1) In contestable markets, large oligopolistic firms, end up behaving like ?
a. perfectly competitive firms
b. a cartel
c. a monopoly
d. monopolistically competitive firms.
2) Form society’s point of view, society would be better off if a monopolist ?
a. produced less and charged a higher price
b. produced more and charged a higher price
c. produced more and charged a lower price
d. produced less and charged a lower price.
3) Suppose we know that a monopolist is maximizing its profits. Which of the following is a correct inference? the monopolist has?
a. maximized its total revenue
b. set price equal to its average cost
c. equated marginal revenue and marginal cost
d. maximized the difference between marginal revenue and marginal cost.
4) The slope of marginal revenue curve is ?
a. always equal to one.
b. half as steep as the demand curve
c. the same as the slope of the demand curve
d. twice as steep as the demand curve
5) Economic profits are ?
a. the difference between total revenue and total costs.
b. anything greater than the normal opportunity cost of investing
c. the opportunity costs of all inputs
d. a rate of profit that is just sufficient to keep owners and investors satisfied
6) A normal rate of profit ?
a. Is the rate of return on investments over the interest rate on risk-free government bonds.
b. is the rate that is just sufficient to keep owners or investors satisfied.
c. is the difference between total revenue and total costs
d. is zero in a perfectly competitive industry.
7) If firms can neither enter nor leaves an industry, the relevant time period is the ?
a. immediate run
b. intermediate run
c. long run
d. short run
8) The cosmetics industry is not considered by economists to be a good example of perfect competition because ?
a. there are many EU and government health controls on cosmetic products
b. there are a very large number of firms in the industry
c. firms spend a large amount of money on advertising
d. profit margins are very high for both producers and retailers
9) If a firm has some degree of market power, then output price ?
a. no longer influences the amount demand of the firm’s product
b. becomes a decision variable for the firm
c. is guaranteed to be above a firm’s average cost.
d. is determined by the actions of other firms in the industry
10) Market power is ?
a. a firm’s ability to monopolies a market completely.
b. a firm’s ability to raise price without losing all demand for its product
c. a firm’s ability to sell any amount of output it desires at the market-determined price.
d. a firm’s ability to charge any price it likes