Question
1)If a perfectly competitive industry is monopolized, consumer surplus: A. becomes equal to producer surplus. B. can be expected to decrease. C. usually remains constant.
1)If a perfectly competitive industry is monopolized, consumer surplus: A. becomes equal to producer surplus. B. can be expected to decrease. C. usually remains constant. D. becomes double of producer surplus.
2)If a monopolistically competitive firm is in long-run equilibrium and average cost equals $150, then the market price must be $150. True or False
3)The term "monopolistic competition": A. denotes an industry characterized by one seller of many differentiated products. B. denotes an industry characterized by many sellers of differentiated products. C. is used to describe perfect competition that has strong entry barriers. D. denotes an industry characterized by many sellers of homogeneous products.
4)A monopolistic competitor's demand curve is A. less elastic than a monopolist's or oligopolist's but more elastic than a perfect competitor's demand curve. B. as elastic as an oligopolist's demand curve. C. more elastic than a monopolist's or oligopolist's but less elastic than a perfect competitor's demand curve. D. perfectly elastic.
5)Monopolistic competition is different from perfect competition because monopolistic competitors: A. are price takers. B. produce differentiated products C. have high barriers to entry. D. produce homogeneous products.
6)Monopolistically competitive firms: A. may earn short-run economic profit, but long-run economic profit is typically zero. B. may earn economic profit both in the short run and in the long run. C. are guaranteed to earn short-run economic profit. D. earn zero economic profit both in the short run and in the long run.
7)Which of the following characteristics distinguishes oligopoly from other market structures? A. Interdependence among firms in the industry B. The production of homogeneous products C. A downward-sloping demand curve D. A horizontal demand curve
8)Interdependent decision making on price, quality, or advertising is a characteristic of: A. monopolistic competition. B. perfect competition. C. oligopolies. D. monopolies.
9)During certain periods in the past few decades, if one of the three major breakfast cereal producers in the United States announced a price increase, the other two announced a similar price increase. This implies that the market for breakfast cereals is a good example of _____. A. the price-leadership model of oligopoly B. a cartel. C. a pure monopoly. D. monopolistic competition
10)The principal advantage of the game theory approach is that it allows to: A. better understand decision making when one person's choices affect another person's choices. B. take all possible information into consideration before developing a theory. C. better understand why firms in a competitive industry avoid games. D. better understand how the government should regulate a natural monopoly.
11)Differentiate between perfect competition and an oligopoly? A. Firms in an oligopoly face horizontal demand curves, whereas firms in a perfectly competitive market face downward-sloping demand curves. B. Firms in an oligopoly charge a lower price than firms in a perfectly competitive market. C. Firms in an oligopoly earn economic profit in the long run, whereas firms in perfectly competitive market earn zero economic profit in the long run. D. An oligopoly is characterized with low barriers to entry, whereas a perfectly competitive market is characterized with high barriers to entry..
Part B.
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