1.What does the perfect competition assumption "free exit" mean?

A firm does not have to be bankrupt in order to leave the marketplace.

A firm can leave a monopoly without any constraint.

A firm can cease production without any constraint.

A firm does not have to pay severance to its employees who choose to leave.

2.Consider that firms that make newsprint paper sheets are leaving the industry due to economic losses. What will happen to the market supply curve?

It will shift to the left.

It will shift to the right.

It will become U shaped.

It will become horizontal.

3.If the price of a good were greater than its marginal cost (P>MC), consumers would be __________.

willing to consider substitute goods at lower prices than the cost of the good

willing to pay a higher price than it costs to produce another unit of the good

unwilling to pay as much as it costs to produce another unit of the good

willing to pay a lower price than it costs to produce another unit of the good

4.Which of the following is a FALLACY about monopolies?

Monopolies produce where demand is elastic.

Monopolies always earn profits.

Monopolies do not have supply curves.

Monopolies ultimately face competition.

5.All of the following are artificial barriers that a monopoly can set up to stop firms from entering its industry EXCEPT __________.

underpricing the competition

exclusively owning the industry's raw materials

purchasing the competition

wielding influence over people's opinions

6.Which of the following statements about monopolies is a FACT?

Monopolies have supply curves.

Monopolies ultimately face competition.

Monopolies charge the highest possible price.

Monopolies do not have to worry about demand.

7.Consider that there are five firms in one industry. Their market shares are 40%, 30%, 20%, 5%, and 5%, respectively. What would the Herfindahl Index for these firms be?

95%

2,950

100%

2,925

8.The Nike "swoosh" logo is recognizable all over the world because, on TV and in photos, we see athletes wearing clothes that display this familiar icon. What is the name for such a marketing advantage?

name brand competition

name brand consumerism

name brand capital

name brand fashion

9.To what kind of market structure do Kellogg, Post, Quaker, and General Mills belong?

perfect competition

oligopoly

monopolistic competition

monopoly

10.Considering a particular industry's firms, what is the first step in calculating their concentration ratio?

Each firm's percentage of total industry sales is listed.

Each firm's percentage of total industry size is listed.

They are ranked in order of increasing size.

They are ranked in order of decreasing size.