chapter 7 econ test
15. A market that is an oligopoly has
CORRECT: a few firms dominating the market.
10. A patent, a license to operate a business, and a franchise
CORRECT: are ways that the government can create a monopoly.
1. Which of the following industries is NOT an example of an oligopoly?
CORRECT: bicycle repair
11. One role of the federal government's Justice Department is to
CORRECT: break up monopolies.
7. An example of a barrier to entry is
CORRECT: high start-up costs.
5. Compared to a market with perfect competition, a monopoly often has
CORRECT: higher prices and fewer goods.
3. Government is concerned with all of the following practices of oligopolies EXCEPT
CORRECT: low barriers to entry.
12. In many industries, deregulation has resulted in
CORRECT: lower prices for consumers.
2. Which is an example of a commodity?
CORRECT: milk
4. Public water is an example of a(n)
CORRECT: natural monopoly.
18. Offering products of different tastes and shapes is an example of
CORRECT: nonprice competition.
19. A natural monopoly is a market that runs most efficiently when it has
CORRECT: one large firm providing all output.
9. A market that is a monopoly has
CORRECT: one seller and many buyers.
16. Public outrage with powerful trusts in the late 1800s led Congress to
CORRECT: pass anti-trust legislation.
13. Price discrimination may be found in any market structure except for
CORRECT: perfect competition.
17. A market structure with many sellers and many buyers is
CORRECT: perfect competition.
8. If several firms decide together to set the market price below their costs for the short term to drive competitors out of business, they are participating in
CORRECT: predatory pricing.
6. Economists usually call an industry an oligopoly if
CORRECT: the four largest firms produce at least 70-80 percent of the output.
14. A firm with a natural monopoly
CORRECT: usually agrees to allow the government to control the price and service provided.
20. An example of a market that meets all four conditions for perfect competition is
CORRECT: wheat.
