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1. |
Which market model has the least number of firms? |
A. | monopolistic competition |
B. | pure competition |
C. | pure monopoly |
D. | oligopoly |
Answer» C. pure monopoly |
2. |
If the demand curve facing a firm is perfectly elastic, then: |
A. | its marginal revenue will equal price. |
B. | its marginal revenue schedule will decrease at an increasing rate. |
C. | its marginal revenue schedule decreases twice as fast as the demand curve. |
D. | it can increase its total revenue by lowering the price of its product. |
Answer» A. its marginal revenue will equal price. |
3. |
A profit-maximizing firm in the short run will expand output: |
A. | until marginal cost begins to rise. |
B. | until total revenue equals total cost. |
C. | until marginal cost equals average variable cost. |
D. | as long as marginal revenue is greater than marginal cost. |
Answer» D. as long as marginal revenue is greater than marginal cost. |
4. |
Price is constant or "given" to the individual firm selling in a purely competitive market because: |
A. | the firm\s demand curve is downward sloping. |
B. | there are no good substitutes for the firm\s product. |
C. | each seller supplies a negligible fraction of total supply. |
D. | product differentiation is reinforced by extensive advertising. |
Answer» C. each seller supplies a negligible fraction of total supply. |
5. |
In pure competition, the marginal revenue of a firm always equals: |
A. | product price. |
B. | total revenue. |
C. | average total cost. |
D. | marginal cost. |
Answer» A. product price. |
6. |
A firm should always continue to operate at a loss in the short run if: |
A. | the firm will show a profit. |
B. | the owner enjoys helping her customers. |
C. | it can cover its variable costs and some of its fixed costs. |
D. | the firm cannot produce any other products more profitably. |
Answer» C. it can cover its variable costs and some of its fixed costs. |
7. |
The purely competitive firm's supply curve: |
A. | is perfectly inelastic in the short run. |
B. | is horizontal in the long run. |
C. | is upward sloping when some inputs are fix |
Answer» C. is upward sloping when some inputs are fix |
8. |
Which is true of normal profits |
A. | they are necessary to keep a firm in the industry in the long run. |
B. | they are zero under pure competition in the long run. |
C. | they are excluded from a firm\s costs of production. |
D. | they are greater than the opportunity cost to the firm. |
Answer» A. they are necessary to keep a firm in the industry in the long run. |
9. |
The representative firm in a purely competitive industry: |
A. | will always earn a profit in the short run. |
B. | may earn either an economic profit or a loss in the long run. |
C. | will always earn an economic profit in the long run. |
D. | will earn an economic profit of zero in the long run. |
Answer» D. will earn an economic profit of zero in the long run. |
10. |
Allocative efficiency occurs when the: |
A. | minimum of average total cost equals average revenue. |
B. | minimum of average total cost equals marginal revenue. |
C. | marginal cost equals the marginal benefit to society. |
D. | marginal revenue equals marginal benefit to society. |
Answer» C. marginal cost equals the marginal benefit to society. |
11. |
When a purely competitive firm is in long-run equilibrium, price is equal to: |
A. | marginal cost, but may be greater or less than average cost. |
B. | minimum average cost, and also to marginal cost. |
C. | minimum average cost, but may be greater or less than marginal cost. |
D. | marginal revenue, but may be greater or less than both average and marginal cost. |
Answer» B. minimum average cost, and also to marginal cost. |
12. |
Under conditions of pure monopoly: |
A. | there are close substitutes. |
B. | there is no advertising. |
C. | the firm is a price taker. |
D. | entry is blocked. |
Answer» D. entry is blocked. |
13. |
A monopoly is most likely to emerge and be sustained when: |
A. | output demand is relatively elastic. |
B. | firms have u-shaped, average-total-cost curves. |
C. | fixed capital costs are small relative to total costs. |
D. | economies of scale are large relative to market demand. |
Answer» D. economies of scale are large relative to market demand. |
14. |
Which is a barrier to entry? |
A. | patents |
B. | revenue maximization |
C. | profit maximization |
D. | elastic product demand |
Answer» A. patents |
15. |
The pure monopolist who is nondiscriminating must decrease price on all units of a product sold in order to sell additional units. This explains why: |
A. | there are barriers to entry in pure monopoly. |
B. | a monopoly has a perfectly elastic demand curve. |
