ECONOMICS

46.Marginal revenue is

a. Equal to price in monopolistic competition.

b. The change in total revenue associated with

increasing prices.

c. Greater than price in pure competition.

d. The change in total revenue associated with

producing and selling one more unit.

47.In microeconomics, the distinguishing

characteristic of the long run on the supply side is

that

a. Only supply factors determine price and output.

b. Only demand factors determine price and

output.

c. Firms are not allowed to enter or exit the

industry.

d. All inputs are variable.

48. What is the main factor that differentiates the

short-run cost function from the long run cost

function

a. Nothing, the two functions are identical.

b. The level of technology.

c. Changes in government subsidies.

d. The nature of the costs.

Items 49 and 50 are based on the following

information:

Karen Parker wants to establish an environmental

testing company that would specialize in

evaluating the quality of water found in rivers and

streams. However, Parker has discovered that she

needs either certification or approval from five

separate local and state agencies before she can

commence business. Also, the necessary

equipment to begin would cost several million

dollars. Nevertheless, Parker believes that if

she is able to obtain capital resources, she can

gain market share from the two major ompetitors.

49.The large capital outlay necessary for the

equipment is an example of a(n)

a. Entry barrier.

b. Minimum efficient scale.

c. Created barrier.

d. Production possibility boundary.

50.The market structure Karen Parker is

attempting to enter isbestdescribed as

a. A natural monopoly.

b. A cartel.

c. An oligopoly.

d. Monopolistic competition.

51.The distinguishing characteristic of oligopolistic

markets is

a. A single seller of a homogeneous product with

no close substitutes.

b. A single seller of a heterogeneous product with

no close substitutes.

c. Lack of entry and exit barriers in the industry.

d. Mutual interdependence of firm pricing and

output decisions.

52.Economic markets that are characterized by

monopolistic competition have all of the following

characteristics except

a. One seller of the product.

b. Economies or diseconomies of scale.

c. Advertising.

d. Heterogeneous products.

53. Which type of economic market structure is

characterized by a few large sellers of a product

or service, engaging in primarily nonprice

competition

a. Monopoly.

b. Oligopoly.

c. Perfect competition.

d. Monopolistic competition.

54. Which type of economic market structure is

composed of a large number of sellers, each

producing an identical product, and with no

significant barriers to entry and exit

a. Monopoly.

b. Oligopoly.

c. Perfect competition

d. Monopolistic competition.

55.A natural monopoly exists because

a. The firm owns natural resources.

b. The firms holds patents.

c. Economic and technical conditions permit only

one efficient supplier.

d. The government is the only supplier.

56.A market with many independent firms, low

barriers to entry, and product differentiation is

bestclassified as

a. A monopoly.

b. A natural monopoly.

c. Monopolistic competition.

d. An oligopoly.

57.Which of the following is nota key assumption

of perfect competition?

a. Firms sell a homogeneous product.

b. Customers are indifferent about which firm

they buy from.

c. The level of a firm's output is small relative to

the industry's total output.

d. Each firm can price its product above the

industry price.

58.An oligopolist faces a "kinked" demand curve.

This terminology indicates that

a. When an oligopolist lowers its price, the other

firms in the oligopoly will match the price

reduction, but if the oligopolist raises its price, the

other firms will ignore the price change.

b. An oligopolist faces a nonlinear demand for its

product, and price changes will have little effect

on demand for that product.

c. An oligopolist can sell its product at any price,

but after the "saturation point" another oligopolist

will lower its price and, therefore, shift the

demand curve to the left.

d. Consumers have no effect on the demand

curve, and an oligopolist can shape the curve to

optimize its own efficiency.

Aggregate Demand and Business Cycles

59. If consumer confidence falls, the impact upon

the economy is

a. A downturn.

b. An upturn.5

c. No change.

d. Consumer confidence does not have an impact

upon the economy.

60.If an increase in government purchases of

goods and services of P20 billion causes

equilibrium GDP to rise by P80 billion, and if total

taxes and investment are constant,

the marginal propensity to consume out of

disposable income is

a. 0.75

b. 0.25

c. 1.25

d. 4.00

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