EC 200 Quiz 3

D) earning a profit

In general, a company whose shareholders collect dividends must be

a) An expenditure switching policy

Tariffs are an example of:

b) Increase government earnings from tax

Tariffs:

B) The sole proprietor

If a proprietorship fails, who is responsible for the firm's debts?

c) An increase in price increases revenue

If demand is price inelastic:

c. and market price will both remain constant

If one perfectly competitive firm increases its level of output, market supply

c) The products are complements and demand is cross price elastic

If the cross elasticity of demand is -2:

d. The market structure cannot be determined from the information given

If the market demand curve for a commodity has a negative slope then the market structure must be

b) Leaves revenue unchanged

If the price elasticity of demand is unit then a fall in price:

a. economies of scale over a broad range of output

1. In the short run, a monopolist will shut down if it is producing a level of output where marginal revenue is equal to short-run marginal cost and price is

c) A highly skilled labour force

Typical problems of developing economies do NOT include

A) increased barriers to entry

All of the following can help break a monopoly EXCEPT

B) franchise

A business that is related to an established corporation and shares the same trademarks, brands, and business model is known as a

C) paying dividends

A corporation distributes profits to its many part-owners by

B) barriers to entry in the monopolist's market prevent competition

A monopoly is able to make greater profits than a perfectly competitive firm because

d) A business that has bases abroad

A multinational enterprise is best described as

d. All of the above are correct

A natural monopoly refers to a monopoly that is defended from direct competition by

D) all of the above

A patent is given to a firm to protect that firm's

d. less than average variable cost

A perfectly competitive firm should reduce output or shut down in the short run if market price is equal to marginal cost and price is

A) a partnership

A proprietorship shared between multiple people is known as

b) A tax on foreign goods and services

A tariff is:

A) the combination of two firms that specialize in different stages of the same supply chain

A vertical merger is

d) The product has a positive income elasticity of demand

Average income increases from £20,000 p.a. to £22,000 p.a. Quantity demanded per year increases from 5000 to 6000 units. Which of the following is correct?

A) oligopolistic

Collusion most frequently occurs in industries that are

a) Greater inequality

Common arguments in favour of globalization do not usually include

A) horizontal merger

Firm X and Firm Y were previously in direct competition, but now they plan to merge. This combination would be considered a

c) The price elasticity of demand is negative; the income elasticity of demand is positive.

For a normal good with a downward sloping demand curve

a) The price elasticity of demand is negative; the income elasticity of demand is negative

For an inferior good with a downward sloping demand curve:

a) Comparative advantage

Free trade is based on the principle of

D) a vertical merger

If a corporation that makes rubber combines with a corporation that makes tires, this action would most likely be considered

B) an oligopoly

If a few firms share most of an entire industry's revenues, the market structure is most likely

a. a monopolist

If a firm sells its output on a market that is characterized by a single seller and many buyers of a homogeneous product for which there are no close substitutes and barriers to long-run resource mobility, then the firm is

b. an oligopolist

If a firm sells its output on a market that is characterized by few sellers and many buyers and limited long-run resource mobility, then the firm is

d. a monopolistic competitor

If a firm sells its output on a market that is characterized by many sellers and buyers, a differentiated product, and unlimited long-run resource mobility, then the firm is

c. a perfect competitor

If a firm sells its output on a market that is characterized by many sellers and buyers, a homogeneous product, unlimited long-run resource mobility, and perfect knowledge, then the firm is a

b) Reduce withdrawals from an economy

Measures to reduce imports will:

B) Advertise the traits that make their product identifiable

Monopolistically competitive firms most frequently do which of the following?

c) 450 units

Price increases from 10 to 12 pence and the price elasticity of demand is -0.5. The quantity demanded was 500 units. What will it be now?

B) copyrights are used to protect ideas, while patents protect processes and products

The basic difference between copyrights and patents is that

b) 7000

The income elasticity is +2 and income increases by 20%. Sales were 5000 units, what will they be now?

c. Production of the industry's product requires a large initial capital investment

The market demand curve for a perfectly competitive industry is QD = 12 - 2P. The market supply curve is QS = 3 + P. The market will be in equilibrium if

D) capital gains

The personal income earned by the sale of stock is known as

a) The price elasticity of demand is -2

The price decreases from £2,000 to £1,800. Quantity demanded per year increases from 5000 to 6000 units. Which of the following is correct?

c) The demand curve is downward sloping

The price elasticity of demand is a negative number this means:

b. is equal to that portion of the long-run marginal cost curve that is above the relevant short-run average total cost curve

The short-run supply curve of a perfectly competitive firm

c) It subsidizes inefficient domestic production

What is the likely consequence of introducing a subsidy paid to domestic producers to protect against foreign producers?

a. is equal to that portion of the short-run marginal cost curve that is above the average variable cost curve

When a perfectly competitive industry is in long-run equilibrium, all firms in the industry

C) monopoly powers

When the government grants an exclusive patent to one firm, that firm enjoys

B) The only seller of a difficult-to-substitute product

Which of the following best describes a successful monopolist?

B) a few firms sharing monopoly power

Which of the following best describes an oligopoly?

d. less than average variable cost

Which of the following is a barrier to entry that typically results in monopoly?

B) Full responsibility for the business' debts

Which of the following is a disadvantage faced by sole proprietors?

D) Non-price competition, such as advertising

Which of the following is most likely to be observed in a monopolistically competitive market?

a. Competitive monopoly

Which of the following is not a type of market structure

b) To increase the level of imports

Which of the following is not an economic argument for protectionism?

d. All of the above come close to satisfying the assumptions of perfect competition

Which of the following markets comes close to satisfying the assumptions of a perfectly competitive market structure?

C) Corporation

Which of the following organizations is most likely to sell stock?

D) Firms have some degree of control over prices

Which of the following statements is true for both monopolistically competitive and oligopolistic industries?

C) An electricity provider

Which of the following would most likely be a monopoly?

C) Patents and copyrights

Which of these could be considered a government-created barrier to market entry?