Reference no: EM13910183

Question 1. Which of the following industries comes closest to the model of perfect competition?

    Automobile industry
    Information technology industry
    Aerospace industry
    Agriculture

Question 2.A feature of perfect competition is ________.

    use of non-price competition by firms
    mutual interdependence among firms
    unique products
    standardized products

Question 3.Which of the following characteristics is most important in differentiating between perfect competition and all other types of markets?

    Whether or not the product is standardized
    Whether or not there is complete market information about price
    Whether or not firms are price takers
    All of the above are equally important.

Question 4.Demand facing an individual, perfectly competitive firm is ________.

    perfectly inelastic at the quantity the firm chooses to produce
    perfectly inelastic at the quantity determined by market forces
    perfectly elastic at the price the firm chooses to charge
    perfectly elastic at the price determined by market forces

Question 5.According to the shutdown rule, a firm should produce no output in the short run if ________.

    the price is below minimum average total cost
    the price is above minimum average total cost
    the total revenues are lower than total fixed costs
    the price is below minimum average variable costs

Question 6.if a perfectly competitive firm incurs an economic loss, it should ________.

    shut down immediately
    try to raise its price
    shut down in the long run
    shut down if this loss exceeds fixed cost

Question 7.A monopolist sells 100 units at $10 per unit and 90 units at $15 per unit. The marginal revenue from the tenth unit is________.

    $1000
    $1350
    $100
    $350

Question 8.Which of the following correctly completes this statement?The monopolist's marginal revenue will be ________.  

    Greater than price
    less than price
    equal to price
    greater than total revenues

Question 9.When MR = MC, ________.

    marginal profit is maximized
    total profit is maximized
    marginal profit is positive
    total profit is zero

Question 10.In the short run, a firm should shut down if it cannot ________.

    make normal profits
    make economic profits
    cover its variable costs
    cover its fixed costs

Question 11.Which of the following industries is most likely to represent the monopolistic competition market structure? 

    Automobile
    Tobacco
    Restaurant
    Farm equipment

Question 12.Which of the following represents a good example of an oligopoly?

    The agriculture industry
    A public utility
    The automobile industry
    The restaurant industry

Question 13.Mutual interdependence means that ________.

    all firms are price takers
    each firm sets its own price based on its anticipated reaction by its competitors
    all firms collaborate to establish one price
    all firms are free to enter or leave the market

Question 14.The Herfindahl-Hirschman Index (HHI) is used to measure ________.

    the degree of non-price competition
    the degree of market concentration in an industry
    the extent of price leadership
    None of the above

Question 15.The existence of a kinked demand curve under oligopoly conditions may result in ________.

    price flexibility
    price rigidity
    competitive pricing
    None of the above.

Question 16.Porter's "Five Forces Model" is based on _______.

    the laws of supply and demand
    the law of diminishing returns
    the Structure-Conduct-Performance model
    the key factors affecting demand

Question 17.In the long run, the most helpful action that a monopolistically competitive firm can take to maintain its economic profit is     to ________.

    continue its efforts to differentiate its product
    raise its price
    lower its price
    do nothing, because it will inevitably experience a decline in profits.

Question 18.The demand curve, which assumes that competitors will follow price decreases but not price increases, is called ________. 

    an industry demand curve
    an inelastic demand curve
    a kinked demand curve
    a competitive demand curve

Question 19.The four-firm concentration ratio ________.

    indicates the total profitability among the top four firms in an industry
    is an indicator of the degree of monopolistic competition
    indicates the presence and intensity of an oligopoly market
    is used by the government as a basis for anti-trust cases

 Question 20. When a company is faced by a kinked demand curve, the marginal revenue curve will be ________.

    upward sloping
    horizontal
    zero at the quantity produced
    discontinuous