AP micro death
. 15. If the number of firms in a monopolistically competitive industry increases and the degree of product differentiation diminishes: A) the likelihood of realizing economic profits in the long run would be enhanced. B) individual firms would now be operating at outputs where their average total costs would be higher. C) the industry would more closely approximate pure competition. D) the likelihood of collusive pricing would increase.
C
. 3. A fixed cost is: A) associated with any productive resource whose price is fixed. B) any cost which increases proportionately with output. C) any cost which a firm would incur even if output was zero. D) associated with all inputs whose short-run supply is perfectly inelastic.
C
11. Which of the following is correct? A) Both purely competitive and monopolistic firms are "price takers." B) Both purely competitive and monopolistic firms are "price makers." C) A purely competitive firm is a "price taker," while a monopolist is a "price maker." D) A purely competitive firm is a "price maker," while a monopolist is a "price taker."
C
20. A monopolistically competitive firm's marginal revenue curve: A) is downsloping and coincides with the demand curve. B) coincides with the demand curve and is parallel to the horizontal axis. C) is downsloping and lies below the demand curve. D) does not exist because the firm is a "price maker."
C
33. In equilibrium which of the following conditions are common to both unregulated monopoly and to pure competition? A) MC = P B) MC = ATC C) MR = MC D) P = MR
C
43. Refer to the above figures. Collusion is most likely to occur in the industry(ies) represented by: A) Figure A. B) Figure B. C) Figure C. D) both Figures B and D.
C
8. The term oligopoly indicates: A) a one-firm industry. B) many producers of a differentiated product. C) a few firms producing either a differentiated or a homogeneous product. D) an industry whose four-firm concentration ratio is low
C
. 4. A firm's total variable cost will depend on: A) the prices of variable resources. C) the level of output. B) the production techniques that are used. D) all of the above.
D
21. In long-run equilibrium, the price charged by the monopolistically competitive firm: A) must be less than ATC. B) must be more than ATC. C) may be either equal to ATC, less than ATC, or more than ATC. D) will be equal to ATC.
D
look at the graph is demand under ATC
no profit, some firms will leave
. 2. Marginal cost: A) equals both average variable cost and average total cost at their respective minimums. B) is the difference between total cost and total variable cost. C) rises for a time, but then begins to decline when diminishing returns set in. D) declines continuously as output increases.
A
17. Prices are likely to be least flexible: A) in oligopoly. C) where product demand is inelastic. B) in monopolistic competition. D) in pure competition.
A
. 5. Economists would describe the U.S. automobile industry as: A) purely competitive. B) an oligopoly. C) monopolistically competitive. D) a pure monopoly.
B
10.An industry comprised of four firms, each with about 25 percent of the total market for a product is an example of: A) monopolistic competition B) oligopoly C) pure monopoly D) pure competition
B
12. Which of the following is a characteristic of pure monopoly? A) close substitute products B) barriers to entry C) the absence of market power D) "price taking"
B
14. Which of the following is not a basic characteristic of monopolistic competition? A) the use of trademarks and brand names C) product differentiation B) recognized mutual interdependence D) a relatively large number of sellers
B
16. Oligopoly is difficult to analyze primarily because: A) the number of firms is too large to make collusion understandable. B) the price and output decisions of any one firm depend on the reactions of its rivals. C) output may be either homogenous or differentiated. D) neither allocative nor productive efficiency is achieved.
B
18. . The demand curve in a purely competitive industry is ______, while the demand curve to a single firm in that industry is ______. A) perfectly inelastic, perfectly elastic C) downsloping, perfectly inelastic B) downsloping, perfectly elastic D) perfectly elastic, downsloping
B
19. When a firm is maximizing profit it will necessarily be: A) maximizing profit per unit of output. B) maximizing the difference between total revenue and total cost. C) minimizing total cost. D) maximizing total revenue
B
30. Refer to the above diagram. To maximize profits or minimize losses this firm should produce: A) E units and charge price C. C) M units and charge price N. B) E units and charge price A. D) L units and charge price LK.
B
31. Refer to the above diagram. In equilibrium total revenue will be: A) NM times 0M. B) 0AJE. C) 0EGC. D) 0EHB.
B
40. The purely competitive market model is portrayed in the above figures by: A) Figure A. B) Figure B. C) both Figures B and D. D) Figure C.
B
29. Refer to the above data. If the market price for the firm's product is $28, the competitive firm will: A) produce 4 units at a loss of $17.40. C) close down in the short run. B) produce 7 units at a loss of $14.00. D) produce 6 units at a loss of $23.80.
B (DAB)
13. . The nondiscriminating monopolist's demand curve: A) is less elastic than a purely competitive firm's demand curve. B) is perfectly elastic. C) coincides with its marginal revenue curve. D) is perfectly inelastic.
A
32. . Refer to the above diagram. In equilibrium the firm will realize: A) an economic profit of ABHJ. C) a loss of GH per unit. B) an economic profit of ACGJ. D) a loss of JH per unit.
A
36. . Refer to the above diagram for a pure monopolist. Monopoly profit: A) cannot be determined from the information given. B) will be ae per unit. C) will be bc per unit. D) will be ac per unit.
A
6. Which of the following industries most closely approximates pure competition? A) agriculture B) farm implements C) clothing D) steel
A
9. . In which of the following industry structures is the entry of new firms the most difficult? A) pure monopoly B) oligopoly C) monopolistic competition D) pure competition
A
28. Refer to the above data. If the market price for the firm's product is $32, the competitive firm will produce: A) 8 units at an economic profit of $16. B) 5 units at a loss of $10. C) 8 units at a loss equal to the firm's total fixed cost. D) 7 units at an economic profit of $41.50.
A (DAB)
1. The law of diminishing returns indicates that: A) as extra units of a variable resource are added to a fixed resource, marginal product will decline beyond some point. B) because of economies and diseconomies of scale a competitive firm's long-run average total cost curve will be U-shaped. C) the demand for goods produced by purely competitive industries is downsloping. D) beyond some point the extra utility derived from additional units of a product will yield the consumer smaller and smaller extra amounts of satisfaction.
A.
41. Refer to the above figures. We would expect industry entry and exit to be relatively easy in: A) Figure A only. B) Figure C only. C) both Figures A and C. D) both Figures B and D.
D
42. . Refer to the above figures. Both allocative and productive efficiency are being realized in: A) all four figures. B) Figures B and D. C) Figure D only. D) Figure B only.
D
44. Refer to the above figures. Product differentiation may be present in: A) Figure A only. B) Figure B only. C) Figure C only. D) both Figures C and D.
D
45. Refer to the above figures. Long-run economic profits are most likely to occur in: A) Figures A and B. B) Figure B only. C) Figure D. D) Figures A and C.
D
7. A pure monopolist is: A) any firm realizing all existing economies of scale. B) any firm whose demand curve is downsloping. C) any firm which can engage in price discrimination. D) a one-firm industry.
D
27. . Refer to the above data. If the market price for the firm's product is $12, the competitive firm will produce: A) 4 units at a loss of $109. C) 8 units at a loss of $48.80. B) 4 units at an economic profit of $31.75. D) zero units at a loss of $100.
D (DAB)
