Multiple-choice questions

1. A business' ability to affect the price it charges is known as

a) pricing power

b) monopoly power

c) oligopoly power

d) market power

e) None of the above

4.The short-run is defined as the time period in which

a) at least one input is fixed

b) the amount of labour is decided

c) the amount of capital is decided

d) at least one input is variable

e) None of the above

5.The law of diminishing marginal returns state that eventually

a) marginal cost falls

b) average variable cost falls

c) average product falls

d) marginal product falls

e) all of the above

6.Economic costs include

a) explicit cost

b) opportunity costs

c) implicit costs

d) accounting costs

e) all of the above

9.When the percentage change in inputs leads to a smaller percentage change in outputs,

that is referred to as

a) constant returns to scale

b) decreasing returns to scale

c) increasing returns to scale

d) marginal returns to scale

e) none of the above

10.Which of the following is true

a) accounting profit = economic profit +explicit costs

b) accounting profit = total revenue -implicit costs

c) economic profit = total revenue - (explicit costs - implicit costs)

d) economic profit =accounting profit - explicit costs

e) none of the above

13. In which market structures are short-run profits sustainable

a) monopolistic competition and perfect competition

b) perfect competition and oligopoly

c) monopoly and oligopoly

d) monopoly and monopolistic competition

e) none of the above

14. Natural monopolies exist when

a) marginal cost crosses the demand curve as the marginal cost curve is falling

b) average fixed costs crosses the demand curve as the average fixed cost curve is falling

c) average variable cost crosses the demand curve as the average variable cost curve is falling

d) average total cost crosses the demand curve as the average total cost curve is falling

e) none of the above

15.The overall effect of a cartel is to

a) limit output

b) reduce output and raise prices

c) act like a monopolistic competitor

d) enforce cooperation among its members

e) none of the above