_____1.If a firm sells its output on a market that is characterized by many sellers and buyers, a homogeneous product, unlimited long-run resource mobility, and perfect knowledge, then the firm is a

A. a monopolist.C. a perfect competitor.

B. an oligopolist.D. a monopolistic competitor.

_____2.A monopoly is a market structure in which

A. a single firm exercises its power over smaller firms

B. a single firm produces a product with a wide variety of very close substitutes

C. each firm is run by a small proprietor

D. there is only one firm producing a product that has no close substitutes

_____3.In perfect competition, a firm's marginal revenue curve is

A. downward sloping. C. upward sloping.

B. horizontal. D. vertical.

_____4.It is a type of imperfectly competitive market characterized by having many firms selling products that are similar but not identical.

A. Perfect CompetitionC. Monopoly

B. OligopolyD. Monopolistic Competition

_____5.A monopolist has a downward-sloping demand curve because

A. it has an inelastic demand

B. typically, it sells only to a few large buyers

C. its demand curve is the same as the industry's demand curve

D. consumers prefer that product

_____6.An individual producer cannot influence the market price under

A. Perfect CompetitionC. Monopoly

B. OligopolyD. Monopolistic Competition

_____7.The monopolistic competition model is one in which there is/are

A.a monopoly.C. economies of scale.

B.Perfect competition.D. government intervention in the market.

_____8.It is a type of market structure wherein making decisions, each firm must weigh its competitor's reactions because there could be a sequence of actions and reactions.

A.Perfect CompetitionC. Monopoly

B.OligopolyD. Monopolistic Competition

_____9.A perfectly competitive firm breaks even at the level of output where

A.P > ATC. B.P < ATC. C. P = ATC. D.P = MC.

_____10. To find out whether it should temporarily shut down its operations, a profit-maximizing firm compares its

A. P to ACB. AC to AVCC. P to MCD.P to AVC

_____11. Which of the following statement is True?

A.A monopolist can charge any price.

B.A monopolist will not charge the highest price possible.

C.A monopolist will earn guaranteed economic profits.

D.A monopolist when established will have absolute power.

_____12. Which of the following refers to a situation where each firm chooses the best strategy, given the strategies chosen by other firms.

A.CollusionC. Dominant Strategy

B.Prisoner's DilemmaD. Nash Equilibrium

_____13. All monopolies exist because of

A.firms' desire to maximize profits C. failure of antitrust laws

B.barriers to entry D. natural selection

_____14. Game models are classified by the

A.size of the payoff.C. sum of all payoffs.

B.nature of strategies employed.D. all of the above

_____15. Barriers to entry are highest in which two types of markets?

A. differentiated competition and oligopoly

B. perfect competition and differentiated competition

C. monopoly and differentiated competition

D. oligopoly and monopoly

_____16. To maximize total sales revenue (TR) the firm should produce where:

A. MR = MCB. MR = OC. MR = PD. P = AVC

_____17. Assume Dell Computer Company operates in a perfectly competitive market producing 5,000 computers per day. At this output level, price exceeds this firm's marginal and average variable costs. To maximize profits, Dell should

A.make no adjustments as they are already maximizing their profits.

B.stop producing since it is earning a loss.

C.increase their output.

D.decrease their output.

_____18. Comparative advantage is a result of the differences in countries:

A.Economies of large-scale production.

B.Relative abundance of various resources.

C.Relative costs of labor.

D.Research and development expenditures.

_____19. The _______ between two currencies specifies how much one currency is worth in terms of the other

A.exchange rates C. exchange interest

B.exchange moneyD. exchange currency

_____20. A country should produce only those products in which it has _________ advantage or can produce using fewer resources than another country

A.CompetitiveB. Comparative C. AbsoluteD. Cost

_____21. The trade balance of a country is represented by:

A.the difference between imports and exports. C. the total imports and exports.

B.the difference between income and expenditure. D. the report between imports and exports.

_____22. If the price of good increases 10% in the UK, and the Japanese currency simultaneously appreciates 10% against the UK currency, then the price of the good ______ for someone in Japan.

A.remains constantB. decreasesC. increasesD. zero

_____23. An example of a Mexican merchandise export would be a shirt made ______ and sold _______.

A. in Mexico by either a Mexican or a U.S. company; outside Mexico

B. in the United States by a Mexican company; in the United States

C. in Mexico by either a Mexican or a U.S. company; in Mexico

D. in the United States by a Mexican company; outside the United States

_____24. Which of the following is NOT a shifter of foreign exchange?

A.TastesB. Inflation rateC. Interest rateD. Income level

_____25. If with one hour of labor time nation A can produce either 3X or 3Y while nation B can produce either 1X or 3Y (and labor is the only input):

A. nation A has a comparative disadvantage in commodity X.

B. nation B has a comparative disadvantage in commodity Y.

C. nation A has a comparative advantage in commodity X.

D. nation A has a comparative advantage in neither commodity.

Answer the next five questions (26 to 30) based on the production table below.

Country: Output per Labor Hour

A B

Product X 3 9

Product Y 4 2

_____26. Country A has an absolute advantage in

A. Product XB. Product YC. Neither X nor YD. Both X and Y

_____27. Country B has an absolute advantage in

A. Product XB. Product YC. Neither X nor YD. Both X and Y

_____28. If the countries were to trade along the lines of absolute advantage:

A. A would export X to BC. B would import Y from A

B. Neither country would want to tradeD. Both A and C

_____29. If countries were to trade along the lines of comparative advantage:

A. A would export X to BC. A would export Y to B

B. Neither country would want to tradeD. Both A and C

_____30. The relative price of X, in terms of Y, in A would be:

A. 1/2 Y B. 3/4 YC. 1 Y D. 4/3 Y