C. | marginal revenue is less than average revenue. |
D. | total revenues are greater than total costs at the profit maximizing level of output. |
Answer» C. marginal revenue is less than average revenue. |
16. |
A nondiscriminating monopolist will find that marginal revenue: |
A. | exceeds average revenue or price. |
B. | is identical to price. |
C. | is sometimes greater and sometimes less than price. |
D. | is less than average revenue or price. |
Answer» D. is less than average revenue or price. |
17. |
At the profit-maximizing level of output, a monopolist will always operate where: |
A. | price is greater than marginal cost. |
B. | price is greater than average revenue. |
C. | average total cost equals marginal cost. |
D. | total revenue is greater than total cost. |
Answer» A. price is greater than marginal cost. |
18. |
In the short run, a monopolist's profits: |
A. | may be positive, negative, or zero. |
B. | are positive because of the monopolist\s market power. |
C. | are positive if the monopolist\s elasticity of demand is less than 1. |
D. | are positive if the monopolist\s selling price is above average variable cost. |
Answer» A. may be positive, negative, or zero. |
19. |
Monopolists are said to be allocatively inefficient because: |
A. | they produce where mr > mc. |
B. | at the profit-maximizing output price is greater than avc. |
C. | they produce only the type of product they desire and do not consider the consumer. |
D. | at the profit-maximizing output the marginal benefit to society of additional output is |
Answer» D. at the profit-maximizing output the marginal benefit to society of additional output is |
20. |
The economic incentive for price discrimination depends on: |
A. | prejudices of business managers. |
B. | differences among sellers\ costs. |
C. | a desire to evade antitrust legislation. |
D. | differences among buyers\ demand elasticities. |
Answer» D. differences among buyers\ demand elasticities. |
21. |
Which would definitely not be an example of price discrimination? |
A. | a theater charges children less than adults for a movie. |
B. | universities charge higher tuition for out-of-state residents. |
C. | a doctor charges for services according to the income of patients. |
D. | an electric power company charges less for electricity used during off-peak hours when |
Answer» D. an electric power company charges less for electricity used during off-peak hours when |
22. |
A market is clearly NOT perfectly competitive if which of the following is true in equilibrium |
A. | price exceeds marginal cost. |
B. | price exceeds average variable cost. |
C. | price exceeds average fixed cost. |
D. | price equals opportunity cost |
Answer» A. price exceeds marginal cost. |
23. |
If a perfectly competitive industry is in long-run equilibrium, which of the following is most likely to be true |
A. | some firms can be expected to leave the industry. |
B. | individual firms are not operating at the minimum points on their average total cost curves. |
C. | firms are earning a return on investment that is equal to their opportunity costs. |
D. | some factors are not receiving a return equal to their opportunity costs. |
Answer» C. firms are earning a return on investment that is equal to their opportunity costs. |
24. |
Which of the following is NOT a characteristic of a competitive market |
A. | it has many buyers |
B. | it has many sellers |
C. | the products traded are identical |
D. | firms set the price (price makers) |
Answer» D. firms set the price (price makers) |
25. |
Which of the following statements is true, regarding the revenues of a firm under perfect competition |
A. | the marginal revenue and the average revenue are equal to the price |
B. | the marginal revenue is greater than the average revenue |
C. | the marginal revenue is greater than the total revenue |
D. | the total revenue is less than the average revenue |
Answer» A. the marginal revenue and the average revenue are equal to the price |
26. |
A firm under perfect competition will maximize profits when its |
A. | total revenue is equal to its total cost |
B. | marginal revenue is equal to its marginal cost |
C. | the difference between marginal revenue and marginal cost is the greatest |
D. | total cost is greater than total revenue |
Answer» B. marginal revenue is equal to its marginal cost |
27. |
The short-run supply curve of a firm in perfect competition is the segment of its: |
A. | marginal cost curve that lies above the minimum average total cost |
B. | marginal revenue curve that lies above the minimum average total cost |
C. | marginal cost curve that lies above the minimum average variable cost |
D. | marginal revenue curve that lies above the minimum average variable cost |
