1.Monopolistically competitive firms typically make economic profits in the long run.

Select one:

True

False

2.Imperfect competition is characterized by firms competing on price.

Select one:

True

False

3.Which of the following characteristics most distinguishes an oligopoly industry from the other three types of market structures?

Select one:

a. Mutual interdependence.

b. Control of price by individual firms.

c. Difficult entry.

d. The possibility of differentiated products.

4.What term describes the average price of a country's exports compared with the price of its imports?

Select one:

a. The terms of trade.

b. The gains from trade.

c. The factor endowment.

d. The trade deficit.

5."Economics deals with using scarce productive resources efficiently in order to satisfy society's unlimited material wants." This statement is:

Select one:

a. positive, but incorrect.

b. positive and correct.

c. normative and correct.

d. normative, but incorrect.

6.The deadweight loss arising from the monopolization of a perfectly competitive industry is:

Select one:

a. the reduction in quantity supplied and the increase in product price.

b. the gain in producer's surplus minus the loss in consumer's surplus.

c. the transfer of consumer's surplus to the monopolist in the form of economic profit.

d. the net reduction in both consumers and producer's surplus which is not captured by anyone.

7.Monopolist, being a single seller in the market, can't make a loss.

Select one:

True

False

8.What happens if the supply of labour increases more than does the demand for labour?

Select one:

a. Wage rates will increase.

b. The effect on wage rates is indeterminate.

c. Wages rates will decrease.

d. The quantity of hours worked will decline.

9.Proponents of free trade suggest that all of the following, except one, are benefits of free trade. Which is the exception?

Select one:

a.Free trade leads to a greater variety of products.

b. Free trade increases competition.

c. Free trade leads to greater self-sufficiency.

d. Free trade leads to higher incomes.

e. Free trade leads to lower prices.

10.Marginal cost is the cost of purchasing an additional input

Select one:

True

False