Question 1

Monopolistic competition is categorized as an industry with few sellers and no competition.

Accepted Answer

A) True 
 B)False  False

Question 2

At a profit maximizing point:

Accepted Answer

A) profits are always positive. 
B) marginal revenue is 0. 
C) marginal cost is 0. 
D) total revenue is maximized. 
E) none of the above. 
A) profits are always positive. 
B) marginal revenue is 0. 
C) marginal cost is 0. 
D) total revenue is maximized. 
E) none of the above. E

Question 3

Which of the following are major sources of imperfect competition?

Accepted Answer

A) Government tariffs. 
B) Patent laws. 
C) Copyright laws. 
D) Economies of scale. 
E) All of the above. 
A) Government tariffs. 
B) Patent laws. 
C) Copyright laws. 
D) Economies of scale. 
E) All of the above. E

Question 4

Profits are maximized when the rate of change of total revenue equals the rate of change of total cost.

Accepted Answer

A) True 
 B)False

Question 5

Oligopoly means exactly two sellers.

Accepted Answer

A) True 
 B)False

Question 6

If marginal revenue is 0:

Accepted Answer

A) total revenue is increasing. 
B) total revenue is maximized. 
C) the demand curve is unit elastic. 
D) B and C only. 
E) A and C only. 
A) total revenue is increasing. 
B) total revenue is maximized. 
C) the demand curve is unit elastic. 
D) B and C only. 
E) A and C only.

Question 7

In the situation of imperfect competition, the relation between market price P and marginal revenue MR for each supplying firm is that:

Accepted Answer

A) P is less than MR at all or most output levels. 
B) P is greater than MR at all or most output levels. 
C) P is the same as MR at all output levels. 
D) P is either less than MR at particular output levels or the same as MR. 
E) none of the above, since P is not related to MR. 
A) P is less than MR at all or most output levels. 
B) P is greater than MR at all or most output levels. 
C) P is the same as MR at all output levels. 
D) P is either less than MR at particular output levels or the same as MR. 
E) none of the above, since P is not related to MR.

Question 8

MR becomes negative when:

Accepted Answer

A) the demand price becomes negative. 
B) the demand elasticity drops from elastic to inelastic. 
C) total revenue becomes negative. 
D) the loss on previous units is at its maximum. 
E) both b and c. 
A) the demand price becomes negative. 
B) the demand elasticity drops from elastic to inelastic. 
C) total revenue becomes negative. 
D) the loss on previous units is at its maximum. 
E) both b and c.

Question 9

If a firm's demand curve is horizontal, then the firm's marginal revenue is:

Accepted Answer

A) less than the price of the product. 
B) equal to the price of the product. 
C) greater than the price of the product. 
D) greater than, equal to, or less than the price of the product, depending on the particular circumstances. 
E) not determinable from the above information. 
A) less than the price of the product. 
B) equal to the price of the product. 
C) greater than the price of the product. 
D) greater than, equal to, or less than the price of the product, depending on the particular circumstances. 
E) not determinable from the above information.

Question 10

A rational firm will only seek to maximize total revenue if:

Accepted Answer

A) it faces a totally inelastic demand curve. 
B) its marginal cost curve falls and then rises. 
C) its average costs are falling. 
D) it is a perfect monopoly. 
E) its variable costs are zero. 
A) it faces a totally inelastic demand curve. 
B) its marginal cost curve falls and then rises. 
C) its average costs are falling. 
D) it is a perfect monopoly. 
E) its variable costs are zero.

Question 11

A monopoly finds that, at its present level of output and sales, marginal revenue equals $5 and marginal cost is $4.10.Which of the following will maximize profits?

Accepted Answer

A) Leave price and output unchanged. 
B) Increase price and leave output unchanged. 
C) Increase price and decrease output. 
D) Decrease price and increase output. 
E) Decrease price and leave output unchanged. 
A) Leave price and output unchanged. 
B) Increase price and leave output unchanged. 
C) Increase price and decrease output. 
D) Decrease price and increase output. 
E) Decrease price and leave output unchanged.

Question 12

Steel is an oligopolistic industry in the U.S.

Accepted Answer

A) True 
 B)False

Question 13

Product differentiation is not an example of a barrier to entry.

Accepted Answer

A) True 
 B)False

Question 14

Use the following to answer questions :
Figure 9-1  
-The difference in consumer surplus between a monopoly market and a perfectly competitive one illustrated by Figure 9-1 is represented by area:

Accepted Answer

A) P5P1A. 
B) P2P3CB. 
C) P3P4DC. 
D) Q1ABQ2. 
E) None of the above. 
A) P5P1A. 
B) P2P3CB. 
C) P3P4DC. 
D) Q1ABQ2. 
E) None of the above.

Question 15

In perfect competition, how is the market price related to marginal revenue for each supplying firm?

Accepted Answer

A) P is the same as MR at all output levels. 
B) P is less than MR at all (or most)output levels. 
C) P is greater than MR at all (or most)output levels. 
D) P is either greater than MR or less than MR at particular output levels, but never the same as MR. 
E) None of the above. 
A) P is the same as MR at all output levels. 
B) P is less than MR at all (or most)output levels. 
C) P is greater than MR at all (or most)output levels. 
D) P is either greater than MR or less than MR at particular output levels, but never the same as MR. 
E) None of the above.

