Choose the letter of the correct answer.

_________ 1. A monopolist is in equilibrium if ___________.

a.his profits are in excess of normal

b.his price causes sales of the quality at which MR = MC.

c.consumers are satisfied with his price

d.he sells the amount at which MR crosses the quantity axis

_________ 2. One oligopolist is in equilibrium if _________.

a.it does not exist

b.it may be altered depending on the reactions of his rivals

c.it represents the demand for the whole industry

d.it may be altered since conditions constantly change

_________ 3. Freedom of entry in monopolistic competition is _________.

a.a limiting force in excessive profits

b.significantly inhibited because of complex technical requirements

c.denied by collusion

d.expensive because of fixed cost

_________ 4. Which is a characteristic of an oligopoly?

a.an open market for the best interests of consumers

b.a market situation with no competition

c.a market situation with only one buyer

d.a market situation with only a few competing sellers

_________ 5.In the kinked demand curve model of simple oligopoly, the price established in the

industry will not fall because if one firm attempts to _________.

a.increase price, other firms will follow

b.decrease price, other firms will not follow

c.decrease price, other firms will follow to start a price war

d.decrease price, other firms will increase price

_________ 6. Nonprice competition often takes the form of ____________.

a.homogeneous products

b.price wars

c.product differentiation

d.collusion

_________ 7. The marginal revenue product is equal to ___________.

a.a summation of the variable and fixed cost

b.the marginal product times the price of the output

c.price times marginal cost

d.the interaction of demand and supply

_________ 8. The marginal revenue product declines because of ____________.

a.increasing returns to scale

b.diminishing returns to scale

c.the falling price of the input

d.interaction of marginal utility and marginal cost

_________ 9.A monopoly finds that its present level of output and sales revenue are equal to P5

and marginal cost is P4.10. Which of the following maximizes profits?

a.leave price and leave output unchanged

b.increase price and leave output unchanged

c.increase price and decrease output

d.increase price and increase output

________ 10. Price leadership in oligopoly means __________.

a.one firm sets new prices

b.one firm alters price

c.all firms collude

d.small firms make price changes