QUESTION 4

1. A monopolist maximizes profits by setting the quantity where:

   A.	marginal revenue equal to marginal cost.
   B.	marginal revenue greater than marginal cost.
   C.	marginal revenue less than marginal cost.
   D.	total revenue as high as possible.

4 points   

 

QUESTION 5

1. Examples of monopolistically competitive industries in which firms differentiate their products by offering them at more locations include all of the following except:

   A.	restaurants.
   B.	video rental stores.
   C.	retail clothing stores.
   D.	wheat farms.

4 points   

 

QUESTION 6

1. For a monopolistically competitive firm, the firm's demand curve is:

   A.	downward sloping.
   B.	horizontal.
   C.	upward sloping.
   D.	none of these

4 points   

 

QUESTION 7

1. The best example of a monopolistic industry is:

   A.	grocery stores.
   B.	toothbrushes.
   C.	patented drugs.
   D.	automobiles.

4 points   

 

QUESTION 8

1. A firm that has market power has the ability:

   A.	to affect the price of its own product.
   B.	to conduct illegal activities without fear of prosecution.
   C.	to command consumer to buy any quantity from them.
   D.	to drive its competition out of the market.

4 points   

 

QUESTION 9

1. If the chimney sweep market became more competitive, one market change that would be expected is:

   A.	lower output.
   B.	higher costs.
   C.	higher profits.
   D.	lower prices.

4 points   

 

QUESTION 10

1. A special case of an oligopoly where there are only two firms is called:

   A.	a monopoly.
   B.	a duopoly.
   C.	perfect competition.
   D.	monopolistic competition.

4 points   

 

QUESTION 11

1. Empirical studies suggest that when a large number of firms are present in a market, prices are usually ________ and profits are usually ________ than when there are only a few firms in a market.

   A.	lower; higher
   B.	lower; lower
   C.	higher; higher
   D.	higher; lower

4 points   

 

QUESTION 12

1. If a firm can maximize its profit by producing the output where price is equal to its marginal cost, the firm is operating in:

   A.	a perfectly competitive market.
   B.	an oligopolistic market.
   C.	a monopolistic market.
   D.	in a monopolistically competitive market.

4 points   

 

QUESTION 13

1. If a firm that makes $100 profit per pair of shoes pays Lebron James $2,000,000 to endorse their basketball shoes, then to make the endorsement pay off they must sell at least:

   A.	$2,000,000 more in shoes.
   B.	$20,000 more in shoes.
   C.	20,000 more pairs of shoes.
   D.	200,000 more pairs of shoes.

4 points   

 

QUESTION 14

1. A group of firms that coordinate their pricing decisions is called:

   A.	a monopoly.
   B.	a duopoly.
   C.	a cartel.
   D.	monopolistic competition.

4 points   

 

QUESTION 15

1. Who are the price takers in a perfectly competitive market?

   A.	both the buyers and the sellers
   B.	the buyers
   C.	neither the buyers nor the sellers
   D.	the sellers

4 points   

 

QUESTION 16

1. A market served by only one firm is called a:

   A.	perfectly competitive market.
   B.	monopoly.
   C.	oligopoly.
   D.	Any of the above could be correct.

4 points   

 

QUESTION 17

1. When firms cooperate with each other rather than compete:

   A.	consumers will end up better off.
   B.	the firms will end up better off.
   C.	both consumers and firms end up better off.
   D.	they will agree to set low prices to help each other out.

4 points   

 

QUESTION 18

1. Which type of barrier to entry allows the electric company to maintain a monopoly over theproduction of electricity?

   A.	a patent.
   B.	economies of scale.
   C.	diseconomies of scale.
   D.	ownership of a scarce factor of production.

4 points   

 

QUESTION 19

1. Which of the following is an example of a monopolistically competitive firm?

   A.	Farmer Smith's corn farm
   B.	Tino's Italian eatery, a local restaurant
   C.	TCI Cablevision, a supplier of cable television services
   D.	Northwest Electricity, a supplier of electricity in the Northwest U.S.

4 points   

 

QUESTION 20

1. Suppose Robin's Clock Works produces in a perfectly competitive market. Suppose the average total cost of clocks is $95, the average variable cost of clocks is $90, and the price of clocks is $85. If the firm is producing the level of output where marginal cost equals price, then in the short run the firm:

   A.	should shut down.
   B.	should continue to produce since total revenue exceeds total variable cost.
   C.	is earning a positive economic profit.
   D.	can increase profit by increasing output.

4 points   

 

QUESTION 21

1. The word "monopolistic" in the label "monopolistic competition" refers to the fact that:

   A.	there is only one firm producing in the market.
   B.	firms have no control over the price they charge.
   C.	each firm produces a unique version of the product.
   D.	none of these

4 points   

 

QUESTION 22

1. If a firm perceived that the other firm in an implicit pricing agreement dropped its price in response to a change in market conditions, then its most likely response would be to:

   A.	match the other firm's price.
   B.	engage in a price war.
   C.	raise price to punish the other firm.
   D.	keep its price the same.

4 points   

 

QUESTION 23

1. The term "rent seeking" best describes a situation in which:

   A.	individuals expend effort searching for a good price on an apartment.
   B.	consumers compete for a limited quantity of the good.
   C.	firms use resources to secure or preserve a monopoly in providing a good or service.
   D.	None of the above are good descriptions of rent-seeking behavior.

4 points   

 

QUESTION 24

1. If a firm suffers an economic loss, its:

   A.	price is less than its marginal cost.
   B.	price is less than its marginal revenue.
   C.	price is less than its average total cost.
   D.	none of the above

4 points   

 

QUESTION 25

1. Monopolistically competitive markets are like monopoly markets because in both markets firms:

   A.	have some control over price.
   B.	face substantial barriers to entry.
   C.	face a large number of competitors.
   D.	have no control over price.

4 points   

 

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