Unit Quiz Market Structure – Which of the following
Subject: Economics   / General Economics
Question
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Unit Quiz: Market Structure
Directions
•Mark your answers to the multiple-choice questions on the answer sheet at the end of the multiple-choice section. Use a black or blue pen.
•Remember to complete the submission information and write your name on every page you turn in.
Multiple-Choice Questions
1.Which of the following is not a characteristic of perfect competition?
A.No barriers to entry
B.Normal profits
C.Positive economic profits
D.Identical products
E.Perfect information
2.If the market demand curve for a good in a perfectly competitive market is inelastic, we can conclude:
A.the demand curve faced by an individual firm in the market is inelastic.
B.the market supply curve is elastic.
C.the market supply curve is inelastic.
D.the demand curve faced by an individual firm is completely elastic.
E.the supply curve of the individual firm is completely inelastic.
3.For a price taker, the marginal revenue is:
A.the price.
B.less than the price.
C.greater than the price.
D.sometimes more and sometimes less than the price.
E.independent of the price.
4.In the short run, a perfectly competitive firm will shut down if price is less than:
A.average total cost.
B.average variable cost.
C.marginal cost.
D.total cost.
E.average-fixed cost.
5.For a perfectly competitive industry in the long run, which of the following is false?
A.Price equals average total cost.
B.Average total cost equals marginal cost.
C.Average fixed cost equals price.
D.Average total cost is at its minimum.
E.There is allocative efficiency.
6.For a perfectly competitive industry or firm, which of the following is always correct?
A.In the short run, the supply curve is the entire marginal-cost curve.
B.In the long run, a constant cost industry has a downward sloping supply curve.
C.In the short run, the supply curve is the marginal-cost curve below the average variable cost.
D.In the long run, a decreasing cost industry has an upward sloping supply curve.
E.None of these
7.Which of the following is a barrier to entry?
A.Large start-up costs
B.Economies of scale
C.Exclusive resource ownership
D.Government-granted exclusive rights
E.All of the above
8.For a one-price monopolist, the marginal revenue curve is always:
A.less than the average-revenue curve.
B.equal to the average-revenue curve.
C.positive.
D.negative.
E.equal to the demand curve.
9.A monopolist who spends money to lobby senators for favorable trade restrictions is:
A.breaking the law.
B.engaging in rent seeking.
C.engaging in arbitrage.
D.failing to maximize profits.
E.in a contestable market.
10.When a monopolist produces where marginal revenue equals marginal cost, it chooses not to produce some items that the consumer values more than the marginal cost of production. This is called:
A.allocative inefficiency.
B.deadweight loss.
C.welfare loss.
D.All of these
E.None of these
11.For a firm to successfully engage in price discrimination, it must:
A.be the only seller in the market.
B.make consumers adore the pricing scheme.
C.find it easy to tell consumers apart.
D.encourage arbitrage.
E.engage in rent seeking.
12.A natural monopoly:
A.is rarely regulated by the government.
B.will earn positive economic profits by producing where demand equals marginal cost in the long run.
C.is an industry with decreasing returns to scale.
D.has decreasing average total cost over its whole range of production.
E.will earn positive economic profits by producing where demand equals average total cost in the long run.
13.Which of the following is true?
A.All consumers prefer price discrimination to one-price pricing.
B.Some consumers prefer price discrimination to one-price pricing.
C.No consumers prefer price discrimination to one-price pricing.
D.A firm will earn the same profits with price discrimination as with one-price pricing.
E.A firm will earn lower profits with price discrimination than with one-price pricing.
14.Which of the following is not a characteristic of monopolistic competition?
A.Homogeneous products
B.Non-price competition
C.Many firms in the market
D.No barriers to entry
E.Price searching
15.Product differentiation by a particular firm:
A.increases the elasticity of demand in the market.
B.increases the elasticity of the demand faced by that firm.
C.decreases the elasticity of demand in the market.
D.decreases the elasticity of the demand faced by that firm.
E.decreases the demand faced by that firm.
16.A monopolistic competitor produces:
A.without allocative inefficiency.
B.where marginal revenue equals marginal cost.
C.where average total cost is at its minimum.
D.where average total cost equals marginal cost.
E.without productive inefficiency.
17.In the long run, a monopolistic competitor:
A.earns zero economic profit.
B.produces at a price where demand is tangent to average total cost.
C.produces at a quantity where marginal revenue equals marginal cost.
D.All of these
E.None of these
18.Which of the following is not true about oligopoly industries?
A.The firms may produce homogenous products.
B.The firms may produce differentiated products.
C.There are few firms.
D.There may be barriers to entry.
E.Each firm acts independent of the other firms.
19.Strategic behavior means:
A.warlike behavior.
B.advertising.
C.acting independent of one’s rivals.
D.acting based on the actual and predicted responses of one’s rivals.
E.planning for the future without reference to the past.
20.Oligopolies often create:
A.productive efficiency.
B.allocative efficiency.
C.welfare loss.
D.None of these
E.All of these
21.Which of the following is not a reason that cartels are difficult to create and maintain?
A.Cartels are illegal in the United States.
B.There’s a huge incentive for the colluding firms to cheat.
C.Collusion is illegal in the United States.
D.Cheating is difficult to detect.
E.None of these
22.According to the kinked demand curve model of oligopolies, the firm believes:
A.their rivals will match their price increases, but not their price cuts.
B.their rivals will match all their price changes.
C.their rivals will match their price cuts, but not their price increases.
D.their rivals will not match their price changes.
E.nothing about their rivals response to price changes.
23.Which of the following is not a standard oligopoly model?
A.Cartels and collusion
B.Game theory and tacit collusion
C.Cost-plus pricing
D.Average-cost pricing
E.Price leadership
24.Which of the following statements about the dominant firm model is incorrect?
A.The dominant firm is usually the largest firm in the industry.
B.It is a cost-plus model.
C.It is a price-leadership model.
D.The dominant firm sets the market price.
E.The dominant firm is a price searcher.
25.If a fruit juice company merged with a large apple farming company, it would be:
A.a conglomerate merger.
B.a vertical merger.
C.a horizontal merger.
D.None of these
E.All of these
26.The concentration ratio of an oligopoly is typically:
A.greater than 10%.
B.less than 20%.
C.greater than 30%.
D.less than 40%.
E.greater than 50%.
27.Which of the following industries create allocative inefficiency?
A.Monopolistic competition, oligopoly, and monopoly
B.Monopolistic competition, oligopoly, and perfect competition
C.Monopolistic competition, oligopoly, perfect competition, and monopoly
D.Monopolistic competition and oligopoly
E.Oligopoly and monopoly
28.Which of the following industries choose the quantity where marginal revenue equals marginal cost to maximize profits?
A.Monopolistic competition, oligopoly, and monopoly
B.Monopolistic competition, oligopoly, and perfect competition
C.Monopolistic competition, oligopoly, perfect competition, and monopoly
D.Monopolistic competition and oligopoly
E.Oligopoly and monopoly
29.Anti-trust legislation:
A.aims to control firms that restrain trade in ways that hurt consumers.
B.aims to control firms that violate the public trust.
C.aims to control monopolies.
D.is limited to corporations.
E.includes the Charmin Act of 1980.
30.Current anti-trust legislation limits:
A.only vertical mergers.
B.only horizontal mergers.
C.both vertical and horizontal mergers.
D.only monopolies.
E.both monopolies and monopolistic competitors.
