Question 1

Brand loyalty is a phenomenon associated with perfectly competitive markets.

Accepted Answer

A) True 
 B)False

Question 2

Monopoly rights provided by patents are awarded to

Accepted Answer

A)  encourage profit making 
B)  guarantee competitive prices 
C)  encourage competition 
D)  the "first come, first served" 
E)  encourage research and development 
A)  encourage profit making 
B)  guarantee competitive prices 
C)  encourage competition 
D)  the "first come, first served" 
E)  encourage research and development

Question 3

To determine whether McDonald's hamburgers are in the same market as Domino's pizza ,the criterion we use is their

Accepted Answer

A)  price elasticities of demand 
B)  price elasticities of supply 
C)  income elasticities of demand 
D)  cross elasticities 
E)  equilibrium prices 
A)  price elasticities of demand 
B)  price elasticities of supply 
C)  income elasticities of demand 
D)  cross elasticities 
E)  equilibrium prices

Question 4

A firm that has relatively high fixed-cost expenditures is likely to be a natural monopoly.

Accepted Answer

A) True 
 B)False

Question 5

The primary reason most oligopolists do not become monopolists is

Accepted Answer

A)  inadequate profit 
B)  disinclination to merge 
C)  fear of government 
D)  inability to prevent competitors from entering the industry 
E)  inability to differentiate their goods 
A)  inadequate profit 
B)  disinclination to merge 
C)  fear of government 
D)  inability to prevent competitors from entering the industry 
E)  inability to differentiate their goods

Question 6

Perfect competition has all of the following features except

Accepted Answer

A)  large number of firms 
B)  goods that are perfect substitutes 
C)  no barriers to entry 
D)  brand loyalty 
E)  firm has insignificant market share 
A)  large number of firms 
B)  goods that are perfect substitutes 
C)  no barriers to entry 
D)  brand loyalty 
E)  firm has insignificant market share

Question 7

Monopolies and oligopolies are similar in that both owe their existence to government intervention in the marketplace.

Accepted Answer

A) True 
 B)False

Question 8

Two goods belonging to the same market have cross elasticities less than three.

Accepted Answer

A) True 
 B)False

Question 9

A firm in a perfectly competitive market structure

Accepted Answer

A)  will advertise to shift its demand curve to the right 
B)  has a demand curve for its good that is perfectly vertical 
C)  cannot influence the price 
D)  has a demand curve for its good that is downward sloping 
E)  has a demand curve for its good that is upward sloping 
A)  will advertise to shift its demand curve to the right 
B)  has a demand curve for its good that is perfectly vertical 
C)  cannot influence the price 
D)  has a demand curve for its good that is downward sloping 
E)  has a demand curve for its good that is upward sloping

Question 10

Although not the only ones, oligopolists produce goods that

Accepted Answer

A)  have zero cross elasticities 
B)  are unique 
C)  are not differentiated 
D)  have infinite cross elasticities 
E)  have close substitutes 
A)  have zero cross elasticities 
B)  are unique 
C)  are not differentiated 
D)  have infinite cross elasticities 
E)  have close substitutes

Question 11

Historical note: In separate court cases, ALCOA and DuPont both faced charges brought by the government that they

Accepted Answer

A)  flooded the market with output to undermine its competition 
B)  charged excessively high prices 
C)  imposed illegal barriers to entry in their respective markets 
D)  monopolized their markets 
E)  sought to create monopolistic competition in their markets 
A)  flooded the market with output to undermine its competition 
B)  charged excessively high prices 
C)  imposed illegal barriers to entry in their respective markets 
D)  monopolized their markets 
E)  sought to create monopolistic competition in their markets

Question 12

A primary determinant of market structure is the number of producers in a market.

Accepted Answer

A) True 
 B)False

Question 13

Mutual interdependence is an important characteristic of the ________ market structure(s).

Accepted Answer

A)  monopoly 
B)  oligopoly 
C)  monopolistic competition 
D)  perfect competition 
E)  perfect competition and monopolistic 
A)  monopoly 
B)  oligopoly 
C)  monopolistic competition 
D)  perfect competition 
E)  perfect competition and monopolistic

Question 14

Which of the following is a characteristic of the perfectly competitive market structure?