Answer» C. marginal cost curve that lies above the minimum average variable cost |
28. |
In perfect competition the shutdown point is defined by |
A. | where price = avc |
B. | where price = ac |
C. | where price = mc |
D. | when the firm starts to incur loss |
Answer» A. where price = avc |
29. |
The demand curve faced by a monopoly is: |
A. | vertical |
B. | horizontal |
C. | upward sloping |
D. | downward sloping |
Answer» D. downward sloping |
30. |
A monopoly is a ________ |
A. | price taker |
B. | price accepter |
C. | price maker |
D. | price neutral |
Answer» C. price maker |
31. |
A monopoly is a ________, therefore the demand curve it faces is ________ |
A. | price taker, downward-sloping |
B. | price taker, horizontal |
C. | price setter, downward-sloping |
D. | price setter, horizontal |
Answer» C. price setter, downward-sloping |
32. |
As output increases in a monopoly, the firm's total revenue: |
A. | first increases and then decreases |
B. | first decreases and then increases |
C. | increases continuously |
D. | decreases continuously |
Answer» A. first increases and then decreases |
33. |
Marginal revenue in a monopoly is: |
A. | always greater than the price |
B. | always equal to the price |
C. | always smaller than the price |
D. | sometimes greater and sometimes smaller than the price |
Answer» C. always smaller than the price |
34. |
Which of the following statements is true regarding a profit maximizing monopoly |
A. | it will cause a deadweight loss |
B. | it will produce less than perfect competition |
C. | it will sell at a higher price than perfect competition |
D. | all of the above |
Answer» D. all of the above |
35. |
In India, which law deals with monopolies |
A. | fera |
B. | fema |
C. | mrtp |
D. | mnrgea |
Answer» C. mrtp |
36. |
Which of the following is NOT a characteristic of monopolistic competition? |
A. | there are many sellers |
B. | there are many buyers |
C. | everybody is perfectly informed |
D. | the goods are identical |
Answer» D. the goods are identical |
37. |
The diagram depicting monopolistic competition in the short run: |
A. | is very similar to the short run monopoly diagram |
B. | is very similar to the short run perfect competition diagram |
C. | is very similar to the short run oligopoly diagram |
D. | is completely different to the diagrams of all the other types of markets |
Answer» A. is very similar to the short run monopoly diagram |
38. |
If the Average Total Cost curve of a firm in monopolistic competition happens to be above the demand curve, it means: |
A. | the firm will have to sell a lot in order to make a profit |
B. | the firm will have to sell at a very high price in order to make a profit |
C. | other firms are performing better in the market than the firm depicted in the diagram |
D. | that firms in that industry will be incurring losses in the short run |
Answer» D. that firms in that industry will be incurring losses in the short run |
39. |
If firms in monopolistic competition are enjoying positive economic profits, in the long run |
A. | they will continue enjoying such profits, since new firms will be unable to enter the industry |
B. | consumers will cease wanting to buy such expensive goods and will switch to cheaper alternatives |
C. | this will attract new firms into the industry, causing prices to drop and profits to disappear |
D. | the government will have to step in and regulate the price |
Answer» C. this will attract new firms into the industry, causing prices to drop and profits to disappear |
40. |
Firms in monopolistic competition in long run equilibrium ________ than firms in perfect competition. |
A. | produce less |
B. | charge a lower price |
C. | have bigger profits |
D. | have lower costs |
Answer» A. produce less |
41. |
In monopolistic competition in long run equilibrium, the price will be equal to: |
A. | the marginal cost |
B. | marginal revenue |
C. | average variable cost |
D. | average total cost |
Answer» D. average total cost |
42. |
A major critique of advertising is that |
A. | it provides information to consumers that they would be better off without |
B. | it manipulates people\s tastes, leading people to make bad choices |
C. | it promotes excessive competition among firms in the industry |
D. | it is usually linked to promotions, which undermine the market\s price |
Answer» B. it manipulates people\s tastes, leading people to make bad choices |
43. |
A major argument in favour of advertising is that: |
A. | it provides information to consumers that allows them to make better choices |
B. | it helps people reaffirm their tastes and preferences |
C. | it reduces competition among firms in the industry, leading to lower prices |
D. | it is usually linked to promotions, which help lower the market\s price |
