QUESTION 11

1. In a competitive industry:

	A	all firms will earn above-normal profits if demand is high.
	B	the opportunity cost of production is zero.
	C	profits are only attainable in the long run to those firms able to innovate at the lowest cost.
	D	resources move across firms in such a way that the total value of production is maximized.

1 points

QUESTION 12

1. Which one would NOT be considered a network good?

	A	cell phones
	B	quiet study rooms
	C	messaging apps on smartphones
	D	online player-versus-player games

1 points

QUESTION 13

1. Entrepreneurs have the incentive to:

	A	follow the orders of the central planner.
	B	move resources into those industries with the lowest marginal costs.
	C	minimize marginal costs.
	D	move resources out of low-value industries and into high-value industries.

1 points

QUESTION 14

1. A perfectly competitive firm with lower marginal costs will produce _____ a competitor with higher marginal costs.

	A	more units than
	B	fewer units than
	C	the same number of units as
	D	higher-quality units than

1 points

QUESTION 15

1. Firms in a perfectly competitive industry maximize profits by:

	A	eliminating the competition.
	B	producing a higher-quality good and setting a price higher than the competition.
	C	setting a price equal to the market price.
	D	setting a price less than the market price and undercutting the competition.

1 points

QUESTION 16

1. Which one would NOT be considered a network good?

	A	Match, the online dating service
	B	Microsoft Word
	C	Fortnite, the online video game
	D	McDonald's hamburgers

1 points

QUESTION 17

1. In a competitive industry, if the marginal cost of factory 1 is higher than that of factory 2, in the short run:

	A	both factories are producing too much.
	B	either factory 1 is producing too much or factory 2 is producing too little, or both.
	C	either factory 1 is producing too little or factory 2 is producing too much, or both.
	D	both factories are producing too little.

1 points

QUESTION 18

1. A competitive firm maximizes profit when marginal cost:

	A	equals the price.
	B	is less than the price.
	C	is greater than the price.
	D	is minimized.

1 points

QUESTION 19

1. In 2011, Google introduced its social networking site, Google+. Even though Google+ was cleaner and more straightforward than its nearest competitor, Facebook, it still had trouble competing with Facebook because:

	A	most people don't know about it.
	B	Facebook has a monopoly on social networking.
	C	everyone's already on Facebook.
	D	the market is still contestable.

1 points

QUESTION 20

1. In April 2011, the European Commission fined Procter & Gamble and Unilever 315 million euros for fixing the price of laundry detergent in eight European countries. They admitted to this cartel, which resulted in a 10% discount in the fines. The 3-year investigation started because of a tip-off by another competitor, Henkel, which was also part of the price-fixing scheme. Henkel received no fine because of its cooperation with investigators. Besides imposing fines, how did investigators make maintaining this cartel difficult to continue?

	A	by offering a 10% discount on the fine if the parties admitted to wrongdoing
	B	by investigating the cartel for 3 years so they could prosecute
	C	by reminding consumers that laundry detergent has a lot of long-run substitutes
	D	by waiving the fine for just Henkel, which encouraged Henkel to cheat