Reference no: EM13172809
1. In which market model would there be a unique product for which there are no close substitutes?
a. Monopolistic competition
b. Pure competition
c. Pure monopoly
d. Oligopoly
2. In which two market models would advertising be used most often?
a. Pure competition and monopolistic competition
b. Pure competition and pure monopoly
c. Monopolistic competition and oligopoly
d. Pure monopoly and oligopoly
3. The steel and automobile industries would be examples of which market model?
a. Monopolistic competition
b. Pure competition
c. Pure monopoly
d. Oligopoly
4. The demand curve faced by a purely competitive firm
a. has unitary elasticity.
b. yields constant total revenues even when price changes.
c. is identical to the market demand curve.
d. is the same as its marginal revenue curve.
5. Let us suppose Harry's, a local supplier of chili and pizza, has the following revenue-and-cost structure: Total Revenue $3,000 Per Week Total Variable Cost $2,000 Per Week Total Fixed Costs $2,000 Per Week
a. Harry's should stay open in the long run.
b. Harry's should shut down in the short run.
c. Harry's should stay open in the short run.
d. Harry's should shut down in the short run but reopen in the long run.
6. A firm should always continue to operate at a loss in the short run if
a. the firm will show a profit.
b. the owner enjoys helping her customers.
c. it can cover its variable costs and some of its fixed costs.
d. the firm cannot produce any other products more profitably.
7. The short-run supply curve for a competitive firm is the
a. entire MC curve.
b. segment of the MC curve lying below the AVC curve.
c. segment of the MC curve lying above the AVC curve.
d. segment of the AVC curve lying to the right of the MC curve.
8. The classic example of a private, unregulated monopoly is
a. Xerox.
b. De Beers.
c. General Motors.
d. General Electric.
9. Which of the following is a barrier to entry?
a. Patents
b. Revenue maximization
c. Profit maximization
d. Elastic product demand
10. The demand curve confronting a nondiscriminating, pure monopolist is
a. horizontal.
b. the same as the industry's demand curve.
c. more elastic than the demand curve confronting a competitive firm.
d. derived by vertically summing the individual demand curves for the buyers.
11. Which case below best represents a case of price discrimination?
a. An insurance company offers discounts to safe drivers.
b. A major airline sells tickets to senior citizens at lower prices than to other passengers.
c. A professional baseball team pays two players with identical batting averages different salaries.
d. A utility company charges less for electricity used during "off-peak" hours, when it does not have to operate its less-efficient generating plants.
12. Which of the following is a characteristic of monopolistic competition?
a. Standardized product
b. Relatively small number of firms
c. Absence of nonprice competition
d. Relatively easy entry
13. Assume that in a monopolistically competitive industry, firms are earning economic profit. This situation will
a. reduce the excess capacity in the industry as firms expand production.
b. attract other firms to enter the industry, causing the firm's profits to shrink.
c. cause firms to standardize their product to limit the degree of competition.
d. make the industry allocatively efficient as each firm seeks to maintain its profits.
14. The characteristic most closely associated with oligopoly is
a. easy entry into the industry.
b. a few large producers.
c. product standardization.
d. no control over price.
15. A high concentration ratio indicates that
a. the industry is highly profitable.
b. the industry is highly competitive.
c. many firms produce most of the output in an industry.
d. few firms produce most of the output in an industry.
16. A major reason that firms form a cartel is to
a. reduce the elasticity of demand for the product.
b. enlarge the market share for each producer.
c. minimize the costs of production.
d. maximize joint profits.
17. Which of the following is a land resource?
a. A farmer
b. An oil-drilling rig
c. A machine for detecting earthquakes
d. Natural gas
18. Refer to the information and assume the stadium capacity is 5,000. The supply of seats for the game
Price per Ticket
Quantity Demanded
$13
1,000
11
2,000
9
3,000
7
4,000
5
5,000
3
6,000
a. varies inversely with ticket prices.
b. varies directly with ticket prices.
c. is perfectly inelastic.
d. is perfectly elastic.
19. Which of the following goods (with their respective income-elasticity coefficients in parentheses) will most likely suffer a decline in demand during a recession?
a. Dinner at a nice restaurant (+1.8)
b. Chicken purchased at the grocery store for preparation at home (+0.25)
c. Facial tissue (+0.6)
d. Plasma-screen and LCD TVs (+4.2)
20. In the diagram Curves 1, 2, and 3 represent
curves figure 1
Graph Description
a. average variable cost, marginal cost, and average fixed cost, respectively.
b. total variable cost, total fixed cost, and total cost, respectively.
c. total fixed cost, total variable cost, and total cost, respectively.
d. marginal product, average variable cost, and average total cost, respectively.
21. Refer to the diagram. Points A, B, C, D, and E show
points diagram1
Graph Description
a. that the opportunity cost of bicycles increases, while that of computers is constant.
b. combinations of bicycles and computers that society can produce by using its resources efficiently.
c. that the opportunity cost of computers increases, while that of bicycles is constant.
d. that society's demand for computers is greater than its demand for bicycles.
22. What type of barrier to entry was used by De Beers throughout much of its history to maintain its monopoly position?
a. Patent protection
b. Government regulation
c. Economies of scale
d. Ownership of an essential resource