Answer» A. it provides information to consumers that allows them to make better choices |
44. |
Branding can be good for society because: |
A. | it allows people to show off the branded goods they use or wear |
B. | it keeps generic goods from taking over the market |
C. | it provides useful information to consumers about the quality of branded goods |
D. | it helps firms enjoy higher prices and profits |
Answer» C. it provides useful information to consumers about the quality of branded goods |
45. |
Which of the following statements is FALSE? |
A. | a monopoly is an industry with only one seller |
B. | an oligopoly is an industry with only a few sellers |
C. | perfect competition is an industry with many sellers |
D. | monopolistic competition is an industry with only a few sellers |
Answer» D. monopolistic competition is an industry with only a few sellers |
46. |
Monopsony is a market with |
A. | one buyer |
B. | one seller |
C. | many buyers |
D. | one buyer and one seller |
Answer» A. one buyer |
47. |
A bilateral monopoly is a market structure consisting of |
A. | one buyer |
B. | one seller |
C. | many buyers |
D. | one buyer and one seller |
Answer» D. one buyer and one seller |
48. |
A bilateral monopoly is a market structure consisting of both a ______and a _____ |
A. | oligopoly and monopoly |
B. | monopoly and monopsony |
C. | oligopoly and perfect competition |
D. | monopoly and perfect competition |
Answer» B. monopoly and monopsony |
49. |
Monopsony is a market with ______ buyers |
A. | many |
B. | few |
C. | one |
D. | one hundred |
Answer» C. one |
50. |
A ___________occurs in an industry where there is only one producer of a good and only one supplier. |
A. | bilateral monopoly |
B. | monopoly |
C. | monopsony |
D. | duopoly |
Answer» A. bilateral monopoly |
51. |
Perfect completion means _____ rivalry |
A. | perfect |
B. | absence of |
C. | fierce |
D. | intense |
Answer» B. absence of |
52. |
_______ is situation in which a single company or group owns all or nearly all of the market for a given type of product or service. |
A. | monopsony |
B. | oligopoly |
C. | perfect competition |
D. | monopoly |
Answer» D. monopoly |
53. |
_______ is situation in which a particular market is controlled by a small group of firms. |
A. | monopsony |
B. | oligopoly |
C. | perfect competition |
D. | monopoly |
Answer» B. oligopoly |
54. |
________ is a market in which there are only a few large buyers for a product or service. |
A. | monopsony |
B. | oligopoly |
C. | oligopsony |
D. | monopoly |
Answer» C. oligopsony |
55. |
________ is one organization created from a formal agreement between a group of producers of a good or service, to regulate supply in an effort to regulate or manipulate prices. |
A. | industry |
B. | firm |
C. | monopoly |
D. | cartel |
Answer» D. cartel |
56. |
Which of the following statements is true |
A. | oligopolies sell more output than perfect competition |
B. | oligopolies charge a higher price than monopolies |
C. | oligopolies sell more output than monopolies |
D. | oligopolies charge a lower price than perfect competition |
Answer» C. oligopolies sell more output than monopolies |
57. |
The larger the number of firms in an oligopoly, the ________ the price and the ________ the output of the industry. |
A. | lower, greater |
B. | higher, lesser |
C. | higher, greater |
D. | lower, lesser |
Answer» A. lower, greater |
58. |
Factors of production are: |
A. | the coefficients in a production function |
B. | the characteristics of a market that determine how much is produced |
C. | the inputs used to produce goods and services |
D. | the outputs from a production function |
Answer» C. the inputs used to produce goods and services |
59. |
The property of diminishing marginal product applies: |
A. | only to workers in the short run |
B. | applies to workers and any other variable inputs in the short run |
C. | only to workers in the long run |
D. | applies to workers and any other variable inputs in the long run |
Answer» B. applies to workers and any other variable inputs in the short run |
60. |
All of the following will cause the value of the marginal product of labor to increase, EXCEPT: |
A. | an increase in the price of the good sold by the firm |
B. | a new production technology is developed and implemented by the firm |
C. | an increase in the number of workers employed by the firm |
D. | an increase in the quantity of other factors of production used by the firm |
Answer» C. an increase in the number of workers employed by the firm |
61. |
If the supply curve for labor is backward bending, and if the wage of a worker increases, she might choose to work: |
A. | fewer hours per week, since she can earn the same income working fewer hours |
