Economics 10-12

When Marginal Cost is greater than marginal revenue, the monopolist can increase its profit or minimize its loss by a. Expanding output b. reducing output c. lowering price d. Producing where price=atc

B. Reducing output

Perfect Price discrimination a. would maximize consumer surplus b. would eliminate consumer surplus c. would have only a small effect on consumer surplus. d. Would have no effect on Consumer Surplus.

B. eliminate consumer surplus

As foreign imports become a greater % of sales in oligopolized industries, the concentration ratio

Becomes less accurate as a measure of concentration.

As a firm grows larger. a. economies of scale sets in, then diseconomies of scale. b. diseconomies of scale set in, then economies of scale. c. economies and diseconomies of scale set in at the same time. d. Neither economies of diseconomies of scale sets in.

a. Economies of Scale sets in, then diseconomies of Scale

the most competitive industry is one that has?

Price Leadership

The higher degree of oligopolization

the greater the likelihood of collusion

A monopoly would have a concentration ratio of?

100

LR equilibrium for firms in monopolistically competitive firms is similar to that of firms in perfect competition in that. a. price equals ATC b. Marginal Revenue equals ATC c. Price equals MC d. Price equals minimum possible ATC.

A. price equals ATC

The kinked Demand Curve Depicts?

Cut-Throat Competion

Each of the following is a legal barrier to entry into an industry except a. Government licensing b. patents c. government franchising d. All of these choices are legal barriers.

D. All of these choices are legal barriers.

which of these statements is false? a. a monopoly is both a firm and an industry b. a monopoly is an imperfect competitor c. there are both regional and local monopolies in the us. d. none of these statements is false.

D. None of these statements is false.

A monopolistically competitor will not make an economic profit unless. a. it uses price discrimination. b. its MR is greater than is MC c. it faces an inelastic demand curve d. its price is greater than its ATC

D. its price is greater than its ATC

When a business such as an airline charges different prices for different people for the same product they are practicing?

Price discrimination

Advertising will likely shift the demand curve to the ______ and make it more ______ a. right; elastic b. right; inelastic c. left ; elastic d. left; inelastic

Right; inelastic

True or False. Big business has a great deal of economic and political power.

True

a highly oligopolized industry would have a _____ HHI and a _____ concentration ratio a. high; high b. low; low c. high; low d. low; high

a. High; High

The largest firm in industry q has a 50% market share and the next five firms each has a market share of 10%. The largest firm in industry r has a 40% market share and the next four firms each has a market share of 15%. Which statement is true? a. Industry Q has a higher HHI than industry R. B. Industry R has a higher HHI than industry Q c. The HHI of these industries is equal d. None of these statements are true.

a. Industry Q has a higher HHI than industry R.

When more substitutes become available, a monopolist has ________ power. a. Less b. infinite c. More

a. Less

Which of these would be an oligopolist? a. Proctor and Gamble b. a McDonald's in Manhattan c. a family farm d. the only dentist in Henry County Florida

a. Proctor and Gamble

marginal revenue for a monopolist a. decreases as price decreases because each unit of the good is being sold for a lower price. b. increases as output increases because demand is inelastic. c. is constant and equal to price. d. increases as price decreases because more people are willing and able to purchase the good at a lower price.

a. decreases as price decreases because each unit of the good is being sold for a lower price.

A monopolistically competitive industry has a. many firms producing a differentiated product. b. many firms producing an identical product. c. a few firms producing a differentiated product. d. A few firms producing an identical product.

a. many firms producing a differentiated product.

the key aspect to product differentiation is? a. The buyers mind b. convenience. c. ambience. d. Physical differences.

a. the buyers mind

If the market share of the largest firm in an industry is 50%, then theoretically the highest possible HHI is? a. 2500 b. 5000 c. 10000 d. 25500

b. 5,000

A cartel is a. Generally illegal in the US b. A group of firms acting under collusion to control output and maximize group profits. c. Similar to a monopolistically competitive industry. d. A group of firms acting like a perfectly competitive industry.

b. A group of firms acting under collusion to control output and maximize group profits.

The monopolist's demand curve is____that of the perfect competitor;the monopolist's marginal revenue curve is ____ that of the perfect competitor. a. Identical To; Identical to b. Different from; different from c. Identical to; different from d. different from; identical to

b. Different from; different from

if total revenue is increasing as output is rising, then a. Marginal Revenue must be equal to 0 b. marginal revenue must be greater than 0 c. marginal revenue must be less than 0 d. price must be increasing.

b. Marginal Revenue must be greater than 0.

A monopolist operates at the minimum point of its ATC curve a. in both the short run and the long run b. In neither the short run or the long Run

b. Neither the SR or the LR

A concentration ratio of 100 would imply that the industry has a. one firm b. no more than four firms c. at least four firms d. more than four firms.

b. No more than four firms.

Which statement is true? a. most monopolistic competitors are large firms. b. there are many firms in a monopolistically competitive industry. c. monopolistic competitors produce an identical product. d. none of these statements are true.

b. There are many firms in a monopolistically competitive industry.

The more differentiated the product a. the more elastic the demand b. the more inelastic the demand c. the more the entire d curve shifts right d. the more the entire d curve shifts left

b. the more inelastic the demand.