Question 16

Personal computers are considered differentiated products.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following are barriers to entry into a market:

Accepted Answer

A) legal restrictions. 
B) high cost of entry. 
C) advertising cost. 
D) product differentiation. 
E) all of the above. 
A) legal restrictions. 
B) high cost of entry. 
C) advertising cost. 
D) product differentiation. 
E) all of the above.

Question 18

An oligopoly exists when:

Accepted Answer

A) a few sellers have complete control over the industry. 
B) a few sellers have no control over the industry. 
C) many sellers are in control of the industry. 
D) no one controls the industry. 
E) none of the above. 
A) a few sellers have complete control over the industry. 
B) a few sellers have no control over the industry. 
C) many sellers are in control of the industry. 
D) no one controls the industry. 
E) none of the above.

Question 19

The output level that maximizes a firm's profits also maximizes the marginal profit on the last unit produced.

Accepted Answer

A) True 
 B)False

Question 20

A natural monopoly features which of the following up to and including quantities that might be demanded at the lowest prices?

Accepted Answer

A) A declining average cost curve. 
B) An increasing marginal cost curve. 
C) A U shaped average cost curve. 
D) An increasing average cost curve. 
E) Both A and B. 
A) A declining average cost curve. 
B) An increasing marginal cost curve. 
C) A U shaped average cost curve. 
D) An increasing average cost curve. 
E) Both A and B.

Monopolistic competition is categorized as an industry with few sellers and no competition.

At a profit maximizing point:

Which of the following are major sources of imperfect competition?

Profits are maximized when the rate of change of total revenue equals the rate of change of total cost.

Oligopoly means exactly two sellers.

If marginal revenue is 0:

In the situation of imperfect competition, the relation between market price P and marginal revenue MR for each supplying firm is that:

MR becomes negative when:

If a firm's demand curve is horizontal, then the firm's marginal revenue is:

A rational firm will only seek to maximize total revenue if:

A monopoly finds that, at its present level of output and sales, marginal revenue equals $5 and marginal cost is $4.10.Which of the following will maximize profits?

Steel is an oligopolistic industry in the U.S.

Product differentiation is not an example of a barrier to entry.

Use the following to answer questions : Figure 9-1 -The difference in consumer surplus between a monopoly market and a perfectly competitive one illustrated by Figure 9-1 is represented by area:

In perfect competition, how is the market price related to marginal revenue for each supplying firm?

Personal computers are considered differentiated products.

Which of the following are barriers to entry into a market:

An oligopoly exists when:

The output level that maximizes a firm's profits also maximizes the marginal profit on the last unit produced.

A natural monopoly features which of the following up to and including quantities that might be demanded at the lowest prices?

The Central Concepts of Economics

The Modern Mixed Economy

Basic Elements of Supply and Demand Part

Supply and Demand: Elasticity and Applications

Demand and Consumer Behavior

Production and Business Organization

Analysis of Costs

Analysis of Perfectly Competitive Markets

Competition Among the Few

Economics of Uncertainty

The Labor Market

Land, Natural Resources, and the Environment

Capital, Interest, and Profits Part Four: Applications of Economic Principles

Government Taxation and Expenditure

Efficiency Vsequality: The Big Trade-Off

International Trade

Overview of Macroeconomics

Geometrical Analysis of Consumer Equilibrium

Production Cost Theory and Decisions of the Firm

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Exam 9: Imperfect Competition and Monopoly

Monopolistic competition is categorized as an industry with few sellers and no competition.

At a profit maximizing point:

Which of the following are major sources of imperfect competition?

Profits are maximized when the rate of change of total revenue equals the rate of change of total cost.

Oligopoly means exactly two sellers.

If marginal revenue is 0:

In the situation of imperfect competition, the relation between market price P and marginal revenue MR for each supplying firm is that:

MR becomes negative when:

If a firm's demand curve is horizontal, then the firm's marginal revenue is:

A rational firm will only seek to maximize total revenue if:

A monopoly finds that, at its present level of output and sales, marginal revenue equals $5 and marginal cost is $4.10.Which of the following will maximize profits?

Steel is an oligopolistic industry in the U.S.

Product differentiation is not an example of a barrier to entry.

Use the following to answer questions : Figure 9-1 -The difference in consumer surplus between a monopoly market and a perfectly competitive one illustrated by Figure 9-1 is represented by area:

In perfect competition, how is the market price related to marginal revenue for each supplying firm?

Personal computers are considered differentiated products.

Which of the following are barriers to entry into a market:

An oligopoly exists when:

The output level that maximizes a firm's profits also maximizes the marginal profit on the last unit produced.

A natural monopoly features which of the following up to and including quantities that might be demanded at the lowest prices?

The Central Concepts of Economics

The Modern Mixed Economy

Basic Elements of Supply and Demand Part

Supply and Demand: Elasticity and Applications

Demand and Consumer Behavior

Production and Business Organization

Analysis of Costs

Analysis of Perfectly Competitive Markets

Competition Among the Few

Economics of Uncertainty

The Labor Market

Land, Natural Resources, and the Environment

Capital, Interest, and Profits Part Four: Applications of Economic Principles

Government Taxation and Expenditure

Efficiency Vsequality: The Big Trade-Off

International Trade

Overview of Macroeconomics

Geometrical Analysis of Consumer Equilibrium

Production Cost Theory and Decisions of the Firm

Filters