CCP Econ Chp 5

B) Barrier to entry

A _____________ makes it more difficult for a competitor to enter a market. A) Luxury product B) Barrier to entry C) Lower price D) Lower cost

C) Natural

A __________________ monopoly is an industry in which makes economic sense to have only one provider. A) Specific B) Original C) Natural D) Competitive

C) Barrier to entry

A ___________________ is anything that might make it more difficult for a competitor to enter a market. A) Monopolistic entry B) Marginal entry C) Barrier to entry D) Perfect competition market

A) Be less innovative than businesses in perfect competition

A business with market power may... A) Be less innovative than businesses in perfect competition B) Force employees to work harder and longer C) Create new markets due to competitive forces D) Sometimes use high profits to research new technologies

C) Monopoly

A market where there is only one seller, and buyers have no good alternative, is called... A) Oligopoly B) Oligarchy C) Monopoly D) Perfect competition market

B) More than

A profit maximizing monopolist will always charge ______________ a perfect competition world A) Less than B) More than C) The same as

A) New competitors

A profitable business will attract... A) New competitors B) Government regulations C) Increases in marginal revenue D) Existing businesses

D) Reputation effect

Companies will often spend considerable amounts of money to create a _______________ in regards to their brand name. A) Market effect B) Production orientation C) Relational effect D) Reputation effect

C) Lower; more

Compared to businesses with market power, businesses in perfect competition will charge ____________ prices and sell ____________ output. A) Higher; rise B) Higher; less C) Lower; more D) Lower; less

A) -$1000

If a local car dealership can sell 8 cars per day at a price of $25,000 each, but must reduce the price to $24,000 to sell one more car, what is the marginal revenue of the 9th car? A) -$1000 B) $16,000 C) $24,000 D) $216,000

A) -$0.05

If a local diner can sell 50 hamburgers per day at $5 each, but must reduce the menu price to $4.95 to sell one burger, what is the marginal revenue of the 51st burger? A) -$0.05 B) $2.45 C) $4.95 D) $252.45

B) The number of dinners served stays the same, but the buyers face higher prices

If all the restaurants in a small town colluded and agreed to raise dinner prices, this would lead to a loss to society because... A) Some dinners that could be served are not B) The number of dinners served stays the same, but the buyers face higher prices C) Collusion is illegal D) The restaurants would become crowded with new customers

C) Play the same music and charge the same price for concerts

If music was perfectly competitive, then all performers would... A) Charge the same price for concerts, but not necessarily play the same music B) Play the same music, but not necessarily charge the same price for concerts C) Play the same music and charge the same price for concerts D) Produce a non standardized product

D) Collusion

If two drugstores in a market agree that they will both sell Fritos at a higher price, and neither will undercut the other, this is called... A) Market banding B) Occlusion C) Implicit collusion D) Collusion

B) Collusion

If two more oligopolistic companies work together to keep prices high and split the market between them, this is called... A) Occlusion B) Collusion C) Profit splitting D) Market sharing

D) Right; fall

In a market where businesses are earning high profits, new entrants will cause the supply curve to shift to the __________, and the market price to __________. A) Left; rise B) Left; fall C) Right; rise D) Right; fall

C) Price equals marginal cost

In perfect competition, P=MC means... A) Profit equals marginal cost B) Price equals market cost C) Price equals marginal cost D) Profit equals market cost

D) Marginal cost

In perfect competition, a profit-maximizing business will expand until its ________________ equals the market price. A) Marginal profit B) Average cost C) Marginal revenue D) Marginal cost

A) Market price; marginal cost

In perfect competition, all businesses in a market produce at the point where __________ equals __________. A) Market price; marginal cost B) Marginal price; marginal cost C) Average revenue; average cost D) Average price; average cost

C) Tend to grow out of business if unable to adjust

In perfect competition, higher cost businesses... A) Thrive and grow B) Increase marginal revenue C) Tend to grow out of business if unable to adjust D) Tend toward oligopolies

