1) In contestable markets large oligopolistic firms end up behaving like ?
a. monopolistically competitive firms
b. a cartel
c. perfectly competitive firms
d. a monopoly.
2) A market is defined as perfectly contestable if ?
a. entry to it and exit from it are both costless
b. entry to it and exit from it are both costly
c. entry to it costless, but exit from it is costless
d. entry to it is costly, but exit from it is costless
3) The kinked demand curve model of oligopoly assumes the elasticity of demand ?
a. in response to a price increase is less elastic than the elasticity of demand in response to a price decrease
b. is perfectly elastic if price increases and perfectly inelastic if price decreases
c. is constant regardless of whether price increase of decrease.
d. in response to a price increases is more elastic than the elasticity of demand in response to a price decrease
4) In which of the following circumstances would a cartel be most likely to work ?
a. The market for copper, where there are very few producers and the product is standardized.
b. The fast-food market where there are a large number of producers but the demand for fast food is inelastic
c. The coffee market where the product is standardized and there are a large number of coffee growers.
d. The automobile industry, where there are few producers but there is great product differentiation.
5) A price- and quantity-fixing agreement is known as?
a. price leadership
b. price concentration
d. game theory,
6) An industry that has a relatively small number of firms that dominate the market is called ?
a. a colluding industry
b. a merged industry
c. a concentrated industry
d. a natural monopoly
7) A form of industry structure characterized by a few firms, each large enough to influence market price is ?
a. perfect competition
b. monopolistic competition
8) Which of the following statements best describes the outcome under monopolistic competition ?
a. It is efficient because the right amount of output is produced, but not efficient in that the output produced is produced at a cost above minimum aver
b. It is efficient because entry is free and economic profits are eliminated in the long run.
c. It is not efficient because too little output is produced and the output that is produced is produced at a cost above minimum average total cost
d. It is not efficient because too little output is produced but is efficient in that the output produced is produced at minimum average total cost.
9) A firm in a monopolistically competitive industry ?
a. sells a fixed amount of output regardless of price.
b. must raise price to sell more output
c. can sell an infinite amount of output at the market-determined price
d. must lower price to sell more output.
10) In monopolistic competition firms achieve some degree of market power ?
a. by producing differentiated products
b. because of barriers to exit from the industry
c. by virtue of size alone
d. because of barriers to entry into the industry