B. | more hours per week, since she can earn the same income working fewer hours |
C. | fewer hours per week, since every hour of leisure is cheaper than before |
D. | more hours per week, since she needs to work more hours to earn the same income |
Answer» A. fewer hours per week, since she can earn the same income working fewer hours |
62. |
If many students choose to study to become accountants, when all of these students eventually graduate, we can expect accountant's wages to ________, and the equilibrium number of accountants will ________ |
A. | rise, increase |
B. | drop, increase |
C. | rise, decrease |
D. | drop, decrease |
Answer» B. drop, increase |
63. |
If there is a permanent increase in the demand for cars, car manufacturers will want to hire ________ workers, which will cause wages in the industry to ________. |
A. | more, rise |
B. | more, drop |
C. | less, rise |
D. | less, drop |
Answer» A. more, rise |
64. |
As firms gradually acquire ever more technology, machinery and equipment, workers' productivity gradually ________, and workers wages gradually ________. |
A. | rises, decrease |
B. | diminishes, decrease |
C. | diminishes, increase |
D. | rises, increase |
Answer» D. rises, increase |
65. |
The price paid for any factor of production tends to be equal to: |
A. | the wage rate |
B. | the value of the marginal product of that input |
C. | the price of the product sold by the firm that inputs |
D. | the price of the product sold by the firm that buys the inputs |
Answer» B. the value of the marginal product of that input |
66. |
In a perfectly competitive market |
A. | each firm sets its own price |
B. | there are a few firms selling unique products |
C. | when one firm ceases production, the market equilibrium price tends to rise |
D. | none of the above. in a perfectly competitive market, firms sell homogenous products and |
Answer» D. none of the above. in a perfectly competitive market, firms sell homogenous products and |
67. |
The three primary characteristics of a perfectly competitive market are |
A. | the firms\ products are unique, they set their own price and can freely enter and exit the market |
B. | the firms\ products are homogenous, the firms are price takers and can freely enter and exit the market |
C. | the firms\ products are homogenous, the firms are price takers and there are barriers to entry into the market |
D. | the firms\ products are unique, they are price takers and there are no barriers to entry in the market |
Answer» B. the firms\ products are homogenous, the firms are price takers and can freely enter and exit the market |
68. |
Microeconomic theory assumes that all firms maximize profits because |
A. | it has been observed that managers always align their goals with investors and seek to maximize short and long run profits |
B. | profit is likely to dominate almost all decisions for smaller firms |
C. | if managers deviate from profit maximization decisions for too long shareholders or the board of directors will replace them |
D. | both (b) and (c) |
Answer» D. both (b) and (c) |
69. |
Profits are maximized when the firm |
A. | captures the largest market share in its market |
B. | produces at an output level where marginal revenue exceeds marginal cost |
C. | produces at the output level where marginal revenue equals marginal cost |
D. | produces at the output level where total revenue is maximized |
Answer» C. produces at the output level where marginal revenue equals marginal cost |
70. |
The demand curve for a perfectly competitive firm |
A. | slopes downward as the quantity demanded increases as the firm lowers price |
B. | is a horizontal, perfectly elastic demand curve at the market price |
C. | is a straight, downward sloping curve that is price elastic at higher prices and price inelastic as price falls and approaches zero |
D. | both (b) and (c) |
Answer» B. is a horizontal, perfectly elastic demand curve at the market price |
71. |
Profit maximization for a perfectly competitive firm is at the quantity where |
A. | price equals marginal revenue |
B. | the difference between price and marginal cost is the greatest |
C. | price equals marginal cost |
D. | marginal cost is at a minimum |
Answer» C. price equals marginal cost |
72. |
A firm may decide to shut down in the short run |
A. | if profit maximization occurs at an output level where price is less than average variable cost |
B. | if profit maximization occurs at an output level where price is less than average total cost |
C. | profit maximization occurs at an output level where price is less than average total cost but greater than average variable cost |
