Question 1

In perfect competition,a profit-maximizing business will expand until its marginal cost equals the market price.

Accepted Answer

A) True 
 B)False  True

Question 2

If two or more oligopolistic companies work together to keep their prices high and split the market between them,this is called

Accepted Answer

A)  occlusion. 
B)  collusion. 
C)  profit splitting. 
D)  market sharing. 
A)  occlusion. 
B)  collusion. 
C)  profit splitting. 
D)  market sharing. B

Question 3

A business can escape perfect competition by building a better,more innovative product.

Accepted Answer

A) True 
 B)False  True

Question 4

In perfect competition,all buyers and sellers are price takers.

Accepted Answer

A) True 
 B)False

Question 5

In perfect competition,P = MC means

Accepted Answer

A)  Profit equals marginal cost. 
B)  Price equals market cost. 
C)  Price equals marginal cost. 
D)  Profit equals market cost. 
A)  Profit equals marginal cost. 
B)  Price equals market cost. 
C)  Price equals marginal cost. 
D)  Profit equals market cost.

Question 6

A business with market power may

Accepted Answer

A)  be less innovative than businesses in perfect competition. 
B)  force employees to work harder and longer. 
C)  create new markets due to competitive forces. 
D)  sometimes use high profits to research new technologies. 
A)  be less innovative than businesses in perfect competition. 
B)  force employees to work harder and longer. 
C)  create new markets due to competitive forces. 
D)  sometimes use high profits to research new technologies.

Question 7

Monopolies generally _____________ technology and globalization.

Accepted Answer

A)  grow with 
B)  thrive with 
C)  are reduced in number by 
D)  are unaffected by 
A)  grow with 
B)  thrive with 
C)  are reduced in number by 
D)  are unaffected by

Question 8

An example of an oligopoly is the

Accepted Answer

A)  airline industry. 
B)  convenience store industry. 
C)  car wash industry. 
D)  photocopying services industry. 
A)  airline industry. 
B)  convenience store industry. 
C)  car wash industry. 
D)  photocopying services industry.

Question 9

AT&T is an example of a business that used market power to

Accepted Answer

A)  avoid government regulation. 
B)  invest in important research benefiting society. 
C)  minimize average costs of production. 
D)  squash the competition. 
A)  avoid government regulation. 
B)  invest in important research benefiting society. 
C)  minimize average costs of production. 
D)  squash the competition.

Question 10

Market power is

Accepted Answer

A)  the combination of price and product. 
B)  the balance between average and marginal product. 
C)  another term for equilibrium. 
D)  the ability to raise prices above the prices that would exist under perfect competition. 
A)  the combination of price and product. 
B)  the balance between average and marginal product. 
C)  another term for equilibrium. 
D)  the ability to raise prices above the prices that would exist under perfect competition.

Question 11

Businesses will generally shut down if they lose money for one or two years.

Accepted Answer

A) True 
 B)False

Question 12

When businesses have market power,they are able to charge a price higher than the price charged by a business in perfect competition.Thus the market power equilibrium on a diagram will be

Accepted Answer

A)  higher and to the right of the perfect competition equilibrium. 
B)  higher and to the left of the perfect competition equilibrium. 
C)  lower and to the right of the perfect competition equilibrium. 
D)  lower and to the left of the perfect competition equilibrium. 
A)  higher and to the right of the perfect competition equilibrium. 
B)  higher and to the left of the perfect competition equilibrium. 
C)  lower and to the right of the perfect competition equilibrium. 
D)  lower and to the left of the perfect competition equilibrium.

Question 13

Compared to businesses with market power,businesses in perfect competition will charge __________ prices and sell __________ output.

Accepted Answer

A)  higher; more 
B)  higher; less 
C)  lower; more 
D)  lower; less 
A)  higher; more 
B)  higher; less 
C)  lower; more 
D)  lower; less

Question 14

$$\begin{array}{l}
\begin{array} { c | c } 
\begin{array} { c } 
\text { Output } \
\text { (Bushels of } \
\text { Barley) }
\end{array} & \begin{array} { c } 
\text { Marginal } \
\text { Cost } \
\text { (Dollars) }
\end{array} \
\hline 10 \text { bushels } & \$ 0.30 \
20 \text { bushels } & \$ 0.60 \
30 \text { bushels } & \$ 0.90 \
40 \text { bushels } & \$ 1.20
\end{array}\
\text { Table } 5.1
\end{array}$$ Refer to Table 5.1,which gives Farmer McColl's marginal cost function for barley.If the current market price for barley is $1.00 per bushel,how much barley should Farmer McColl produce?

Accepted Answer

A)  20 bushels. 
B)  30 bushels. 
C)  Between 30 and 40 bushels. 
D)  More than 40 bushels. 
A)  20 bushels. 
B)  30 bushels. 
C)  Between 30 and 40 bushels. 
D)  More than 40 bushels.

