1.Monopolists may be able to earn profit, even in the long run, as the result of

a. consumer ignorance.

b. an inelastic demand for its product.

c. product differentiation.

d. high barriers to entry.

2.Which of the following is true of monopoly?

a. Monopoly expands the options available to consumers.

b. Monopoly results in allocative inefficiency.

c. Profits and losses induce firms to enter and exit from industries.

d. Monopoly works well when governments regulate prices.

3.A market situation in which the average total costs of production continually decline with increased output until the entire market is supplied is called

a. a legal monopoly.

b. a natural monopoly.

c. diminishing returns to scale.

d. diminishing returns to a variable factor.

4.Which of the following market structures has firms that are price takers?

A. Perfect competition

B. Monopoly

C. Monopolistic competition

D. Oligopoly

5.Which of the following is not a characteristic of a perfectly competitive market?

A. Individual firms have no incentive to advertise because all consumers are aware that every firm's product is identical to every other firm's product.

B. It is easy for new firms to enter the market.

C. Firms in the market make large profits in the long run

D. There are many small firms in the market.