Question 1

Which of the following is MOST likely to be competing in monopolistic competition?

Accepted Answer

A)  a soybean farmer 
B)  a steel producer 
C)  a restaurant 
D)  an oil producer 
E)  an electric utility company 
A)  a soybean farmer 
B)  a steel producer 
C)  a restaurant 
D)  an oil producer 
E)  an electric utility company

Question 2

If a firm's total revenue DECREASES when the price of its product is raised from $50 to $55, the demand for this product between these two prices is:

Accepted Answer

A)  elastic. 
B)  inelastic. 
C)  unitary elastic. 
D)  Cannot tell from what is given. 
A)  elastic. 
B)  inelastic. 
C)  unitary elastic. 
D)  Cannot tell from what is given.

Question 3

A firm in monopolistic competition faces no competition, so it can set its price at any level.

Accepted Answer

A) True 
 B)False

Question 4

The equilibrium point is that point at which the quantity demanded would not change if price were either lowered or raised.

Accepted Answer

A) True 
 B)False

Question 5

"Kinked" demand curves:

Accepted Answer

A)  are sometimes found in pure competition. 
B)  are inelastic above the "kink" and elastic below the "kink." 
C)  are typical of monopolistic competition. 
D)  tend to encourage a stable price in a product-market. 
E)  both C and D are true. 
A)  are sometimes found in pure competition. 
B)  are inelastic above the "kink" and elastic below the "kink." 
C)  are typical of monopolistic competition. 
D)  tend to encourage a stable price in a product-market. 
E)  both C and D are true.

Question 6

The availability of substitutes is one important factor affecting whether the demand for a product is elastic or inelastic.

Accepted Answer

A) True 
 B)False

Question 7

A FIRM faces an almost perfectly flat or horizontal demand curve in a(an) ______________ market situation.

Accepted Answer

A)  monopolistic competition 
B)  monopoly 
C)  pure competition 
D)  oligopoly 
E)  None of the above--demand curves are always down-sloping. 
A)  monopolistic competition 
B)  monopoly 
C)  pure competition 
D)  oligopoly 
E)  None of the above--demand curves are always down-sloping.

Question 8

Which of the following statements about oligopoly situations is TRUE?

Accepted Answer

A)  "Price cutters" face fairly elastic demand curves. 
B)  Cutting prices can lead to everyone losing sales revenue. 
C)  Many large sellers are competing with each other. 
D)  Essentially heterogeneous products are offered by many competitors. 
E)  None of the above is true. 
A)  "Price cutters" face fairly elastic demand curves. 
B)  Cutting prices can lead to everyone losing sales revenue. 
C)  Many large sellers are competing with each other. 
D)  Essentially heterogeneous products are offered by many competitors. 
E)  None of the above is true.

Question 9

Which of the following statements about elasticity of supply is TRUE?

Accepted Answer

A)  A product's elasticity of supply is calculated directly from its elasticity of demand. 
B)  In the long run, the supply curve for most products is highly inelastic. 
C)  If a product's demand curve is inelastic, then its supply curve also must be inelastic. 
D)  In the very short run (after the growing season has begun), the supply curve for most agricultural products is highly inelastic. 
E)  All of the above are true. 
A)  A product's elasticity of supply is calculated directly from its elasticity of demand. 
B)  In the long run, the supply curve for most products is highly inelastic. 
C)  If a product's demand curve is inelastic, then its supply curve also must be inelastic. 
D)  In the very short run (after the growing season has begun), the supply curve for most agricultural products is highly inelastic. 
E)  All of the above are true.

Question 10

If demand is inelastic, then total revenue would increase if price were raised.

Accepted Answer

A) True 
 B)False

Question 11

If total revenue remains the same when price is raised or lowered, then we have the special case of "unitary elasticity of demand."

Accepted Answer

A) True 
 B)False

Question 12

Most demand curves are upward-sloping--to the right.

Accepted Answer

A) True 
 B)False

Question 13

A "demand schedule:"

Accepted Answer

A)  shows how much a firm is willing to sell at a particular price. 
B)  is published regularly by the U.S. government and other governments. 
C)  is a table which shows the relationship between price and quantity demanded in a market. 
D)  is usually the same for all products. 
E)  Both B and C are true. 
A)  shows how much a firm is willing to sell at a particular price. 
B)  is published regularly by the U.S. government and other governments. 
C)  is a table which shows the relationship between price and quantity demanded in a market. 
D)  is usually the same for all products. 
E)  Both B and C are true.

Question 14

When a demand curve is INELASTIC:

Accepted Answer

A)  if price goes down, then total revenue stays the same. 
B)  if price goes up, then total revenue stays the same. 
C)  if price goes down, then total revenue goes down. 
D)  if price goes up, then total revenue goes down. 
A)  if price goes down, then total revenue stays the same. 
B)  if price goes up, then total revenue stays the same. 
C)  if price goes down, then total revenue goes down. 
D)  if price goes up, then total revenue goes down.

Question 15

In which of the following situations would the seller(s) be most likely to face a "kinked" demand curve?