D. | if profit maximization occurs at an output level where price is equal to average total cost and the firm does not foresee changes to the market price in the future |
Answer» A. if profit maximization occurs at an output level where price is less than average variable cost |
73. |
If a perfectly competitive firm finds that the profit maximizing output level occurs where price is equal to marginal cost but is less than average variable cost |
A. | the firm will continue to operate in the short run since total revenue exceeds total variable cost but will exit the industry in the long run |
B. | the firm will continue to operate in the short run since it has to pay the total fixed cost whether or not it continues to operate |
C. | the firm will increase its selling price to raise revenue in order to be able to continue to operate profitably in the short run |
D. | the firm will shut down in the short run and exit the industry in the long run if it does not foresee market conditions changing |
Answer» D. the firm will shut down in the short run and exit the industry in the long run if it does not foresee market conditions changing |
74. |
In the long run, a perfectly competitive firm earning zero economic profits |
A. | will exit the market in search of more profitable use of its resources |
B. | is earning a normal rate of return on its investments |
C. | signifies that the firm is performing poorly and so should exit the market |
D. | will break even |
Answer» B. is earning a normal rate of return on its investments |
75. |
In the long run, a constant cost industry |
A. | has an upward sloping supply curve as the quantity supplied increases with increases in demand |
B. | expands in response to an increase in demand despite rising input costs, and so the long run supply curve is horizontal |
C. | can expand in response to an increase in demand without input costs changing, and so the long run supply curve is horizontal |
D. | does not expand in response to an increase in demand and so the long run supply curve is horizontal |
Answer» C. can expand in response to an increase in demand without input costs changing, and so the long run supply curve is horizontal |
76. |
Market power is defined as |
A. | the ability of a firm to charge any price it wants |
B. | produce and sell as large a quantity as possible at high prices |
C. | the ability of a seller or buyer to affect the market price of a good or service |
D. | sell large a quantity at high prices |
Answer» C. the ability of a seller or buyer to affect the market price of a good or service |
77. |
Marginal revenue for a monopolist is equal to |
A. | the increased revenue from the sale of an additional unit less the loss of revenue from selling previous units at a lower price |
B. | the change in revenue resulting from a one unit change in output |
C. | the change in revenue divided by the change in output |
D. | all of the above are applicable |
Answer» D. all of the above are applicable |
78. |
For a monopolist, marginal revenue is always less than price because |
A. | as output increases, the price of all units must fall to sell the additional unit |
B. | because at lower prices, profit margins fall |
C. | in order to sell additional quantities, the additional units much be sold at a lower price |
D. | because monopolist is a price maker |
Answer» A. as output increases, the price of all units must fall to sell the additional unit |
79. |
The profit maximizing output level for a monopolist is |
A. | the output level where price elasticity of demand is −1 and total revenue is maximized |
B. | the output level where price elasticity of demand is +1 and total revenue is maximized |
C. | the output level where marginal revenue equals marginal cost |
D. | where the difference between price and average total cost is the largest |
Answer» C. the output level where marginal revenue equals marginal cost |
80. |
The supply curve for the monopolist |
A. | does not exist |
B. | is represented by the marginal cost curve above the average total cost curve |
C. | is represented by the marginal cost curve above the average variable cost curve |
D. | is represented by the marginal cost curve above the average cost curve |
Answer» A. does not exist |
81. |
The Lerner Index is a measure of __________ |
A. | perfect competition |
B. | monopoly power |
C. | competition |
D. | market |
Answer» B. monopoly power |
82. |
For the monopolist, at the profit maximizing level of output |
A. | price is greater than marginal cost (p > mc) |
B. | price is equal to marginal cost (p=mc) |
C. | price may be greater than or equal to marginal cost, |
D. | price is less than marginal cost (p <mc) |
Answer» A. price is greater than marginal cost (p > mc) |
83. |
A major source of monopoly power in a market is |
A. | a low market elasticity of demand |