A) Perfect competition

In the long run, monopolistic competition starts to look like... A) Perfect competition B) Market satiation C) Market balance D) An equalized market

A) Lower than average cost

Marginal revenue is generally ______________ for businesses that do not operate under conditions of perfect competition. A) Lower than average cost B) Higher than the price C) Lower than the price D) Lower than the marginal product

D) The ability to raise prices above the prices that would exist under perfect competition

Market power is.... A) The combination of price and product B) The balance between average and marginal product C) Another term for equilibrium D) The ability to raise prices above the prices that would exist under perfect competition

C) Are reduced in number by

Monopolies generally _______________ technology and globalization A) Grow with B) Thrive with C) Are reduced in number by D) Are unaffected by

A) A large number of sellers with a similar product

Monopolistic competition is characterized by... A) A large number of sellers with a similar product B) One seller with a standard product C) A limited number of sellers with a variety of products D) One seller with a variety of products

B) Technological change

Natural monopolies have been slowly eroded by... A) Perfect competition B) Technological change C) Market imbalance D) Rising cost

D) The local water company

Natural monopolies include... A) Cell phone companies B) Fast food outlets C) Colleges and universities D) The local water company

C) Lack of key resource

An example of a barrier to entry is.... A) Plentiful natural resources B) Low cost resources C) Lack of key resource D) Helpful government regulation

A) Airline industry

An example of an oligopoly is the... A) Airline industry B) Convenience store industry C) Car wash industry D) Photocopying services industry

B) Are a few sellers in a market

An oligopoly occurs when there... A) Are a large number of sellers in a market producing a variety of products B) Are a few sellers in a market C) Is only one seller in a market D) Are a large number of sellers producing similar products

A) To be in a socialistic country

The easiest way to have a monopoly today is... A) To be in a socialistic country B) To have the government protect you C) To own everything in your market D) With a strong business plan

A) Perfect competition, monopolistic competition, oligopoly and monopoly

The four main types of market structure are... A) Perfect competition, monopolistic competition, oligopoly and monopoly B) Land, labor, capital, and business know how C) Average market, market balance, equilibrium, and marginal product D) Marginal cost, revenue, product, and price

D) A natural monopoly

The local department store used to be ___________________ before technological change. A) A monopoly B) A perfect competitor C) An oligopoly D) A natural monopoly

B) Where marginal revenue equals marginal cost

The profit maximizing rule says that a seller will expand output to the point... A) Where marginal revenue equals price B) Where marginal revenue equals marginal cost C) Where marginal revenue is less than the price D) Where marginal cost equals marginal revenue

B) Higher and to the left of the perfect competition equilibrium

When businesses have market power, they are able to charge a price higher than the price charged by a business in perfect competition. Thus the market power equilibrium on a diagram will be... A) Higher and to the right of the perfect competition equilibrium B) Higher and to the left of the perfect competition equilibrium C) Lower and to the right of the perfect competition equilibrium D) Lower and to the left of the perfect competition equilibrium

A) Lower costs

Which of the following is NOT an example of a barrier to entry? A) Lower costs B) Scarce land C) Rare natural minerals D) Heavy government regulations

B) Wheat

Which of the following is most likely to be sold in a perfectly competitive market? A) Law School Administration Test (LSAT) tutoring B) Wheat C) Fast food D) Automobiles

B) Implicit

__________________ collusion can occur even when oligopolistic businesses do not directly communicate with each other. A) Explicit B) Implicit C) Profit splitting D) Market sharing

A) Market power

_____________________ is the ability to raise prices above the level perfect competition would produce by restricting the quantity supplied. A) Market power B) Monopolistic power C) Oligarchic power D) Perfect marketing

B) Advertising

______________________ is paid communication with potential customers in a public medium, such as newspapers or television. A) Journalism B) Advertising C) Public relations D) Brand identification