-searchers; consumers
42In perfect competition, the assumption of easy entry and exit implies that:
- Ain the long run all firms in the industry will earn zero economic profits
- Bion the short run all firms in the industry will earn positive economic profits
- Cin the short run all firms in the industry will earn zero economic profits
- Din the long run all firms in the industry will earn zero economic profits and in the short run all firms in the industry will ear positive economic profits
43Zoe's Baerky determines that P>ATC and P>AVC. Zoe should:
- Acontinue to operate even though she is experiencing an economic loss
- Bcontinue to operate as she is making an economic profit
- Cshut down immediately as she is experiencing an economic loss
- Draise the price until she has maximized her profits
44A competitive firm operating in the short run is maximizing profits and just breaking even. It costs include a monthly license fee of $100 that is imposed by the state and must be paid for as long as the firm is in existence. The license fee is now raised to $150. To continue to maximize profits in the short run, the firm should:
- Aincrease price
- Bincrease output
- Creduce output
- Dnot change output
45Many furniture stores run "Going out of Business" sales but never go out of business. In order for the shut-down decision to be the appropriate one, the price of furniture must be ___________ than the _____________ average variable cost.
- Ahigher; maximum
- Blower; maximum
- Chigher; minimum
- Dlower; minimum
46For a firm producing at any level of output greater than the most profitable one, a reduction in output decreases:
- Atotal cost more than total revenue
- Btotal revenue more than total cost
- Ctotal revenue by the same amount as total cost
- Dtotal revenue but no total cost
47In the short run, a perfectly competitive firm produces output and earns an economic profit if:
- AP>ATC
- BP=ATC
- CP<AVC
- DAVC>P>ATC
48If a perfectly competitive firm sells 10 units of output at a price of $30 per unit, its marginal revenue is:
- A$10
- B$30
- Cless than $30
- D$300
49If a perfectly competitive firm is producing a quantity that generate P=MC, then profit:
- Ais maximized
- Bcan be increased by decreasing the quantity
- Ccan be increased by decreasing the price
- Dcan be increased by increasing production
50In an oligopolistic market structure, collusion between firms usually leads to higher profits than noncooperative behavior. However, formal, overt collusion doesn't usually occur in the United States because:
- Ait is illegal
- Bthere is an incentive for each firm to cheat on a collusive agreement
- Can oligopolistic firm will typically prefer lower profits if the only way to make the higher profits is to improve the profit of its rivals
- Dit is illegal and because there is an incentive for each firm to cedar on a collusive agreement
Information
- Description
- Quiz on Exam 4, created by Jessica Lin on 12/12/2019.
- Author
- Jessica Lin
- Language
- English
- Views
- 0
- Rating
- No ratings yet Rate this quiz