Question 1

Market structure is determined mainly by the size of firms.

Accepted Answer

A) True 
 B)False

Question 2

Perfect competitors produce goods that are

Accepted Answer

A)  highly differentiated 
B)  differentiated by firm 
C)  poor substitutes for each other 
D)  identical 
E)  unique 
A)  highly differentiated 
B)  differentiated by firm 
C)  poor substitutes for each other 
D)  identical 
E)  unique

Question 3

Price elasticity of demand is a useful tool for classifying firms that exist within the same market.

Accepted Answer

A) True 
 B)False

Question 4

Imagine that you own a firm that operates in a perfectly competitive industry. What will happen to the market price in your industry if you decide to triple your output?

Accepted Answer

Since each firm's market share

Question 5

Cross elasticity among goods in a perfectly competitive market is infinite.

Accepted Answer

A) True 
 B)False

Question 6

When considering the definition of "monopolistic competition," it is wise to place emphasis upon the first word as it most nearly describes market performance within this industry structure.

Accepted Answer

A) True 
 B)False

Question 7

The justification for the patent system is that it

Accepted Answer

A)  protects desirable monopolies 
B)  encourages innovation 
C)  discourages the development of substitute goods 
D)  guarantees high profit for the monopolies so that they can use the profit as a source for research and development 
E)  discourages competition 
A)  protects desirable monopolies 
B)  encourages innovation 
C)  discourages the development of substitute goods 
D)  guarantees high profit for the monopolies so that they can use the profit as a source for research and development 
E)  discourages competition

Question 8

In the long run, monopolistic competition

Accepted Answer

A)  results in a monopoly 
B)  ends up with one firm, that is, competition transforms to monopoly 
C)  ends up with many firms in the industry 
D)  has zero barriers to entry 
E)  has no product differentiation 
A)  results in a monopoly 
B)  ends up with one firm, that is, competition transforms to monopoly 
C)  ends up with many firms in the industry 
D)  has zero barriers to entry 
E)  has no product differentiation

Question 9

Natural monopolies result from the peculiar relationship between

Accepted Answer

A)  government regulation and the ownership of scarce resources 
B)  threats to potential entrants and the price of the product 
C)  the size of market demand and the firm's cost structure 
D)  product differentiation and the ownership of patents 
E)  the firm's advertising campaigns and its labor policies 
A)  government regulation and the ownership of scarce resources 
B)  threats to potential entrants and the price of the product 
C)  the size of market demand and the firm's cost structure 
D)  product differentiation and the ownership of patents 
E)  the firm's advertising campaigns and its labor policies

Question 10

Which of the following represents a serious barrier to entry?

Accepted Answer

A)  high fixed cost 
B)  low fixed cost 
C)  easy access to acquiring resources 
D)  no history of patents in the industry 
E)  very elastic demand for the good 
A)  high fixed cost 
B)  low fixed cost 
C)  easy access to acquiring resources 
D)  no history of patents in the industry 
E)  very elastic demand for the good

Question 11

The single most important factor that determines market structure is

Accepted Answer

A)  location 
B)  firm size 
C)  number of firms in the industry 
D)  price 
E)  complementarity of the goods 
A)  location 
B)  firm size 
C)  number of firms in the industry 
D)  price 
E)  complementarity of the goods

Question 12

The firm's demand curve and the industry's demand curve are identical in 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 13

Which of the following serves to protect a monopoly structure?