Accepted Answer

A)  advertising 
B)  product differentiation 
C)  perfect substitutes 
D)  patents 
E)  mutual interdependence 
A)  advertising 
B)  product differentiation 
C)  perfect substitutes 
D)  patents 
E)  mutual interdependence

Question 15

Suppose a monopolist chooses to advertise its good and its own demand curve shifts to the right, then we know that

Accepted Answer

A)  the industry's demand curve shifts in precisely the same way 
B)  its competitors share some of the benefits of the advertising 
C)  the monopolist's cost curves will shift to accommodate the shift in demand 
D)  the price of substitute goods will fall 
E)  consumers are turned off by the advertising and buy less at every price 
A)  the industry's demand curve shifts in precisely the same way 
B)  its competitors share some of the benefits of the advertising 
C)  the monopolist's cost curves will shift to accommodate the shift in demand 
D)  the price of substitute goods will fall 
E)  consumers are turned off by the advertising and buy less at every price

Question 16

Barriers to entry into a monopolistically competitive industry are virtually impossible to overcome.

Accepted Answer

A) True 
 B)False

Question 17

The individual firm's demand curve under conditions of perfect competition is

Accepted Answer

A)  perfectly horizontal 
B)  perfectly vertical 
C)  upward sloping 
D)  downward sloping 
E)  nonexistent in perfect competition 
A)  perfectly horizontal 
B)  perfectly vertical 
C)  upward sloping 
D)  downward sloping 
E)  nonexistent in perfect competition

Question 18

There are fewest problems in distinguishing between which two market structures?

Accepted Answer

A)  oligopoly and monopolistic competition 
B)  monopolistic competition and perfect competition 
C)  monopoly and perfect competition 
D)  oligopoly and monopoly 
E)  oligopoly and perfect competition 
A)  oligopoly and monopolistic competition 
B)  monopolistic competition and perfect competition 
C)  monopoly and perfect competition 
D)  oligopoly and monopoly 
E)  oligopoly and perfect competition

Question 19

If you are told that the green cheese market on the moon is a monopoly, you would know that there

Accepted Answer

A)  is only one seller of the green cheese produced on the moon 
B)  is only one buyer of the green cheese produced on the moon 
C)  is only green cheese on the moon 
D)  are close substitutes for green cheese on the moon 
E)  are only a few producers on the moon 
A)  is only one seller of the green cheese produced on the moon 
B)  is only one buyer of the green cheese produced on the moon 
C)  is only green cheese on the moon 
D)  are close substitutes for green cheese on the moon 
E)  are only a few producers on the moon

Question 20

Cross elasticity is higher the more perfect two goods are as substitutes.

Accepted Answer

A) True 
 B)False

Exam 10: Identifying Markets and Market Structures

Brand loyalty is a phenomenon associated with perfectly competitive markets.

Monopoly rights provided by patents are awarded to

To determine whether McDonald's hamburgers are in the same market as Domino's pizza ,the criterion we use is their

A firm that has relatively high fixed-cost expenditures is likely to be a natural monopoly.

The primary reason most oligopolists do not become monopolists is

Perfect competition has all of the following features except

Monopolies and oligopolies are similar in that both owe their existence to government intervention in the marketplace.

Two goods belonging to the same market have cross elasticities less than three.

A firm in a perfectly competitive market structure

Although not the only ones, oligopolists produce goods that

Historical note: In separate court cases, ALCOA and DuPont both faced charges brought by the government that they

A primary determinant of market structure is the number of producers in a market.

Mutual interdependence is an important characteristic of the ________ market structure(s).

Which of the following is a characteristic of the perfectly competitive market structure?

Suppose a monopolist chooses to advertise its good and its own demand curve shifts to the right, then we know that

Barriers to entry into a monopolistically competitive industry are virtually impossible to overcome.

The individual firm's demand curve under conditions of perfect competition is

There are fewest problems in distinguishing between which two market structures?

If you are told that the green cheese market on the moon is a monopoly, you would know that there

Cross elasticity is higher the more perfect two goods are as substitutes.

Introduction

Production Possibilities and Opportunity Costs

Demand and Supply

Elasticity

Happiness, Utility, and Consumer Choice

Price Ceilings and Price Floors

Entrepreneurship and Business Ownership

Costs of Production

Maximizing Profit

Price and Output in Monopoly, Monopolistic Competition, and Perfect Competition

Price and Output Determination Under Oligopoly

Antitrust and Regulation

Externalities, Market Failure, and Public Choice

Wage Rates in Competitive Labor Markets

Wages and Employment: Monopsony and Labor Unions

Interest, Rent, and Profit

Income Distribution and Poverty

International Trade

Exchange Rates, Balance of Payments, and International Debt

The Economic Problems of Less-Developed Economies

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