Question 15

Monopolistic competition is characterized by

Accepted Answer

A)  a large number of sellers with a similar product. 
B)  one seller with a standard product. 
C)  a limited number of sellers with a variety of products. 
D)  one seller with a variety of products. 
A)  a large number of sellers with a similar product. 
B)  one seller with a standard product. 
C)  a limited number of sellers with a variety of products. 
D)  one seller with a variety of products.

Question 16

Why does perfect competition often lead to a market in which profits tend toward zero?

Accepted Answer

Perfect competition rewards the lowest-c

Question 17

Microsoft's two main products,Windows and Office,could be examples of

Accepted Answer

A)  perfect competition. 
B)  monopolistic competition. 
C)  a natural monopoly. 
D)  an oligopoly. 
A)  perfect competition. 
B)  monopolistic competition. 
C)  a natural monopoly. 
D)  an oligopoly.

Question 18

An oligopoly occurs when there

Accepted Answer

A)  are a large number of sellers in a market producing a variety of products. 
B)  are a few sellers in a market. 
C)  is only one seller in a market. 
D)  are a large number of sellers producing similar products. 
A)  are a large number of sellers in a market producing a variety of products. 
B)  are a few sellers in a market. 
C)  is only one seller in a market. 
D)  are a large number of sellers producing similar products.

Question 19

Marshall Field's and Sterns Department Stores are examples of low-cost producers in a perfect competition market.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is most likely to be sold in a perfectly competitive market?

Accepted Answer

A)  Law School Admission Test (LSAT) tutoring. 
B)  Wheat. 
C)  Fast food. 
D)  Automobiles. 
A)  Law School Admission Test (LSAT) tutoring. 
B)  Wheat. 
C)  Fast food. 
D)  Automobiles.

In perfect competition,a profit-maximizing business will expand until its marginal cost equals the market price.

If two or more oligopolistic companies work together to keep their prices high and split the market between them,this is called

A business can escape perfect competition by building a better,more innovative product.

In perfect competition,all buyers and sellers are price takers.

In perfect competition,P = MC means

A business with market power may

Monopolies generally _____________ technology and globalization.

An example of an oligopoly is the

AT&T is an example of a business that used market power to

Market power is

Businesses will generally shut down if they lose money for one or two years.

When businesses have market power,they are able to charge a price higher than the price charged by a business in perfect competition.Thus the market power equilibrium on a diagram will be

Compared to businesses with market power,businesses in perfect competition will charge prices and sell output.

Monopolistic competition is characterized by

Why does perfect competition often lead to a market in which profits tend toward zero?

Microsoft's two main products,Windows and Office,could be examples of

An oligopoly occurs when there

Marshall Field's and Sterns Department Stores are examples of low-cost producers in a perfect competition market.

Which of the following is most likely to be sold in a perfectly competitive market?

Introduction

Demand and Supply: The Basics of the Market Economy

Market Equilibrium and Shifts

How Businesses Work

Government and the Economy

The First Step Into Macroeconomics

Inflation

Growth

Business Cycles, unemployment and Inflation

Fiscal Policy

Monetary Policy

The Financial Markets

International Trade

Technological Change

Economics of the Labor Market

The Distribution of Income

Economics of Retirement and Healthcare

Economics of Energy, the Environment, and Global Climate Change Glossary

Filters

Exam 5: Competition and Market Power

In perfect competition,a profit-maximizing business will expand until its marginal cost equals the market price.

If two or more oligopolistic companies work together to keep their prices high and split the market between them,this is called

A business can escape perfect competition by building a better,more innovative product.

In perfect competition,all buyers and sellers are price takers.

In perfect competition,P = MC means

A business with market power may

Monopolies generally _____________ technology and globalization.

An example of an oligopoly is the

AT&T is an example of a business that used market power to

Market power is

Businesses will generally shut down if they lose money for one or two years.

When businesses have market power,they are able to charge a price higher than the price charged by a business in perfect competition.Thus the market power equilibrium on a diagram will be

Compared to businesses with market power,businesses in perfect competition will charge __________ prices and sell __________ output.

Monopolistic competition is characterized by

Why does perfect competition often lead to a market in which profits tend toward zero?

Microsoft's two main products,Windows and Office,could be examples of

An oligopoly occurs when there

Marshall Field's and Sterns Department Stores are examples of low-cost producers in a perfect competition market.

Which of the following is most likely to be sold in a perfectly competitive market?

Introduction

Demand and Supply: The Basics of the Market Economy

Market Equilibrium and Shifts

How Businesses Work

Government and the Economy

The First Step Into Macroeconomics

Inflation

Growth

Business Cycles, unemployment and Inflation

Fiscal Policy

Monetary Policy

The Financial Markets

International Trade

Technological Change

Economics of the Labor Market

The Distribution of Income

Economics of Retirement and Healthcare

Economics of Energy, the Environment, and Global Climate Change Glossary

Filters

Compared to businesses with market power,businesses in perfect competition will charge prices and sell output.