Accepted Answer

A)  appearance of close substitute goods 
B)  creation of technologies that serve to break down barriers to entry 
C)  continuing exclusive access to resources required to produce the good 
D)  easier access to resources required to produce the good 
E)  diseconomies of scale 
A)  appearance of close substitute goods 
B)  creation of technologies that serve to break down barriers to entry 
C)  continuing exclusive access to resources required to produce the good 
D)  easier access to resources required to produce the good 
E)  diseconomies of scale

Question 14

A unique characteristic of oligopolies is their

Accepted Answer

A)  differentiated products 
B)  profit-maximizing behavior 
C)  advertising campaigns 
D)  ability to overcome barriers to entry 
E)  mutual interdependence 
A)  differentiated products 
B)  profit-maximizing behavior 
C)  advertising campaigns 
D)  ability to overcome barriers to entry 
E)  mutual interdependence

Question 15

An economic consultant recently reported to Sam Snerd that the cross-price elasticitybetween his product and another firm's scooters is 4.5. From this information Sam canconclude that

Accepted Answer

A)  his firm's market is smaller 
B)  his firm is a monopolist 
C)  his firm's product has few substitutes 
D)  there is at least one other firm in his relevant market 
E)  scooters are complimentary to his firm's product 
A)  his firm's market is smaller 
B)  his firm is a monopolist 
C)  his firm's product has few substitutes 
D)  there is at least one other firm in his relevant market 
E)  scooters are complimentary to his firm's product

Question 16

Entry into a monopolistically competitive industry is

Accepted Answer

A)  easy, but exiting is difficult 
B)  difficult, but exiting is easy 
C)  difficult, but not impossible 
D)  impossible 
E)  easier than entry into oligopoly 
A)  easy, but exiting is difficult 
B)  difficult, but exiting is easy 
C)  difficult, but not impossible 
D)  impossible 
E)  easier than entry into oligopoly

Question 17

One very important feature of a monopoly is the size of the firm.

Accepted Answer

A) True 
 B)False

Question 18

The big labels in the music industry, such as Sony, Time-Warner, and Universal, are churning out thousands of CD albums each year that compete against each other for your dollar. But, considering the CD industry only, they also compete against

Accepted Answer

A)  records 
B)  cassette tapes 
C)  used CDs 
D)  stereos 
E)  used textbooks 
A)  records 
B)  cassette tapes 
C)  used CDs 
D)  stereos 
E)  used textbooks

Question 19

Historical note: Because of its military importance, the U.S. government exercised monopoly control over which one of the following goods before World War II?

Accepted Answer

A)  iron 
B)  steel 
C)  helium 
D)  hydrogen 
E)  coal 
A)  iron 
B)  steel 
C)  helium 
D)  hydrogen 
E)  coal

Question 20

Beanie Babies are popular stuffed animals sold by the Ty Corporation. Explain whether or not Ty is a monopoly.

Accepted Answer

Since there are many substitut

Exam 10: Identifying Markets and Market Structures

Market structure is determined mainly by the size of firms.

Perfect competitors produce goods that are

Price elasticity of demand is a useful tool for classifying firms that exist within the same market.

Imagine that you own a firm that operates in a perfectly competitive industry. What will happen to the market price in your industry if you decide to triple your output?

Cross elasticity among goods in a perfectly competitive market is infinite.

When considering the definition of "monopolistic competition," it is wise to place emphasis upon the first word as it most nearly describes market performance within this industry structure.

The justification for the patent system is that it

In the long run, monopolistic competition

Natural monopolies result from the peculiar relationship between

Which of the following represents a serious barrier to entry?

The single most important factor that determines market structure is

The firm's demand curve and the industry's demand curve are identical in the _________market structure(s).

Which of the following serves to protect a monopoly structure?

A unique characteristic of oligopolies is their

An economic consultant recently reported to Sam Snerd that the cross-price elasticitybetween his product and another firm's scooters is 4.5. From this information Sam canconclude that

Entry into a monopolistically competitive industry is

One very important feature of a monopoly is the size of the firm.

The big labels in the music industry, such as Sony, Time-Warner, and Universal, are churning out thousands of CD albums each year that compete against each other for your dollar. But, considering the CD industry only, they also compete against

Historical note: Because of its military importance, the U.S. government exercised monopoly control over which one of the following goods before World War II?

Beanie Babies are popular stuffed animals sold by the Ty Corporation. Explain whether or not Ty is a monopoly.

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

Filters