Question 1

A standardized or homogeneous product is one where the customer views the product as identical. For this type of customer the only thing that will matter will be

the customer service

the quality

the most convenience

the lowest price

Question 2

The reason we prefer competition for a society is because

smaller firms have larger economies of scale

in the long run more competition creates more jobs

its long run result is efficiency

smaller firms have less power politically

Question 3

Easy entry is

found in monopoly markets and means that it is relatively easy to start a new business

is found in competitive markets and means that the economies of scale are very large

found in competitive markets and means it is relatively easy to start a new business in competitive industries

found in monopoly markets and it means it is only easy for 1 firm to enter

Question 4

Comparing monopoly versus competitive industry, in most cases, monopoly will

produce less, charge a higher price to customers, and be less efficient

produce less, charge a higher price to customers, and be more efficient

produce more, charge a lower price to customers, and be more efficient

produce more, charge a higher price to customers, and be more efficient

Question 5

Monopoly is created by

demand increasing

barriers

easy entry

diminishing returns

Question 6

Your textbook argues that monopoly may not always be harmful to society. Sometimes it may be beneficial. An example where society may benefit from a monopoly

when it is a legal barrier like patents that encourage increased innovation

when it causes prices to increase

when it increases deadweight losses

when it lowers efficiency

Question 7

A monopoly, unlike competition, has ability to choose

the politicians in charge of regulating the industry

the cost of resources

the demand in the industry

the price it sells at

Question 8

A perfectly competitive industry has the following characteristics

barriers to entry, lots of firms, large and small firms, identical product

easy entry, lots of firms, small firms, identical product

barriers to entry, one firm, perfectly differentiated/unique product

easy entry, lots of firms, a differentiated product

Question 9

A legal barrier of monopoly refers to

a law that forbids monopoly

a barrier to monopoly practices

a barrier to monopoly entry into an industry

A law which makes entry of new businesses difficult limiting competition

Question 10

The effect of a barrier to entry could be

economic profits are guaranteed

high prices cannot be bid down by new competition

externality costs will be incorporated into the price of the product

costs of production cannot be lowered through increased investment