Accepted Answer

A)  A medium-sized airport with one gift shop. 
B)  A small town--some distance from any others--with three "off brand" gasoline stations at the major intersection. 
C)  Men's clothing stores in downtown Las Vegas. 
D)  A small community with one electric power company. 
E)  A farmers' market with one farmer selling honey. 
A)  A medium-sized airport with one gift shop. 
B)  A small town--some distance from any others--with three "off brand" gasoline stations at the major intersection. 
C)  Men's clothing stores in downtown Las Vegas. 
D)  A small community with one electric power company. 
E)  A farmers' market with one farmer selling honey.

Question 16

Most supply curves slope upward, indicating that suppliers will be willing to offer greater quantities at higher prices.

Accepted Answer

A) True 
 B)False

Question 17

In oligopoly situations:

Accepted Answer

A)  prices tend to be rigid and similar--because of price-fixing agreements. 
B)  price wars may occur if a firm seeks to increase its market share by cutting price. 
C)  a firm faces an INELASTIC demand curve if it raises price. 
D)  the quantity offered changes a lot due to the lack of a fixed market price. 
E)  All of the above are true. 
A)  prices tend to be rigid and similar--because of price-fixing agreements. 
B)  price wars may occur if a firm seeks to increase its market share by cutting price. 
C)  a firm faces an INELASTIC demand curve if it raises price. 
D)  the quantity offered changes a lot due to the lack of a fixed market price. 
E)  All of the above are true.

Question 18

Rico Hardware is an industrial supply firm that sells standard screws, bolts, and other small hardware items to construction companies. Rico competes with many similar firms nationwide and sells its merchandise at "the going rate." Rico seems to be operating in an environment that is close to:

Accepted Answer

A)  pure competition. 
B)  monopoly. 
C)  monopolistic competition. 
D)  oligopoly. 
A)  pure competition. 
B)  monopoly. 
C)  monopolistic competition. 
D)  oligopoly.

Question 19

The elasticity of demand for a particular product depends upon:

Accepted Answer

A)  the availability of substitutes. 
B)  the producer's costs. 
C)  the availability of raw materials. 
D)  the quantity the producer is willing to supply. 
E)  All of the above. 
A)  the availability of substitutes. 
B)  the producer's costs. 
C)  the availability of raw materials. 
D)  the quantity the producer is willing to supply. 
E)  All of the above.

Question 20

The elasticity of the firm's demand curve, the number and size of competitors, and the uniqueness of the firm's marketing mix all affect the nature of the competitive situation.

Accepted Answer

A) True 
 B)False

Exam 22: Economics Fundamentals

Which of the following is MOST likely to be competing in monopolistic competition?

If a firm's total revenue DECREASES when the price of its product is raised from $50 to $55, the demand for this product between these two prices is:

A firm in monopolistic competition faces no competition, so it can set its price at any level.

The equilibrium point is that point at which the quantity demanded would not change if price were either lowered or raised.

"Kinked" demand curves:

The availability of substitutes is one important factor affecting whether the demand for a product is elastic or inelastic.

A FIRM faces an almost perfectly flat or horizontal demand curve in a(an) ______________ market situation.

Which of the following statements about oligopoly situations is TRUE?

Which of the following statements about elasticity of supply is TRUE?

If demand is inelastic, then total revenue would increase if price were raised.

If total revenue remains the same when price is raised or lowered, then we have the special case of "unitary elasticity of demand."

Most demand curves are upward-sloping--to the right.

A "demand schedule:"

When a demand curve is INELASTIC:

In which of the following situations would the seller(s) be most likely to face a "kinked" demand curve?

Most supply curves slope upward, indicating that suppliers will be willing to offer greater quantities at higher prices.

In oligopoly situations:

Rico Hardware is an industrial supply firm that sells standard screws, bolts, and other small hardware items to construction companies. Rico competes with many similar firms nationwide and sells its merchandise at "the going rate." Rico seems to be operating in an environment that is close to:

The elasticity of demand for a particular product depends upon:

The elasticity of the firm's demand curve, the number and size of competitors, and the uniqueness of the firm's marketing mix all affect the nature of the competitive situation.

Marketings Value to Consumers, Firms, and Society

Marketing Strategy Planning

Evaluating Opportunities in the Changing Marketing Environment

Focusing Marketing Strategy With Segmentation and Positioning

Demographic Dimensions of Global Consumer Markets

Final Consumers and Their Buying Behavior

Business and Organizational Customers and Their Buying Behavior

Improving Decisions With Marketing Information

Elements of Product Planning for Goods and Services

Product Management and New-Product Development

Place and Development of Channel Systems

Distribution Customer Service and Logistics

Retailers,wholesalers,and Their Strategy Planning

Promotion-Introduction to Integrated Marketing Communications

Personal Selling and Customer Service

Advertising, Publicity, and Sales Promotion

Pricing Objectives and Policies

Price Setting in the Business World

Implementing and Controlling Marketing Plans: Evolution and Revolution

Managing Marketings Link With Other Functional Areas

Ethical Marketing in a Consumer-Oriented World: Appraisal and Challenges

Marketing Arithmetic

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