B. | a high market price elasticity of demand |
C. | aggressive rivalry between firms in a market |
D. | the presence of many firms in a market |
Answer» A. a low market elasticity of demand |
84. |
According to economic pricing theory, the basic objective of every pricing strategy |
A. | is to reduce prices in order to increase consumer surplus and the quantity sold |
B. | to raise prices in order to reduce consumer surplus |
C. | sell at a price and quantity where total revenue is maximized |
D. | to capture consumer surplus and convert it to additional profit for the firm |
Answer» D. to capture consumer surplus and convert it to additional profit for the firm |
85. |
The practice of charging different prices to different consumers for the same goods or services is known as _____ |
A. | product differentiation |
B. | marketing |
C. | aggressive selling |
D. | price discrimination |
Answer» D. price discrimination |
86. |
Which of the following statements about industries that are oligopolies is false |
A. | firms in these industries may attempt to cooperate |
B. | firms in these industries are interdependent |
C. | the fact that there is more than one firm in an oligopoly means that there are no barriers to entry |
D. | an oligopoly with two firms is called a duopoly |
Answer» C. the fact that there is more than one firm in an oligopoly means that there are no barriers to entry |
87. |
The price rigidity in an oligopolistic market is explained by _______ |
A. | price discrimination |
B. | product differentiation |
C. | bundling |
D. | kinked demand curve |
Answer» D. kinked demand curve |
88. |
Product differentiation is seen in |
A. | perfect competition |
B. | monopoly |
C. | monopolistic competition |
D. | pure competition |
Answer» C. monopolistic competition |
89. |
Price discrimination is a strategy in |
A. | monopoly |
B. | perfect competition |
C. | monopolistic competition |
D. | pure competition |
Answer» A. monopoly |
90. |
Suppose a competitive firm produces 100 units of X for a price of Rs.10 a unit. The firm is employing labour and capital such that the marginal physical product of labour and capital is 20 and 5 and the prices paid to labour and capital are Rs. 60 and Rs. 40 respectively. How would you characterize the firm |
A. | the firm is in long-run equilibrium |
B. | the firm is earning excess profits |
C. | the firm should expand production |
D. | the firm should contract production |
Answer» C. the firm should expand production |
91. |
That the perfectly competitive firm will pick a combination of inputs where the ratio of each input’s marginal product to its price is equal follows from |
A. | the need to use inputs in fixed proportions |
B. | the backward bending supply curve of labour |
C. | cost minimization |
D. | the attempt to achieve a target rate of return |
Answer» C. cost minimization |
92. |
If an additional worker costs you Rs. 15 per hour, and that person can add 25 units of output to the firm, you should hire that person as long as |
A. | 25 remains above rs.15 |
B. | 25/rs.15 is greater than zero |
C. | rs.15/25 is great than zero |
D. | the value of the marginal product is above rs.15 ......................... |
Answer» D. the value of the marginal product is above rs.15 ......................... |
93. |
Entry is restricted under: |
A. | Perfect competition |
B. | Monopoly |
C. | Monopolistic competition |
D. | All of the above |
Answer» B. Monopoly |
94. |
Demand curve is perfectly elastic under: |
A. | Perfect competition |
B. | Monopoly |
C. | Monopolistic competition |
D. | All of the above |
Answer» A. Perfect competition |
95. |
Demand curve is elastic under: |
A. | Perfect competition |
B. | Monopoly |
C. | Monopolistic competition |
D. | All of the above |
Answer» C. Monopolistic competition |
96. |
Demand curve is inelastic under: |
A. | Perfect competition |
B. | Monopoly |
C. | Monopolistic competition |
D. | All of the above |
Answer» B. Monopoly |
97. |
Differentiated but close substitutes exist under: |
A. | Perfect competition |
B. | Monopoly |
C. | Monopolistic competition |
D. | All of the above |
Answer» C. Monopolistic competition |
98. |
Selling cost is insignificant under: |
A. | Perfect competition |
B. | Monopoly |
C. | Monopolistic competition |
D. | All of the above |
Answer» B. Monopoly |
99. |
Few firms exist under: |
A. | Perfect competition |
B. | Oligopoly |
C. | Monopolistic competition |
D. | Both perfect and monopolistic competition |
Answer» B. Oligopoly |
100. |
In which market structure, price and output solution is indeterminate? |
A. | Oligopoly |
B. | Monopolistic competition |
C. | Perfect competition |
D. | Monopoly |
Answer» A. Oligopoly |
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