Pure Competition
1) Perfect competition is an industry with
A) a few firms producing identical goods.
B) many firms producing goods that differ somewhat.
C) a few firms producing goods that differ somewhat in quality.
D) many firms producing identical goods.
D) many firms producing identical goods.
In a monopolistic competitive industry, products are:
A)Exactly the same
B)All different
C)Random
D)Differentiated
D) Differentiated
In oligopolistic markets,
A) there are many firms.
B) there are only a few firms.
C) there are no barriers to entry.
D) all firms are price takers
B) there are only a few firms.
Which of the following is NOT a characteristic of pure monopoly?
A)Single Seller
B)No close substitutes
C)Price taker
D)Blocked Entry
C) Price taker
One difference between oligopoly and monopolistic competition is that
A) a monopolistically competitive industry has fewer firms.
B) fewer firms compete in oligopoly than in monopolistic competition.
C) in monopolistic competition, the products are identical.
D) monopolistic competition has barriers to entry.
B) fewer firms compete in oligopoly than in monopolistic competition.
In perfect competition,
A) there are significant restrictions on entry.
B) each firm can influence the price of the good.
C) there are few buyers.
D) all firms in the market sell their product at the same price
D) all firms in the market sell their product at the same price
In monopolistically competitive markets, products are ____ and entry is ____.
A)identical; free
B) differentiated; free
C) identical; hard
D) differentiated; hard
B) Differentiated; free
A formal agreement among producers to set the price and the individual firm's output levels of a product is called a:
A) Joint venture
B) Partnership
C) Cartel
D) Task force
C) Cartel
A monopolist seeks:
A)Maximum price
B)Maximum profit
C)Maximum quantity
D)Maximum total cost
B) Maximum profit
Which of the following is NOT a characteristic of monopolistic competition?
A)There are a large number of competing firms.
B) There are significant barriers to entry.
C) Each firm produces a differentiated product.
D) Collusion is impossible
B) There are significant barriers to entry.
In perfect competition, the price of the product is determined where the industry
A)elasticity of supply equals the industry elasticity of demand.
B)supply curve and industry demand curve intersect.
C)fixed cost is zero.
D)average variable cost equals the industry average total cost.
B)supply curve and industry demand curve intersect.
Which characteristic is associated with monopolistic competition?
A)Collusion
B)Product differentiation
C)Small number of firms
D)Awareness of rival firms in the market
B) Product Differentiation
An example of oligopoly is
A) long-distance telephone service.
B) wheat farming.
C) the clothing industry.
D) the restaurant industry.
A) long-distance telephone service
A monopolist seeking to maximize total profit will produce up to: MR __ MC
A)<
B)>
C)=
D)Not of the above
C) =
Price Discrimination is:
A)Selling different products at the same price to different people regardless of cost
B)Selling the same products at different prices to different people regardless of cost
C)Selling different products at different prices to different people regardless of cost
D)Selling the same products at the same prices to the same people regardless of price
B)Selling the same products at different prices to different people regardless of cost
If firms exit an industry, the
A) profits of the remaining firms decrease.
B) industry supply curve shifts leftward.
C) price of the product falls.
D) output of the industry increases.
B) industry supply curve shifts leftward.
Monopolistic competition is a market structure in which:
A)firms face barriers to entry.
B) a large number of firms compete.
C) firms produce and sell an identical product.
D) firms face perfectly elastic demand for their product.
B) a large number of firms compete
Firms in an oligopoly
i are independent of each others' actions.
ii can each influence the market price.
iii charge a price equal to marginal revenue.
A) i only
B) i and iii
C) ii only
D) i, ii, and iii
C) ii only
Which of these is a NOT a barrier to entry?
A)Licenses
B)Employees
C)Economies of scale
D)Patents
B) Employees
For a monopoly, the industry demand curve is the firm's
A) profit function.
B) marginal revenue curve.
C) supply curve.
D) demand curve.
D) demand curve
Which of the following are assumptions we make about perfect competition?
A) A large number of industries
B) A large number of firms
C) Each firm is a price-taker
D) No government intervention
E) Identical products
F) Information on the activities of other firms is generally available
B) A large number of firms
C) Each firm is a price-taker
E) Identical products
If firms in a monopolistically competitive industry are earning an economic profit, then:
A)some customers will exit the market.
B) some workers will leave the industry’s labor force.
C) some firms will leave the industry.
D) new firms will enter the industry.
D) New firms will enter the industry
Once a cartel determines the profit-maximizing price,
A) each firm faces the temptation to cheat by lowering its price.
B) changes in the output of any member firm will not affect the market price.
C) each firm faces the temptation to cheat by raising its price.
D) entry into the industry by rival firms will not affect the profit of the cartel.
A) each firm faces the temptation to cheat by lowering its price.
Which of the following is an example of a monopoly?
A)Buying a snack at a super market
B)Buying a meal on an airplane
C)Buying a dress on Rodeo Ave.
D)Buying a car at an auto mall
B) Buying a meal on an airplane
A perfectly competitive firm's demand curve is
A) perfectly inelastic.
B) the same as the market demand curve.
C) downward sloping.
D) the same as the firm's marginal revenue curve.
D) the same as the firm's marginal revenue curve.