Multiple Choice 1.Market power is defined as the ability of a single economic actor or a small group of actors to have a substantial influence on market prices. Market structures with large market powers (i.e. monopolies, oligopolies, monopolistic competition) are also market failures.

A. both statements are true B. both statements are false C. statement 1 is true, statement 2 is false D. statement 1 is false, statement 2 is true

2.A market economy is defined as an economy that allocates resources through the centralized decisions of many firms and households as they interact in markets for goods and services. Markets, on the other hand, are defined as an arena or space for commercial dealings. A. both statements are true B. both statements are false C. statement 1 is true, statement 2 is false D. statement 1 is false, statement 2 is true

3.A monopoly is a firm that is the sole seller of a product without close substitutes. They can charge higher prices for a good they exclusively sell (P > MC=MR) and they can charge way too high because that's how they realize their target profits. A. both statements are true B. both statements are false C. statement 1 is true, statement 2 is false D. statement 1 is false, statement 2 is true

4.Governments can create monopolies. The costs of production make a single producer more efficient than a large number of producers and we call this a natural monopoly. A. both statements are true B. both statements are false C. statement 1 is true, statement 2 is false D. statement 1 is false, statement 2 is true

5.In a monopolistic competition, the process of entry and exit continues until firms in the market are making some economic profits. Once this equilibrium is reached, there is no incentive for new firms to enter, and there is also no incentive for existing firms to exit. A. both statements are true B. both statements are false C. statement 1 is true, statement 2 is false D. statement 1 is false, statement 2 is true

6.There are only negative externalities to monopolistic competition. It creates product monopoly, coming from its name monopolistic competition, and business stealing. A. both statements are true B. both statements are false C. statement 1 is true, statement 2 is false D. statement 1 is false, statement 2 is true

7.Price discrimination is the business practice of selling the same good at different prices to different customers. It is a rational strategy for monopoly firms if they want to maximize their profit as they introduce the same product at varying prices. A. both statements are true B. both statements are false C. statement 1 is true, statement 2 is false D. statement 1 is false, statement 2 is true

8.Advertising is the business practice of convincing the public to buy a certain company's product. Defenders of ads argue that it helps consumers make informed choices & enhances the ability of markets to allocate efficiently. A. both statements are true B. both statements are false C. statement 1 is true, statement 2 is false D. statement 1 is false, statement 2 is true

9.Oligopoly is a market structure in which only have exactly two sellers that offer similar or identical products. Because of the lure of higher profits, oligopolists are often pursuing self-interest and are acting like monopolists. A. both statements are true B. both statements are false C. statement 1 is true, statement 2 is false D. statement 1 is false, statement 2 is true

10.If oligopolists agree to work together they form a cartel or a group of firms acting in unison. They then come into an agreement about quantities to produce and/or prices to charge which is called collaboration. A. both statements are true B. both statements are false C. statement 1 is true, statement 2 is false D. statement 1 is false, statement 2 is true Identification 11.The study of how people behave in strategic situations. 12.A particular game between two captured prisoners that illustrates why cooperation is difficult to maintain even when it is mutually beneficial 13.Decisions of oligopolists are weighed by these two effects (1) 14.Decisions of oligopolists are weighed by these two effects (1) 15.The welfare cost for a monopoly is similar to which government intervention?

Multiple Choice 1.The second statement is false. Perfectly competitive markets require symmetrical information. A. both statements are true B. both statements are false C. statement 1 is true, statement 2 is false D. statement 1 is false, statement 2 is true

2.Positive economics does not rely on value judgments as it confirms economic theories and policies through facts. The effectiveness of economic policies should only be assessed using positive economics. A. both statements are true B. both statements are false C. statement 1 is true, statement 2 is false D. statement 1 is false, statement 2 is true

3.Nationwide unemployment, underemployment, and employment rates are under the domains of macroeconomics. Understanding the capacity of an individual rice miller's capacity to supply rice to the market is under microeconomics. A. both statements are true B. both statements are false C. statement 1 is true, statement 2 is false D. statement 1 is false, statement 2 is true

4.Markets that are monopolistically competitive have both positive and negative externalities. Externalities are defined as either adverse or beneficial impacts of economic transactions to an external party or a bystander. A. both statements are true B. both statements are false C. statement 1 is true, statement 2 is false D. statement 1 is false, statement 2 is true

5.Moral hazards and adverse selections are examples of information asymmetry. Perfect information is similar to good information. A. both statements are true B. both statements are false C. statement 1 is true, statement 2 is false D. statement 1 is false, statement 2 is true

Multiple Choice Identify the type of market failure in the provided case:

6.A large number of businesses in Makati are owned by the Ayalas and Zobels. A. Externalities B. Public goods C. Information asymmetry D. Failure of competition E. Incomplete markets

7.Facemasks with oversized dimensions sold in Shopee for half the original price. A. Externalities B. Public goods C. Information asymmetry D. Failure of competition E. Incomplete markets

8.Increasing numbers of young Filipinos who are obese because of poorly-labelled fast & processed foods. A. Externalities B. Public goods C. Information asymmetry D. Failure of competition E. Incomplete markets

9.Priority vaccinations for the elderly and immuno-compromised help reduce the spread of the coronavirus. A. Externalities B. Public goods C. Information asymmetry D. Failure of competition E. Incomplete markets

10.A good, transparent, accountable and responsible Filipino government. A. Externalities B. Public goods C. Information asymmetry D. Failure of competition E. Incomplete markets