A firm can sell 14 units at 18$, but to sell 15 units, the firm must cut the price to 17$, the marginal revenue derived from selling the 15th unit is a. -18$ b. 0$ c. 3$ d. 17$

c. 3$

In the LR the monopolistic competitor______ an economic profit and the perfect competitor ______ an economic profit a. Makes makes b. Makes; Doesn't make c. Doesn't make; Doesn't make d. Doesn't make; makes

c. Doesn't make; Doesn't make

In the LR the monopolistic competitor _____ at peak efficeny and the perfect competitor _____ at peak efficiency. a. operates; operates b. operates; doesn't operate c. doesn't operate; operates d. Doesn't operate; doesn't operate

c. Doesn't operate; operates

Oligopoly is characterized by? a. Identical products only b. differentiated products. c. high barriers to entry d. many firms.

c. High barriers to entry

Which of the following is not a characteristic of monopolistic competition? a. Some price control b. a tendency to rely on non-price competition c. a horizontal demand curve. d. some degree of product differentiation.

c. Horizontal demand curve.

Which of the following is a legal way to reduce the price problems oligopolies face? a. collusion b. formation of cartels. c. Price Leadership d. Merging to become monopolists

c. Price leadership

A firm that has substantial monopoly power a. confronts a perfectly-elastic demand curve b. Can sell as much as it wants at the price it chooses. c. can strongly influence the price that it charges for its output d. is one of only a few firms in the industry.

c. can strongly influence the price it charges for output.

Price discrimination a. is prohibited by law b. occurs whenever a good or service is being resold. c. occurs when a seller charges two or more prices for the same good or service d. occurs when the seller charges different prices for different quality products.

c. occurs when a seller charges two or more prices for the same good or service.

A natural monopoly a. has an average cost curve that reaches minimum possible average cost at a low level of output. b. has a marginal cost curve that is deeply downward sloping. c. occurs when a single firm can supply the entire market demand for a product at a lower average cost than would be possible if two or more firms supplied the market. d. is usually allowed to choose its price so as to maximize profits in the us.

c. occurs when a single firm can supply the entire market demand for a product at a lower average cost than would be possible if two or more firms supplied the market.

which of these statements is false? a. the monopolist's demand and marginal revenue curves are two separate curves. b. the monopolist can sell more output by lower price c. the monopolist produces at the minimum point of its ATC curve d. None of these statements is false.

c. the monopolists produces at the minimum point of its ATC curve

The closer the industry concentration ratio is to 100, the more likely it is that a. there are a reasonably large number of medium sized firms. b. this is an industry approaching perfect competition. c. There is a small number of large firms. d. Price competition is being practiced.

c. there is a small number of large firms.

which statement is true? a. most firms in the us are oligopolies. b. oligopoly is illegal in the us. c. product differentiation is the most important characteristic of oligopoly. d. Big business or industry in the US typically refers to oligopolies.

d. Big business or industry typically refers to oligopolies in the US

Which statement is true? a. Oligopolies are illegal in most states b. most oligopolies in the US are cartels c. Covert Collusion has probably never taken place in the US d. Cutthroat competition and Cartels are on the opposite ends of the competitive spectrum.

d. Cutthroat competition and Cartels are on the opposite ends of the competitive spectrum.

Monopolistic competition is similar to a monopoly because firms in both industries a. sell products with no close substitutes. b. sell differentiated products. c. have freedom of entry and exit. d. have some control of prices.

d. Have some control over prices.

if a monopolistic competitor is producing at an output for which MR is 40$ and MC is 32$ to maximize profits the firm should a. Decrease the level of output. b. Keep the level of output constant. c. Continue to make 8$ per unit d. Increase the level of output.

d. Increase the level of output.

Which statement is true about the monopolistic competitor in the long run? a. It will be making a profit. b. It may be making a profit or taking a loss. c. It will be taking a loss. d. It will be breaking even.

d. It will be breaking even

Monopolistic competition may lead to each of the following except. a. inefficiency b. over-differentiation c. Long-run Break-even d. Monopoly profits.

d. Monopoly profits.

Which statement is true? a. the monopolistic competitor is often a large firm. b. most firms in the us are monopolistic competitors. c. price discrimination is impossible under monopolists competition d. none of these statements are true.

d. None of these statements are true.

which statement is true? a. The monopolistic competitor has a perfectly elastic demand curve. b. the monopolistic competitor may make a profit in the long run. c. The monopolistic competitor operates at the minimum point of her ATC curve. d. None of these statements is true.

d. None of these statements is true.

Which of these statements is true? a. The monopolist operates at the minimum point of its ATC curve b. Once a monopoly is set up it is impossible to dislodge it. c. Monopolies are always large firms. d. Price is always read off the demand curve.

d. Price is always read off the demand curve.

if a monopolists marginal cost equals its marginal revenue. a. output should be raised. b. output should be reduced c. production is at its most efficient d. profits are maximized or losses are minimized.

d. Profits are maximized or losses are minimized.

The definition of monopolistic competition includes. a. Few firms and ease of entry and exit b. few firms and barriers to enter/exit c. many firms and barriers to enter/exit d. many firms and ease of entry/exit

d. many firms and ease of entry/exit

The strong interdependence of oligopolistic firms is shown by a. their willingness to change prices frequently. b. their reluctance to advertise. c. their inability to form a price conspiracy. d. the vulnerability of their sales to the actions of their rivals.

d. the vulnerability of their sales to the actions of their rivals.

The concentration ratio is the % of ____ earned by the _____ largest firms in the industry

sales; four

The most important factor about an oligopolized industry is that

there are only a few firms