Reference no: EM132154272

1. Classical economists preferred perfect competition to monopoly because it fulfilled all but which one of the following basic goals?

a. consumer sovereignty

b. dispersion of economic power

c. virtual equality in income distribution

d. efficiency of resource allocation

2. The kinked demand curve facing an oligopolist

a. is elastic in the upper portion but inelastic in the lower portion

b. is inelastic in the upper portion but elastic in the lower portion

c. is discontinuous

d. is upward sloping in the upper portion and downward sloping in the lower portion

e. none of the above

3. An exclusive dealership is

a. an agreement between a manufacturer and its dealers that forbids the dealers from handling any other manufacturer's products.

b. an agreement between a manufacturer and its dealers that requires the dealers to purchase some other good or service

c. the only dealership within some geographical area, which therefore acts as a monopoly

d. a dealership that differentiates its product with "snob appeal."

e. a vertical merger

4. Barriers to entry to the monopolistically competitive industry

a. don't exist

b. are greater than those to purely competitive industries but less than those to monopolies or oligopolies

c. are primarily based upon prices

d. are less than those to competitive industries but greater than those to monopolies or oligopolies

e. enable these firms to earn substantial economic profits in the long run.

5. The more elastic the monopolistic competitor's demand curve

is, the

a. fewer the number of competitors

b. easier it is for firms to enter the market and duplicate the product

c. greater the difficulty in duplicating the product

d. lower the public's awareness

e. none of the above

6. The monopolistic competitor will charge a price

a. above that of a purely competitive firm but will produce more

b. below that of a monopolist firm will produce more

c. equal that of a monopolist but will produce at the output level of a purely competitive firm

d. to maximize sales

e. where economic profits are zero in the short run

7. Which of the following statements about the monopolistically

competitive industry in the long run is true?

a. Its output level is less than capacity

b. Its price is above that for a perfectly competitive firm

c. Consumers have a greater variety of products to choose from

d. All of the above statements are true

e. None of the above statements are true

8. In the long run, the output level of a monopolistic competitor

a. occurs at the minimum of average total cost

b. is greater than that of the purely competitive firm

c. is less than that of monopolies or oligopolies

d. is the same as that of the perfectly competitive firm

e. is none of the above